June 24, 2025 • 41 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyJune 24th, 2025
Featuring:
1) Gary Gensler, former SEC Chair and Professor of the Practice of Global Economics & Management at MIT, discusses his new text with Simon Johnson and others on the economic consequences of a second Trump administration as well as his experience in government as SEC Chair. It comes as Fed Chair Jay Powell is set to testify before Fed Chair Jay Powell gets set to likely have to explain why he and fellow policymakers seem resolved to continue holding interest rates for the time being, as the president calls for rate cuts.
2) Monica DiCenso, Head of Global Investment Opportunities at JPMorgan Private Bank, joins to talk about why she's telling clients to expect the economy to remain resilient and is diversifying global investments. The possible ceasefire between Israel and Iran sparked cautious optimism for a lasting resolution to the conflict, leading to a decrease in oil prices and an increase in stock prices.
3) Henrietta Treyz, co-founder at Veda Partners, joins for a discussion on the Big Beautiful Bill and President Trump's economic and political priorities beyond the Middle East. President Trump's $4.2 trillion tax-cut package is nearing a vote in the Senate, but it lacks the necessary support due to disagreements among Republicans over Medicaid cuts, green energy incentives, and other issues. Senate Republicans plan to begin voting on the bill mid-week, with a goal of final passage by the weekend, but meeting this deadline will require quick negotiations on thorny policy issues.
4) Emily Kilcrease, former Deputy Assistant US Trade Representative in the first Trump admin, joins to talk about what she believes it would take to effectively remake the economic world order.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
We welcome all of you across the nation with our
questionnaire conversation of the day. Here he is with Gary Gensler.
He's a former chairman the Securities and Exchange Commission, Professor
of Practice of Global Economics and Management at MIT. Did
you ever study under Stanley Fisher? Did you have the privilege?
Speaker 3 (00:44):
H I got to know stan Fisher, terrific public servant.
I got to know him when he served here at
the US here in international finance. I also got to
know him a little bit when he ran in the
Central Bank over in Israel.
Speaker 2 (01:00):
Katie Greifeld called me up earlier this morning and she said,
and folks, gus the horse is okay in the heat.
It's serious. And Katie said that the horses are doing
fine this morning. And Katie said, can you do the
entire interview on crypto? And I said, over Mike, with
all that's going on from the Ginstler to the Atkins
SEC We're going to get crypto out of the way now, folks.
(01:21):
And I'm sorry, Gary Ginsler, it is breaking news. I
got Chris Giles in the ft this morning highlighted the
Bank of International Settlements research. I adore Raphael Hour's work
at BIS. I got rogue off in chapter seventeen, eighteen
and nineteen going after stable coin. We need a Genstler update.
(01:44):
What are we getting into with tether and stable coin?
Speaker 3 (01:47):
So Tom, I couldn't agree with you more about your
earlier statement. There are so many bigger items going on
in this economy. The tariffs, immigration, frankly, a whole attack
on some funding, a lot of things that are going
to I think hurt long term economic growth. And that's
why I joined Simon Johnson and other colleagues from the
(02:09):
Center of Economic Policy Research to do a book, a
rapid response book about the economic consequences. But in that
book you're asking about stable coins. It's interesting, the worldwide
dollar market's about forty five trillion, that's when you add
everything up, forty five trillion dollars and stable coins are
about a quarter trillion. And so you know, the question
(02:32):
is is Scott Bessant, Secretary of Treasury. Right he says
that's going to grow to two trillion. It starts to say,
what's the use of one of these We already have
digital dollars. You and I we all Lisa earlier saying
I don't understand stable coins. We have stable coins, they're
called US dollars, deposits, money market funds, and so forth.
(02:53):
The only thing that these companies are offering is an
alternative way to move dollars out side of the banking system,
which means outside of sanctions, outside of any money laundering laws.
And so that's the real risk. It could undermine the
US geopolitically.
Speaker 2 (03:11):
Paul's got any questions. Let me get this in right now,
because I think it's so important. The bravest book in
my career here was Ken Rogoff, The Curse of Cash.
He got death threats off that book. It's nothing more
than a use for criminal activity. It replaces illegal one
hundred dollars bills in briefcases. How simplistic is that statement
(03:33):
that I just made.
Speaker 3 (03:34):
Well, you're talking about these stable coins.
Speaker 2 (03:38):
Tethers, stable coin, the whole thing. It's nothing more than
a walk around the sec and the rest of the
financial world.
Speaker 3 (03:45):
It looks stable coins. Tether was invented early on about
ten and eleven years ago, to be the equivalent of
the poker chip at the casino. You could use it
to move crypto versus crypt dough because these large exchanges
couldn't get bank accounts and so instead you could sidestep
(04:07):
any money lawn during in sanctions. At a quarter of
a trillion dollars, it's starting to be somewhat meaningful. And
here's the cool question, the interesting economic question. Who gets
the interest payments, Who gets the float the three and
a half or four percent on on you know, for
every billion dollars, that's thirty five or forty million dollars
of interest, and who gets that interest. I'd rather have
(04:30):
a money market fund where I get the interest the investor.
Speaker 4 (04:34):
Gary The economic consequences of a second Trump administration of
preliminary assessment. We're six months into the second administration of
President Trump. There's lots of unique economic policies coming out
of Washington.
Speaker 5 (04:46):
Let's start with tariffs.
Speaker 4 (04:48):
When I was in business school, terrorists were kind of
a targeted thing you'd do once in a while if
somebody was dumping steel or something else in there.
Speaker 3 (04:56):
We've never really.
Speaker 4 (04:56):
Seen them as a whole policy across the globe, across
all of our trading partners. How do you think about
the President of Trump's economic policies pocusing on strategy on tariffs.
Speaker 3 (05:09):
I think and thank you for mentioning this book that
we did together, and it was a rapid response book.
But overall, all our experts said tariffs are going to
put downward pressure on economic growth and upward pressure on inflation.
And that's the history of these things. We have seen
worldwide movements to tariffs, and it was right before the
(05:33):
nineteen thirties great depression, and Congress got in and weighed
in and so forth. And I would remind listeners that
tariffs are only on goods, not on services. And about
ninety percent of workers in the US are working outside
of the manufacturing field. And one of our authors, Michael Strain,
wrote an excellent chapter and Michael says it won't even
(05:56):
help manufacturing because manufacturers have to buy all all these goods,
these intermediate goods from overseas and the tariffs will be higher.
So I don't think the tariffs are going to help.
I think they're gonna hurt, and interestingly, they're going to
particularly hurt also in rural communities because rural communities have
to sell their farm goods, their agricultural products overseas. So
(06:19):
it doesn't even necessarily help the president in some of
his political base in rural states.
Speaker 4 (06:25):
A lot of I'm just going to, you know, preempt
a lot of email I'm going to get today in
my social saying we haven't seen any of it. Tariffs
are working. Just find inflation's not there or is it
just too.
Speaker 3 (06:37):
Early, so it's a bit early. But I'd say this
to any listeners, You've just had the largest tax increase
that you've had in generations. Average tariffs in the US
were two point three percent. Globally, adding everything up two
point three percent, and that was even after the first
Trump administration raised tariffs. In China they are now over
(06:59):
ten percent, so the overall teriff rates have gone up fourfold.
That's a big tax increase. It takes time, but the
International Monetary Fund lowered our growth estimates for this year
a full point, so you know we're seeing that happen.
Speaker 2 (07:16):
Right. I've got to ask We got all sorts of
topics to talk to with Gary Ginsler, former Securities in
Exchange Commission chairman, and MIT out with a wonderful what
do you call it? Like a kindle book?
Speaker 3 (07:27):
Is there like a well it's it's a real book.
We do have it physically, but it's online at the
Center for Economic Policy Research, which is a remarkable organization
in Europe, and you can get it for free right
at the CEPR website.
Speaker 2 (07:40):
Wonderful, So we'll get I'll get that out on LinkedIn
and Twitter as well. So I got to get this straight.
You're at Pikesville High School, you end up at Wharton,
you do better than good in your academics. The world's
imploding in private credit, right, Paul, Sure, everybody needs evaluation.
You have to be the first call for the University
of pen Sylvania. Do you have any handle on the
(08:02):
new valuation the mark to market of private credit? And
dare I say private equity as well?
Speaker 3 (08:09):
Well, you're kind I mean, University Pennsylvania was terrific. I'm
at MIT now, so I just have to give that
shout out. But in terms of private credit, look, this
is a field about give or take two trillion dollars
of lending and assets under management that has competed with
commercial banks, and we made sort of a conscious decision
(08:29):
to move some of these risks out of commercial banks
and into private credit. I think it's good. It's competition
in the capital market here. Am I really took to.
Speaker 2 (08:38):
The chase of sloan. You're at Sloan with a piece
of chalk in your what's the haircut right now on
private credit? Is it eighteen percent? Is it greater?
Speaker 3 (08:49):
Or if you're talking about valuations, it really depends on
what the large companies, the Apollos and the Blackstones and
so forth, how have they valued it. If they're valuing
it properly, then it's not a haircut. But yes, they
usually charge higher interest rates.
Speaker 4 (09:07):
Garret, how do you think the US should from a
trade perspective and economic policy perspective, deal with China?
Speaker 5 (09:13):
Right now?
Speaker 4 (09:14):
It feels like the globalization trend that you and I
and Tom grew up with that seems to have lost
a lot of stements out of favor. Now maybe that's
a short term trend. I don't know, But specifically with China,
how do you put the policies?
Speaker 3 (09:27):
My experience and we had to negotiate when I was
at the SEC, A big consequential transactional situation. Can China
keep their companies in the US stock market? And China
was not playing ball and following the rules about inspections.
We were able to sort that through. And my experience
is as you treat them with respect and dignity and consistency,
(09:52):
and this oscillation, this big volatile changes of policy, I
think is not doing the US well. I think, yes,
the President is a risk taker. I respect that he
is a fundamentally He's come into office very determined and
he wants to readjust with China. But I think China
(10:13):
is very savvy. They're going to be able to compete
with this in artificial intelligence even if we clamp down
on export controls and they have those rare earth minerals
that they're able to they have leverage points. Is what
I'm trying to say.
Speaker 2 (10:27):
I've got to go to a new topic here, but
Gary goinster. To get to that topic, I used AI.
I went to Gemini here and I tipped in the
difference between the Genstler and Atkins sec. First of all,
Gary Gensler with all as you mentioned Paul Esteemed at
GOLDBN Sachs. Paul and I would editorialize you would be
on a shortlist to run any major firm in America. Fine,
(10:52):
Gary Gensler on AI, what are our kids? What does
Lisa Mataio need to know?
Speaker 3 (10:57):
Well, I would say this, it's one. It's around at
least ten years even longer. So it's not just new
with open ai and chat Chept two. It's the most
transformative technology of the time. And I find myself thinking
I'm more of the optimist. I think there'll be a
lot of new productivity that comes from this, but also
(11:19):
a lot of changes in the job market. Bloomberg will
be different, Bloomberg Radio maybe not so different all right
at least, but I think it will be very different.
And so I think the US versus China is an
interesting thing. The big hyperscalers, the big you know, Chap,
GPT and Gemini and so forth. Those companies are competing
(11:43):
with China, and China's got natural.
Speaker 2 (11:45):
Deep deep seek whatever it is.
Speaker 3 (11:47):
Yeah, well they have deep seek, but they have something else.
They have one point four billion people, so they have
data advantages over We're big, but we're only three hundred
and forty million people.
Speaker 2 (11:57):
Let me go to what I was on with jem
and I here and also the AI effort of Bloomberg,
and that is the shift from the Genstler SEC over
what Paul Atkins has been charged by the President of
the United States. You're going to tell me collegially that
the ven diagram of Gensler and Atkins is pretty tight.
There's differences, but there's a collegial agreement. Beloney. People see
(12:22):
this Gary Gensler. Is a sharp shift that we're seeing
right now, is it?
Speaker 3 (12:27):
Look, elections have consequences, and I have a deep respect
and you're right, I'm going to be respectful. Chair Atkins
has served at the SEC, not once but twice before.
He knows the agency well, and I think whether it's
Republican or Democrat, what this show is focused on is
the markets, the capital markets, and the capital markets do
(12:48):
best when there's rules of the road. And that's been
true for ninety years and that's what's really critical. Now
the SEC has shrunk about twenty percent, so it's not
as able to veil the markets and make sure that
it's free of fraud and manipulation.
Speaker 2 (13:04):
Where are your shadows right now? If we go to
a more what's the word swashbuckling? Is that right now?
Speaker 3 (13:09):
Yeah, swashbuckling works.
Speaker 2 (13:11):
That works if we go to a more Trumpian sec
where are the Guenstler's shadows now? Within global Wall Street?
Where's the leverage the thing, the portfolio insurance of eighty seven,
the surprises of August nineteen ninety eight, where's the shadows
for you in the system?
Speaker 3 (13:30):
Look, I think that overall it's much beyond the Securities
and Exchange Commission. It's in terms of the whole financial markets.
You probably will have a tendency to greater leverage, meaning
more borrowing. But we are also in a heightened risk
environment geopolitical. As we lay out in this book, we
(13:51):
are pulling back the US from global alliances. So there
is definitely a bit more inflation risk, There's a lot
more leverage in this sytem. Investors are less well protected
with the Frankly, this sort of a large dismantling of
something called the consumer financial you know, the CFPB, and
(14:12):
so so investors have to be a little bit more aware.
There's more risk in the system, big risk. And there's
also I would say the US dollar is under pressure.
It's down ten percent this year so far, and this
is in the environment where the stock market has been
quite resilient. You know, we're almost at near all time highs,
(14:36):
and so that investors have to say, is there more
downside risk than upside potential.
Speaker 4 (14:40):
Another big area of change within the second Trump administration
has been immigration. How is that impacting effectively shutting down
the southern border, how does that impact the US labor market?
Speaker 3 (14:52):
So it's interesting again in her book This Economic Consequences
of the Second Trump Administration A preliminary, we have a
really interesting chapter on this question. And overall, the forecast
is that it will cut growth by about zero point
seven to one and a half percent, and in terms
(15:14):
of the labor market itself, interestingly, it's going to hurt
rural America a lot. Now, rar America will also be
hurt by medicaid cuts because believe it, medicaid is more
used in raw America than an urban America. And also
the tariffs, so there's like a triple threat to rural America,
which again politically, it's an interesting conundrum for this White
(15:37):
House what to do. But on immigration, I would say
it's a downward pressure on the economy these policies in
addition to the downward pressure from tariffs.
Speaker 2 (15:49):
Gary, I want to get this in I think it's
too important. And this goes to your colleague, the Nobel laureate,
Simon Johnson.
Speaker 3 (15:55):
And wonderful friend in college in.
Speaker 2 (15:56):
The heart of the world blowing up for me personally.
And there was Andrew Ross Sorkin's wonderful book and any others.
Roggy Roger out at booth that's a Chicago, that's a school,
Gary out in Chicago. You may not be familiar with that,
but Simon Johnson's monograph Thirteen Bankers was the definitive book
(16:17):
to describe the moment where we lost control in five six,
where the SEC opened the floodgates to certain transactions and leverage.
Are we at a risk now where we could repeat
what Professor Johnson wrote about Chapter four of Thirteen Bankers.
(16:37):
This is the piece of paper that opened the risk
gate floodgates? Can we do that again? Look?
Speaker 3 (16:43):
I think we're human Tom and humankind. We abb and
flow on risk. The financial system written the warrge is
in good shape.
Speaker 5 (16:54):
But will it.
Speaker 3 (16:55):
Tend towards greater borrowing against risk assets? And that's when
you have challenges. And I think we have a US
dollar that people have some question about. You have inflation
moving up. You have greater leverage, and you have a
tremendous amount of uncertainty policy and geopolitical uncertainty. And those
(17:17):
are times you can see, you know, I'll call them
spills on all five and you know, financial spills on
all five hurt millions of Americans when you lose your
jobs or your you know, mortgage rates.
Speaker 2 (17:32):
Go home. I got six more questions, how many do
you have? Yeah, Plank, Sure we are out of time.
Gary Goensler, thank you so much. As the former chairman
of the Securities in Exchange Commission. Out with a new effort.
I'll get it out on LinkedIn and Twitter at cep
R with Simon Johnson and his colleagues at mi T.
Speaker 1 (17:55):
You're listening to the Bloomberg Surveillance Podcast. Catch us live
weekday afternoons from seven to ten am Eastern Listen on
Applecarplay and Android Otto with the Bloomberg Business app, or
watch us live on YouTube.
Speaker 2 (18:08):
Manica Descenzo with us right now with the market lifting.
The fancy titleist had a global investment Opportunities a JP
Morgan private bank. Far more importantly, she flies around the
world talking to high net worth family offices and others
with large pots of money for the JP Morgan Bank
(18:31):
and way more important, Monica. You were in the trenches
of equity research long ago and you did something that
probably needed on Wall Street a lot more. You were
a rock star and you took a year off. It's amazing, Lisa,
and I've been working on this since three am.
Speaker 3 (18:51):
Yeah.
Speaker 2 (18:52):
What was it like walking out the door after the
addiction of seventy hours a week.
Speaker 6 (18:58):
Well, everyone thought it lost my mind, including my parents
who are very concerned that I'd be living in the basement,
but I wanted to try something different. I enjoyed a
year traveling all around the world very and then at
the end of the year, my former boss, Alexia Quodronni,
who I think Paul knows, called me back and said,
any interest in coming back to this?
Speaker 3 (19:17):
And I did.
Speaker 2 (19:18):
The stereotypist people sort of drift off in the Netherlands,
and you came back ever stronger from that year off.
How did it make you stronger? Did you rise to
such an important level at JP Morgan.
Speaker 6 (19:31):
I actually think the perspective you get by seeing other
parts of the world and meeting people. And I traveled
with myself for a year like just alone, which makes
you a little more independent. And I think in my
role now a little more interesting. You know, all the
stuff I saw on people I met. When I talk
to clients, they think it's odd and intriguing. And I
think when you choose to come back as an adult
versus jumping into this career after college where it just
(19:52):
feels like the obvious path, that's a very different thing.
Speaker 2 (19:55):
President Trump femailed me from the actually texted from the
Air Force one orosse The atlanticing says, ask Monica, if
American exceptionalism still ragns is it still there for your
clients worldwide?
Speaker 6 (20:09):
So worldwide is interesting question. Let's separate US clients versus international.
In the US client base the last decade, they have
cared mostly about maintaining a very heavy overweight to US
equities in US investments. Overall the last six months, we've
seen them start to pivot, which I think is important
because if you had that sixty to forty portfolio, drift
(20:30):
brought you closer to seventy five twenty five over the
last just last few years, which means you have more
equity than you probably need. You probably have more US
than you need, and so our US clients are finally
starting to look outside the US, looking at Europe, looking
at Japan, looking at local denominated assets to balance out
their portfolio. My international clients have always done that, but
I will tell you coming out of COVID, my international
(20:51):
clients they felt like the US was the safest bet.
They thought we were in best position to rally after COVID.
I was in London a couple of weeks ago, and
that has changed a little bit and again giving up
on the US. Certainly, they appreciate our dominance and tech
and AI and everything like that, but they're understanding that
they need to have more diversity in their portfolios. And
so I don't think US stepialism is dead. Is it
(21:11):
being chipped away at the on the fringe?
Speaker 3 (21:13):
Yeah?
Speaker 6 (21:14):
Absolutely.
Speaker 4 (21:15):
So for your clients, let's say the family office is
a big part of your client base, how do they
think about alternative investments? I'm actually surprised that it's a
big an allocation, as big an allocation as is.
Speaker 5 (21:26):
How do you guys think about alternatives with your clients.
Speaker 6 (21:28):
So when you start to get to the family office,
levels's assume you're talking about a billion dollar plus balance
sheet at that kind of level. You're talking about generational wealth,
and so they can have a higher allocation to alternatives
which are less liquid because they probably don't need to
tap into that money in the next five ten years.
And so there we can see alternative allocations north of
fifty percent, wow, which is amazing. For a traditional client,
(21:49):
you would be much lower, like half of that, if
not less.
Speaker 5 (21:52):
So where are we or what's your role at JP Morgan?
Speaker 4 (21:55):
How are you kind of working with your clients to
deal with the geopolitical risk with the domestic political changes
that we have here in the US, with the change
in maybe the US not being as safe a haven
as it was even six months ago. What's the kind
of conversations you're having.
Speaker 6 (22:11):
Yeah, with as far as it remains think about the US,
the US exceptionalism idea there. We've been advocating more global
diversification in portfolios. So again, look at Europe, look at Japan,
look at local denominated bombs, another EM and another markets.
Just have more exposure in your portfolio to things outside
the US. When you think about geopolitical risk, we really
(22:32):
don't do a whole lot in portfolios that we manage
around that because history tells us geopolitical flare ups are
pretty bad indicator of pulling out the market. People want
to do that, that that's the inclination, But in fact,
if you did that, you actually underperformed. And we looked
back over three, six and twelve months after geopolitical spikes.
Speaker 3 (22:49):
Only on a three month basis.
Speaker 6 (22:51):
Do equities lag so near term it causes volatility intermediate
to long term, it generally doesn't matter for a global
diversified portfolio.
Speaker 2 (22:58):
We continue with Monica descends, Head of Global Investment Opportunities,
JP Morgan, Private Bank, with headlines out from the testimony
of Chairman Powell that we will see later today. The
US economy, labor market remain in a solid position. There's
many headlines. I'll pick a few. Effects of policy changes
on economy remain uncertain. We've heard that uncertain word. Maybe
(23:20):
the key to headline here the chairman says, ultimate tariff
level will determine the impact of the path forward. Long
run inflation consistent one two percent target is your own
Powell from all your travels Monica as a central banker to.
Speaker 6 (23:36):
The world, certainly all eyes are on him. And that
was some of the conversations I had in Europe a
couple of weeks ago, and I think most people agree
with this view that we probably haven't seen the full
impact of tariffs and the data, and so most of
the people I work with assume that you're looking at
a fall, if not later, for any kind of move
on rates. I know overnight, there was some last day
(23:57):
or so, some questions around maybe July, but still the view.
Speaker 2 (23:59):
Of most that when you synthesized GP Morgan's research, when
does the feel of tariffs click in? Now?
Speaker 6 (24:09):
The feel is there from a vibe standpoint. If you
look at sentiment corporate and consumer, it's there. People are petrified,
companies are trying to figure out what they're going to do,
but it hasn't flowed into all the hard data yet,
and I think that takes time because we don't actually know.
If you look at corporate earnings, we're assuming earnings growth
slows down in Q two from double digit to single digit,
but still its still okay. And so I think, unfortunately,
(24:30):
from a data standpoint, you're looking at end of summer,
if not later, to really have a handle on this,
and it'd be great to have the administration be somewhat
consistent in the communication. I think that would help a
lot and maybe give Powell the amo that he needs
to actually move. I don't think he's gonna do anything
without some stability.
Speaker 5 (24:46):
Though thanks to come space.
Speaker 4 (24:47):
I mean we can sit here in a two year
treasure we can get done.
Speaker 5 (24:51):
Near four percent. Yeah, do your clients want to take
credit risk at this point or they are comfortable.
Speaker 6 (24:57):
In the treasure mark very comfortable in treasuries where we've
seen a little more interest in the muni market, So
some dislocation there, especially in the questions around Wilson. Of
these universities maintain their tax status, so that's created a
little bit of volatility. And if you're willing to take
muni risk, which historically has very low defaults, which most
of my clients are, that somewhere would lean into high
yield not so much spread most people feel aren't wide enough.
(25:19):
You're not getting paid enough. And then the other part
hybrid instruments like bank preferreds. We love financials here and
bank preferreds will give you, if you're a US taxpayer,
high single digit tax equial yields, and so that makes
a lot of sense if you're not concerned about some
more large banks.
Speaker 2 (25:34):
Is the lot of the sns of formula just as
simple as load the boat on Georgetown. Is that what
you're saying.
Speaker 3 (25:41):
About, George.
Speaker 6 (25:41):
I've not looked at their bonds lately, but perhaps some
other universities if you feel.
Speaker 3 (25:48):
Comfortable with them. Yeah, and I would want to.
Speaker 6 (25:50):
Diversified UNI portfolio for sure. But I have the privilege
of paying New York New York City taxes, so I'm
a big owner of meetings myself.
Speaker 2 (25:57):
You're in a meeting, there's seven fancy people from J
Pete Morgan, There's you know, some elderly high networth foreign domestic.
I don't care. With the kids, it's like it's like,
what's the TV show Succession? It's like she's in the
room with the Succession. That's our clients. Were they your clients?
Speaker 6 (26:14):
The characters from Succession?
Speaker 3 (26:17):
The actors are not.
Speaker 6 (26:18):
I would love to meet many of the very quickly here.
Speaker 2 (26:20):
If they say we've loaded the boat an apple or
pick a big stock, how do you talk about us
selling the mother load.
Speaker 6 (26:27):
It's a big struggle from many families they work with
now because they have massive embedded gains, and so oftentimes
the tax tail wags the dog and people don't want
to sell now. There are things you can do to
chip away over time. There were loss harvesting strategies. There
are things like exchange funds you can put a concert
position into. But I'm a big advocate of diversifying that concentration.
(26:48):
The constitutions are great for creating wealth, they're not great
for sustaining wealth over the long term, and so we
need to get the diversification going. It's just it can
be very difficult when someone's tethered to the stories.
Speaker 2 (26:58):
Jamie from Central Parks just emails ask her if she's
taken another year off, are you taking another year off?
Speaker 6 (27:03):
If Jamie's listening and he wants to offer that, I'd
be willing to to come back with perspective in a year.
Speaker 2 (27:09):
Thanks you so much. Monica Descenzo on a beach somewhere
here in the coming month. She is with JP Morgan.
Speaker 1 (27:15):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay 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 Play Bloomberg eleven thirty.
Speaker 2 (27:32):
Henrietta Trace joins in sentw in studio. We could talk
here for hours and hours. Richard Hass yesterday was heated
that the legislative branch, Capitol Hill, you're expert, has given
away the right to declare award after years and years
and years and years with this action, it's over the
(27:53):
president handles the Pentagon.
Speaker 7 (27:56):
Yeah, it's absolutely true. And you know, Leadershoomer's gonna file
War Powers resolution. They'll vote on that on Wednesday. But
this is a very partisan situation. I'd say like eighty
five to even ninety percent of the Republican conference is
very much behind the President making the choices that he made,
and so they're not they just don't have the votes
to force the issue. But absolutely, and I think Brand
Paul would very much agree with that sentiment.
Speaker 4 (28:18):
Where do we go here on the domestic stuff, the
one big beautiful bill?
Speaker 5 (28:23):
Where are we with that right now?
Speaker 7 (28:25):
Yeah, we are in a much tougher place than I
think it appears from the outside. I was with some
Republican Senate folks last night and talk to them constantly, obviously,
and I think that underneath the surface they are paddling
very furiously. I increase my odds from twenty percent to
forty percent that they could get this done by the
fourth of July, really, but that's mostly because there they
(28:46):
have the advantage of these crises, Launching weapons in Iran,
deploying the National Guard out to California. That all helps
advance the narrative around the immigration spending and the military spending.
The tax package itself, the medicaid cuts are very problematic,
and what the American public does know about this bill,
they don't like. It's got a sixty seven percent disapproval
(29:09):
rating on the healthcare side, and it's seventy one percent
disapproval rating from independent voters generally nationwide. So they need
to jam it through. That can grease the wheels, But
there's a lot of details to iron.
Speaker 4 (29:19):
Out, all right, Just I don't know how to put this.
Where's the Republican Party, I guess just in general? Where's
the Democratic Party? I'm sorry, where's the Democratic Party in general?
Speaker 5 (29:28):
And maybe as it relates to this legislation.
Speaker 7 (29:30):
The Democratic Party is not even remotely keeping up with
the pace of the conversation, especially around this. Yeah, not
at all. They're not even on target on an hourly basis,
let alone a daily basis, and I think that that's
really a part of the problem.
Speaker 2 (29:45):
Can let's just cut to the chase. We have an
election going on this morning in New York. We'll get
Henrietta Trece's view on that in a moment. She's the
only one I know who understands ring choice voting except
Gina Cervetti and Robert Brockton. What's so important your is
hockeing Jeffries seems to be where everybody goes to. Isn't
he supposed to be visible.
Speaker 7 (30:05):
And vocal, so much more visible and vocal than where
he is right now? And they're nowhere in terms of
getting a discussion about what's in this bill. The bill
is unpopular. Go talk about the unpopular stuff on every mediac.
Speaker 2 (30:18):
But you're in that chair fourteen at the Capitol girl
in Washington, you live there. Why Why for Republicans and
Democrats listening, Why is mister Jeffries, who everyone considers articulate silent?
Speaker 7 (30:33):
I think he can't break through and keep up with
the cycle, is really what I've seen. I don't understand
why they're not on tariffs all day, every day. If
you're making the price of a can of beer more expensive,
talk about it all day long, talk about it going
into the fourth of July Memorial Day. They're nowhere on tariffs,
they're nowhere on this War Powers resolution. They don't even
have a unanimous front there. They're expecting maybe one hundred
(30:54):
and ninety Democrats to sign on to the War Powers
Resolution bill in the House, but they're not going to
be comprehensive, and the pushback to this Senate bill is
not nearly as forceful or detailed or even talking about
the medicaid stuff, I think they're relying on the institutional
knowledge of the American voter to rail against medicaid cuts,
which the American voter can do very quickly. But I
(31:16):
don't think Democrats are advancing the narrative.
Speaker 5 (31:18):
So do you believe?
Speaker 2 (31:20):
So?
Speaker 4 (31:20):
We have just explained to us of the timing here.
We're going to get July fourth, is what date? And
then what do we do after July fourth?
Speaker 7 (31:26):
July fourth is meaningless. July fourth is a manufactured feel
good story. It doesn't do anything. The only deadline that
is real, and I just heard Kevin McCarthy say this
is the debt ceiling deadline, and that is, of course
exactly correct. The debt ceiling breach is going to happen
in mid August. They don't need to pass this bill
until they're ready to leave for the August vacasion, so
they've got time.
Speaker 2 (31:46):
Matt from large amount emails and it says, okay, salt
I think is back to forty thousand, but with a
lower income hurdle or something are we going to get
Would you explain, for Matt and for me, why does
Oklahoma salt in New York or New Jersey or California
needs to be adjusted?
Speaker 3 (32:07):
They don't.
Speaker 7 (32:08):
They absolutely do not. West Virginia for sure doesn't care.
And we've heard all the senators from those states say
that for years now. The reality on this bill is
that the senators have about a trillion dollars that they
can throw at various problems. We have a lot of
big problems. There's one hundred and twenty two billion dollars
they got stripped out of the snap cuts that the
parliamentarium won't allow. We have to fix the salt cap
(32:31):
more than ten k. It needs to stay probably at
forty K, but drop down to three hundred thousand dollars
in an income bracket, which is extremely expensive. Salt alone
is a one point two trillion dollar revenue raiser. We
need to extend more money on the IRA and get
some of these Medicaid cuts out so I can spend
a trillion dollars real fast, and that's what they need
to do. But even now in July fourth, so it.
Speaker 4 (32:53):
Looks like the Republicans do they have the run of Washington.
It just feels like obviously they have the majorities, but
slim majorities.
Speaker 5 (33:00):
But it feels not that slim. It feels like they
can get pretty much anything they want here.
Speaker 4 (33:04):
And that's good for policy maybe if you want to
get stuff done, But is that kind of where we are?
Speaker 7 (33:09):
Absolutely this is the Trump effect. So when you look
at the details of this bill and to get even
more granular, the reason Lisa Murkowski of Alaska is out
right now talking about maybe not supporting this bill is
because thirty five percent of Medicaid recipients in Alaska will
lose their coverage with this package. Dan Sullivan is up
for reelection this cycle, so there are members who are
taking a lot of heat from the members who are
(33:32):
at risk.
Speaker 2 (33:32):
So give us a vignette, Henri, to your expert this. Unfortunately,
we're near out of time a given congress person in
a room or over lunch like in the movies, Redford's
there the rest of them do they just say this
is all that matters to me. If I don't get this,
I won't vote for the bill. Does that Hollywood drama happen?
Speaker 7 (33:53):
Some of the members are like that. Ran Paul is
like that, he's a no go just because the debt ceiling.
But what really happens in these caucus lunches is members
will get much more vocal towards the end of the process.
So last night Tom Tillis of North Carolina, who's in
a tough race, Yeah, with a piece of paper showing
the top ten states who are going to lose Medicare coverage,
Medicaid coverage. He's going to lose six hundred thousand people
(34:14):
just in North Carolina. So members will go to the
mat for their individual issues. The Trump effect also is
such that they're trying to keep members from speaking out
publicly about their concerns. If you have a problem, goes
straight to the President, goes straight to Leader thun And
that keeps the expectation or the negative vibe, if you will, down.
But it is very much alive in these caucus meetings,
(34:35):
especially right now.
Speaker 5 (34:37):
Who's driving the bus here in Congress?
Speaker 2 (34:39):
Is it?
Speaker 5 (34:41):
I mean, who's pushing all this through?
Speaker 7 (34:43):
Leader Thun is doing a lot of heavy lifting on
the set side with Lindsay Graham.
Speaker 2 (34:48):
Is the President near in the vicinity like the Red
Sox or a lame duck? Okay, they're playing five hundred
ball again? Is the President near a lame duck?
Speaker 7 (34:57):
I think the reason he floats the idea of running
a third term is because he doesn't want anybody to
talk about him being a lame duck. Indeed, I also
heard that straight from the former speaker, So I think
he is presenting as though he will run again and
allowing that confusion to list so that there won't be
a shadow presidency.
Speaker 2 (35:12):
Do you know that New Orleans is seven degrees cooler
than New York City? Right now?
Speaker 3 (35:16):
Come on down, Henrietta Treys, thank.
Speaker 2 (35:21):
You so much. With Vada Partner's just a hugely popular
value add for the machinery of the Washington we're within.
Speaker 1 (35:35):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg terminal.
Speaker 2 (35:49):
If you look at Emily Kilcreasee's bag collection, it's unbelievable.
She's never had an introduction like that joining us now
this is the conversation today for those of you coast
to coast looking at tariffs and trade. Emily kilcrease is
earned ability within our trade, our thinking of international affairs
(36:10):
with the National Security Council and working with mister Litthheiser
a few years ago. Emily, thank you so much for
joining Bloomberg Surveillance. How different is the day to day
trade tariff grind of Trump II versus Trump one, which
you lived.
Speaker 8 (36:29):
It's a great question. The trade space is fundamentally different
under the second Trump administration. He came into this term
willing to use tariffs at a scale we've just never
seen before in the era of a globalized economy. He
used them faster, he used them harder, and on both
strategic competitors like China as well as on close US allies.
(36:50):
So the goals of his tariff program have changed substantially,
and the candidly the chaos that we've seen in some
of his trade policy is just much different than what
we saw the first time around.
Speaker 2 (37:00):
You lived Lightheiser's book, No Trade Is Free. He came
out of a desperate northeastern Ohio and said, we need
to fix the system. What ice Emily killcrease is just simple.
It's a question of magnitude. Can this nation survive even
a blended seventeen percent tariff? Isn't that beyond Lightheiser.
Speaker 6 (37:23):
It's a good point.
Speaker 8 (37:24):
You know, tariffs do have a role in addressing unfair
trade practices that we've seen from other countries, mostly China. Clearly,
Investor Lightheiser and President Trump have been focused on that
they can have a role in protecting critical industries. But
the question that you've identified is can we use tariffs
at high levels for all of the different goals that
the Trump administration is now trying to use them for.
(37:46):
Can we use tariffs to generate revenue? Can we use
them to fix trade deficits? Can we use them to
combat unfair trade practices? When you add all of that up,
you do end up with a very high tariff rate
that could have some serious consequences for the US economy,
for US productivity and ultimately for the US workers that
the Trump administration is trying to help. So it's a
(38:06):
really big risk. It's a big experiment, and there are
certainly very good reasons to think that it might not
work out the way that the Trump administration wants it
to if you do have a tariff wall that exceeds
twenty percent or more.
Speaker 4 (38:20):
Emily, I think the premise for President Trump and his
economic supporters and his policies is that somehow the United
States is at some disadvantage or is not treated fairly
by some of.
Speaker 5 (38:31):
Its trading partners.
Speaker 4 (38:32):
But others would pushed back and say, hey, since World
War Two, no one has benefited better or greater than
the United States from free global trade.
Speaker 5 (38:43):
How do you think we should think about that?
Speaker 8 (38:46):
So there is a small bit of truth in what
the Trump administration is saying, what the President is criticizing
in terms of how our trading system works today, we
have a trading system that treats China the way it
treats everybody else. Are you politically that doesn't make a
lot of sense anymore. We also know that it's been
really hard to get even some of our closer trading partners,
(39:07):
like Europe to address long standing trade irritance in the relationship.
Trade is hard, it's hard to get other economies to
fix regulations, fixed barriers to trade sometimes. So it's not
that the Trump administration is completely wrong. It's a question
of whether their approach to fixing these problems is actually
going to have the effect they wanted to.
Speaker 2 (39:25):
Emily Gilchrist, your essay in Foreign Affairs is blistering, and
there has to be a change here in process. Is
a change here to go from Trump and deal making
back to a diplomacy of say the Uruguay round.
Speaker 8 (39:42):
So I don't think there's going back, right. I don't
think there's going back to a wto led system. I
don't think there's going back even to kind of a
more mild approach that we saw on the first Trump administration.
The point that I make in the essay in Foreign
Affairs with my co author Jeff Gertz is really one
about US credibility, and that's where we argue that the
US and particularly the Trump administration needs to show that
(40:05):
not only is it going to threaten tariffs, that it
can credibly commit to not impose tariffs if our trading
partners do what we ask them.
Speaker 7 (40:13):
To do.
Speaker 8 (40:14):
So far, we haven't seen that. We've seen continued threats
of tariffs. We've seen continued back and forth on again,
off again terror proposals that really hurts the US ability
to kind of usher the economic order into a better,
more sustainable state, and in many ways it's undermining the
Trump administration's own goals.
Speaker 2 (40:30):
Emily, thank you so much, and I'll get the essay
out from Foreign Affairs. Very valuable, short suite and really
thought provoking on this new regime of terrors. Emily killed
Crease joins us this morning off the Foreign Affairs Essay.
Speaker 1 (40:44):
This is the Bloomberg Surveillance podcast, available on apples, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Easter and on Bloomberg dot Com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
(41:05):
and always on the Bloomberg terminal
Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
We welcome all of you across the nation with our
questionnaire conversation of the day. Here he is with Gary Gensler.
He's a former chairman the Securities and Exchange Commission, Professor
of Practice of Global Economics and Management at MIT. Did
you ever study under Stanley Fisher? Did you have the privilege?
Speaker 3 (00:44):
H I got to know stan Fisher, terrific public servant.
I got to know him when he served here at
the US here in international finance. I also got to
know him a little bit when he ran in the
Central Bank over in Israel.
Speaker 2 (01:00):
Katie Greifeld called me up earlier this morning and she said,
and folks, gus the horse is okay in the heat.
It's serious. And Katie said that the horses are doing
fine this morning. And Katie said, can you do the
entire interview on crypto? And I said, over Mike, with
all that's going on from the Ginstler to the Atkins
SEC We're going to get crypto out of the way now, folks.
(01:21):
And I'm sorry, Gary Ginsler, it is breaking news. I
got Chris Giles in the ft this morning highlighted the
Bank of International Settlements research. I adore Raphael Hour's work
at BIS. I got rogue off in chapter seventeen, eighteen
and nineteen going after stable coin. We need a Genstler update.
(01:44):
What are we getting into with tether and stable coin?
Speaker 3 (01:47):
So Tom, I couldn't agree with you more about your
earlier statement. There are so many bigger items going on
in this economy. The tariffs, immigration, frankly, a whole attack
on some funding, a lot of things that are going
to I think hurt long term economic growth. And that's
why I joined Simon Johnson and other colleagues from the
(02:09):
Center of Economic Policy Research to do a book, a
rapid response book about the economic consequences. But in that
book you're asking about stable coins. It's interesting, the worldwide
dollar market's about forty five trillion, that's when you add
everything up, forty five trillion dollars and stable coins are
about a quarter trillion. And so you know, the question
(02:32):
is is Scott Bessant, Secretary of Treasury. Right he says
that's going to grow to two trillion. It starts to say,
what's the use of one of these We already have
digital dollars. You and I we all Lisa earlier saying
I don't understand stable coins. We have stable coins, they're
called US dollars, deposits, money market funds, and so forth.
(02:53):
The only thing that these companies are offering is an
alternative way to move dollars out side of the banking system,
which means outside of sanctions, outside of any money laundering laws.
And so that's the real risk. It could undermine the
US geopolitically.
Speaker 2 (03:11):
Paul's got any questions. Let me get this in right now,
because I think it's so important. The bravest book in
my career here was Ken Rogoff, The Curse of Cash.
He got death threats off that book. It's nothing more
than a use for criminal activity. It replaces illegal one
hundred dollars bills in briefcases. How simplistic is that statement
(03:33):
that I just made.
Speaker 3 (03:34):
Well, you're talking about these stable coins.
Speaker 2 (03:38):
Tethers, stable coin, the whole thing. It's nothing more than
a walk around the sec and the rest of the
financial world.
Speaker 3 (03:45):
It looks stable coins. Tether was invented early on about
ten and eleven years ago, to be the equivalent of
the poker chip at the casino. You could use it
to move crypto versus crypt dough because these large exchanges
couldn't get bank accounts and so instead you could sidestep
(04:07):
any money lawn during in sanctions. At a quarter of
a trillion dollars, it's starting to be somewhat meaningful. And
here's the cool question, the interesting economic question. Who gets
the interest payments, Who gets the float the three and
a half or four percent on on you know, for
every billion dollars, that's thirty five or forty million dollars
of interest, and who gets that interest. I'd rather have
(04:30):
a money market fund where I get the interest the investor.
Speaker 4 (04:34):
Gary The economic consequences of a second Trump administration of
preliminary assessment. We're six months into the second administration of
President Trump. There's lots of unique economic policies coming out
of Washington.
Speaker 5 (04:46):
Let's start with tariffs.
Speaker 4 (04:48):
When I was in business school, terrorists were kind of
a targeted thing you'd do once in a while if
somebody was dumping steel or something else in there.
Speaker 3 (04:56):
We've never really.
Speaker 4 (04:56):
Seen them as a whole policy across the globe, across
all of our trading partners. How do you think about
the President of Trump's economic policies pocusing on strategy on tariffs.
Speaker 3 (05:09):
I think and thank you for mentioning this book that
we did together, and it was a rapid response book.
But overall, all our experts said tariffs are going to
put downward pressure on economic growth and upward pressure on inflation.
And that's the history of these things. We have seen
worldwide movements to tariffs, and it was right before the
(05:33):
nineteen thirties great depression, and Congress got in and weighed
in and so forth. And I would remind listeners that
tariffs are only on goods, not on services. And about
ninety percent of workers in the US are working outside
of the manufacturing field. And one of our authors, Michael Strain,
wrote an excellent chapter and Michael says it won't even
(05:56):
help manufacturing because manufacturers have to buy all all these goods,
these intermediate goods from overseas and the tariffs will be higher.
So I don't think the tariffs are going to help.
I think they're gonna hurt, and interestingly, they're going to
particularly hurt also in rural communities because rural communities have
to sell their farm goods, their agricultural products overseas. So
(06:19):
it doesn't even necessarily help the president in some of
his political base in rural states.
Speaker 4 (06:25):
A lot of I'm just going to, you know, preempt
a lot of email I'm going to get today in
my social saying we haven't seen any of it. Tariffs
are working. Just find inflation's not there or is it
just too.
Speaker 3 (06:37):
Early, so it's a bit early. But I'd say this
to any listeners, You've just had the largest tax increase
that you've had in generations. Average tariffs in the US
were two point three percent. Globally, adding everything up two
point three percent, and that was even after the first
Trump administration raised tariffs. In China they are now over
(06:59):
ten percent, so the overall teriff rates have gone up fourfold.
That's a big tax increase. It takes time, but the
International Monetary Fund lowered our growth estimates for this year
a full point, so you know we're seeing that happen.
Speaker 2 (07:16):
Right. I've got to ask We got all sorts of
topics to talk to with Gary Ginsler, former Securities in
Exchange Commission chairman, and MIT out with a wonderful what
do you call it? Like a kindle book?
Speaker 3 (07:27):
Is there like a well it's it's a real book.
We do have it physically, but it's online at the
Center for Economic Policy Research, which is a remarkable organization
in Europe, and you can get it for free right
at the CEPR website.
Speaker 2 (07:40):
Wonderful, So we'll get I'll get that out on LinkedIn
and Twitter as well. So I got to get this straight.
You're at Pikesville High School, you end up at Wharton,
you do better than good in your academics. The world's
imploding in private credit, right, Paul, Sure, everybody needs evaluation.
You have to be the first call for the University
of pen Sylvania. Do you have any handle on the
(08:02):
new valuation the mark to market of private credit? And
dare I say private equity as well?
Speaker 3 (08:09):
Well, you're kind I mean, University Pennsylvania was terrific. I'm
at MIT now, so I just have to give that
shout out. But in terms of private credit, look, this
is a field about give or take two trillion dollars
of lending and assets under management that has competed with
commercial banks, and we made sort of a conscious decision
(08:29):
to move some of these risks out of commercial banks
and into private credit. I think it's good. It's competition
in the capital market here. Am I really took to.
Speaker 2 (08:38):
The chase of sloan. You're at Sloan with a piece
of chalk in your what's the haircut right now on
private credit? Is it eighteen percent? Is it greater?
Speaker 3 (08:49):
Or if you're talking about valuations, it really depends on
what the large companies, the Apollos and the Blackstones and
so forth, how have they valued it. If they're valuing
it properly, then it's not a haircut. But yes, they
usually charge higher interest rates.
Speaker 4 (09:07):
Garret, how do you think the US should from a
trade perspective and economic policy perspective, deal with China?
Speaker 5 (09:13):
Right now?
Speaker 4 (09:14):
It feels like the globalization trend that you and I
and Tom grew up with that seems to have lost
a lot of stements out of favor. Now maybe that's
a short term trend. I don't know, But specifically with China,
how do you put the policies?
Speaker 3 (09:27):
My experience and we had to negotiate when I was
at the SEC, A big consequential transactional situation. Can China
keep their companies in the US stock market? And China
was not playing ball and following the rules about inspections.
We were able to sort that through. And my experience
is as you treat them with respect and dignity and consistency,
(09:52):
and this oscillation, this big volatile changes of policy, I
think is not doing the US well. I think, yes,
the President is a risk taker. I respect that he
is a fundamentally He's come into office very determined and
he wants to readjust with China. But I think China
(10:13):
is very savvy. They're going to be able to compete
with this in artificial intelligence even if we clamp down
on export controls and they have those rare earth minerals
that they're able to they have leverage points. Is what
I'm trying to say.
Speaker 2 (10:27):
I've got to go to a new topic here, but
Gary goinster. To get to that topic, I used AI.
I went to Gemini here and I tipped in the
difference between the Genstler and Atkins sec. First of all,
Gary Gensler with all as you mentioned Paul Esteemed at
GOLDBN Sachs. Paul and I would editorialize you would be
on a shortlist to run any major firm in America. Fine,
(10:52):
Gary Gensler on AI, what are our kids? What does
Lisa Mataio need to know?
Speaker 3 (10:57):
Well, I would say this, it's one. It's around at
least ten years even longer. So it's not just new
with open ai and chat Chept two. It's the most
transformative technology of the time. And I find myself thinking
I'm more of the optimist. I think there'll be a
lot of new productivity that comes from this, but also
(11:19):
a lot of changes in the job market. Bloomberg will
be different, Bloomberg Radio maybe not so different all right
at least, but I think it will be very different.
And so I think the US versus China is an
interesting thing. The big hyperscalers, the big you know, Chap,
GPT and Gemini and so forth. Those companies are competing
(11:43):
with China, and China's got natural.
Speaker 2 (11:45):
Deep deep seek whatever it is.
Speaker 3 (11:47):
Yeah, well they have deep seek, but they have something else.
They have one point four billion people, so they have
data advantages over We're big, but we're only three hundred
and forty million people.
Speaker 2 (11:57):
Let me go to what I was on with jem
and I here and also the AI effort of Bloomberg,
and that is the shift from the Genstler SEC over
what Paul Atkins has been charged by the President of
the United States. You're going to tell me collegially that
the ven diagram of Gensler and Atkins is pretty tight.
There's differences, but there's a collegial agreement. Beloney. People see
(12:22):
this Gary Gensler. Is a sharp shift that we're seeing
right now, is it?
Speaker 3 (12:27):
Look, elections have consequences, and I have a deep respect
and you're right, I'm going to be respectful. Chair Atkins
has served at the SEC, not once but twice before.
He knows the agency well, and I think whether it's
Republican or Democrat, what this show is focused on is
the markets, the capital markets, and the capital markets do
(12:48):
best when there's rules of the road. And that's been
true for ninety years and that's what's really critical. Now
the SEC has shrunk about twenty percent, so it's not
as able to veil the markets and make sure that
it's free of fraud and manipulation.
Speaker 2 (13:04):
Where are your shadows right now? If we go to
a more what's the word swashbuckling? Is that right now?
Speaker 3 (13:09):
Yeah, swashbuckling works.
Speaker 2 (13:11):
That works if we go to a more Trumpian sec
where are the Guenstler's shadows now? Within global Wall Street?
Where's the leverage the thing, the portfolio insurance of eighty seven,
the surprises of August nineteen ninety eight, where's the shadows
for you in the system?
Speaker 3 (13:30):
Look, I think that overall it's much beyond the Securities
and Exchange Commission. It's in terms of the whole financial markets.
You probably will have a tendency to greater leverage, meaning
more borrowing. But we are also in a heightened risk
environment geopolitical. As we lay out in this book, we
(13:51):
are pulling back the US from global alliances. So there
is definitely a bit more inflation risk, There's a lot
more leverage in this sytem. Investors are less well protected
with the Frankly, this sort of a large dismantling of
something called the consumer financial you know, the CFPB, and
(14:12):
so so investors have to be a little bit more aware.
There's more risk in the system, big risk. And there's
also I would say the US dollar is under pressure.
It's down ten percent this year so far, and this
is in the environment where the stock market has been
quite resilient. You know, we're almost at near all time highs,
(14:36):
and so that investors have to say, is there more
downside risk than upside potential.
Speaker 4 (14:40):
Another big area of change within the second Trump administration
has been immigration. How is that impacting effectively shutting down
the southern border, how does that impact the US labor market?
Speaker 3 (14:52):
So it's interesting again in her book This Economic Consequences
of the Second Trump Administration A preliminary, we have a
really interesting chapter on this question. And overall, the forecast
is that it will cut growth by about zero point
seven to one and a half percent, and in terms
(15:14):
of the labor market itself, interestingly, it's going to hurt
rural America a lot. Now, rar America will also be
hurt by medicaid cuts because believe it, medicaid is more
used in raw America than an urban America. And also
the tariffs, so there's like a triple threat to rural America,
which again politically, it's an interesting conundrum for this White
(15:37):
House what to do. But on immigration, I would say
it's a downward pressure on the economy these policies in
addition to the downward pressure from tariffs.
Speaker 2 (15:49):
Gary, I want to get this in I think it's
too important. And this goes to your colleague, the Nobel laureate,
Simon Johnson.
Speaker 3 (15:55):
And wonderful friend in college in.
Speaker 2 (15:56):
The heart of the world blowing up for me personally.
And there was Andrew Ross Sorkin's wonderful book and any others.
Roggy Roger out at booth that's a Chicago, that's a school,
Gary out in Chicago. You may not be familiar with that,
but Simon Johnson's monograph Thirteen Bankers was the definitive book
(16:17):
to describe the moment where we lost control in five six,
where the SEC opened the floodgates to certain transactions and leverage.
Are we at a risk now where we could repeat
what Professor Johnson wrote about Chapter four of Thirteen Bankers.
(16:37):
This is the piece of paper that opened the risk
gate floodgates? Can we do that again? Look?
Speaker 3 (16:43):
I think we're human Tom and humankind. We abb and
flow on risk. The financial system written the warrge is
in good shape.
Speaker 5 (16:54):
But will it.
Speaker 3 (16:55):
Tend towards greater borrowing against risk assets? And that's when
you have challenges. And I think we have a US
dollar that people have some question about. You have inflation
moving up. You have greater leverage, and you have a
tremendous amount of uncertainty policy and geopolitical uncertainty. And those
(17:17):
are times you can see, you know, I'll call them
spills on all five and you know, financial spills on
all five hurt millions of Americans when you lose your
jobs or your you know, mortgage rates.
Speaker 2 (17:32):
Go home. I got six more questions, how many do
you have? Yeah, Plank, Sure we are out of time.
Gary Goensler, thank you so much. As the former chairman
of the Securities in Exchange Commission. Out with a new effort.
I'll get it out on LinkedIn and Twitter at cep
R with Simon Johnson and his colleagues at mi T.
Speaker 1 (17:55):
You're listening to the Bloomberg Surveillance Podcast. Catch us live
weekday afternoons from seven to ten am Eastern Listen on
Applecarplay and Android Otto with the Bloomberg Business app, or
watch us live on YouTube.
Speaker 2 (18:08):
Manica Descenzo with us right now with the market lifting.
The fancy titleist had a global investment Opportunities a JP
Morgan private bank. Far more importantly, she flies around the
world talking to high net worth family offices and others
with large pots of money for the JP Morgan Bank
(18:31):
and way more important, Monica. You were in the trenches
of equity research long ago and you did something that
probably needed on Wall Street a lot more. You were
a rock star and you took a year off. It's amazing, Lisa,
and I've been working on this since three am.
Speaker 3 (18:51):
Yeah.
Speaker 2 (18:52):
What was it like walking out the door after the
addiction of seventy hours a week.
Speaker 6 (18:58):
Well, everyone thought it lost my mind, including my parents
who are very concerned that I'd be living in the basement,
but I wanted to try something different. I enjoyed a
year traveling all around the world very and then at
the end of the year, my former boss, Alexia Quodronni,
who I think Paul knows, called me back and said,
any interest in coming back to this?
Speaker 3 (19:17):
And I did.
Speaker 2 (19:18):
The stereotypist people sort of drift off in the Netherlands,
and you came back ever stronger from that year off.
How did it make you stronger? Did you rise to
such an important level at JP Morgan.
Speaker 6 (19:31):
I actually think the perspective you get by seeing other
parts of the world and meeting people. And I traveled
with myself for a year like just alone, which makes
you a little more independent. And I think in my
role now a little more interesting. You know, all the
stuff I saw on people I met. When I talk
to clients, they think it's odd and intriguing. And I
think when you choose to come back as an adult
versus jumping into this career after college where it just
(19:52):
feels like the obvious path, that's a very different thing.
Speaker 2 (19:55):
President Trump femailed me from the actually texted from the
Air Force one orosse The atlanticing says, ask Monica, if
American exceptionalism still ragns is it still there for your
clients worldwide?
Speaker 6 (20:09):
So worldwide is interesting question. Let's separate US clients versus international.
In the US client base the last decade, they have
cared mostly about maintaining a very heavy overweight to US
equities in US investments. Overall the last six months, we've
seen them start to pivot, which I think is important
because if you had that sixty to forty portfolio, drift
(20:30):
brought you closer to seventy five twenty five over the
last just last few years, which means you have more
equity than you probably need. You probably have more US
than you need, and so our US clients are finally
starting to look outside the US, looking at Europe, looking
at Japan, looking at local denominated assets to balance out
their portfolio. My international clients have always done that, but
I will tell you coming out of COVID, my international
(20:51):
clients they felt like the US was the safest bet.
They thought we were in best position to rally after COVID.
I was in London a couple of weeks ago, and
that has changed a little bit and again giving up
on the US. Certainly, they appreciate our dominance and tech
and AI and everything like that, but they're understanding that
they need to have more diversity in their portfolios. And
so I don't think US stepialism is dead. Is it
(21:11):
being chipped away at the on the fringe?
Speaker 3 (21:13):
Yeah?
Speaker 6 (21:14):
Absolutely.
Speaker 4 (21:15):
So for your clients, let's say the family office is
a big part of your client base, how do they
think about alternative investments? I'm actually surprised that it's a
big an allocation, as big an allocation as is.
Speaker 5 (21:26):
How do you guys think about alternatives with your clients.
Speaker 6 (21:28):
So when you start to get to the family office,
levels's assume you're talking about a billion dollar plus balance
sheet at that kind of level. You're talking about generational wealth,
and so they can have a higher allocation to alternatives
which are less liquid because they probably don't need to
tap into that money in the next five ten years.
And so there we can see alternative allocations north of
fifty percent, wow, which is amazing. For a traditional client,
(21:49):
you would be much lower, like half of that, if
not less.
Speaker 5 (21:52):
So where are we or what's your role at JP Morgan?
Speaker 4 (21:55):
How are you kind of working with your clients to
deal with the geopolitical risk with the domestic political changes
that we have here in the US, with the change
in maybe the US not being as safe a haven
as it was even six months ago. What's the kind
of conversations you're having.
Speaker 6 (22:11):
Yeah, with as far as it remains think about the US,
the US exceptionalism idea there. We've been advocating more global
diversification in portfolios. So again, look at Europe, look at Japan,
look at local denominated bombs, another EM and another markets.
Just have more exposure in your portfolio to things outside
the US. When you think about geopolitical risk, we really
(22:32):
don't do a whole lot in portfolios that we manage
around that because history tells us geopolitical flare ups are
pretty bad indicator of pulling out the market. People want
to do that, that that's the inclination, But in fact,
if you did that, you actually underperformed. And we looked
back over three, six and twelve months after geopolitical spikes.
Speaker 3 (22:49):
Only on a three month basis.
Speaker 6 (22:51):
Do equities lag so near term it causes volatility intermediate
to long term, it generally doesn't matter for a global
diversified portfolio.
Speaker 2 (22:58):
We continue with Monica descends, Head of Global Investment Opportunities,
JP Morgan, Private Bank, with headlines out from the testimony
of Chairman Powell that we will see later today. The
US economy, labor market remain in a solid position. There's
many headlines. I'll pick a few. Effects of policy changes
on economy remain uncertain. We've heard that uncertain word. Maybe
(23:20):
the key to headline here the chairman says, ultimate tariff
level will determine the impact of the path forward. Long
run inflation consistent one two percent target is your own
Powell from all your travels Monica as a central banker to.
Speaker 6 (23:36):
The world, certainly all eyes are on him. And that
was some of the conversations I had in Europe a
couple of weeks ago, and I think most people agree
with this view that we probably haven't seen the full
impact of tariffs and the data, and so most of
the people I work with assume that you're looking at
a fall, if not later, for any kind of move
on rates. I know overnight, there was some last day
(23:57):
or so, some questions around maybe July, but still the view.
Speaker 2 (23:59):
Of most that when you synthesized GP Morgan's research, when
does the feel of tariffs click in? Now?
Speaker 6 (24:09):
The feel is there from a vibe standpoint. If you
look at sentiment corporate and consumer, it's there. People are petrified,
companies are trying to figure out what they're going to do,
but it hasn't flowed into all the hard data yet,
and I think that takes time because we don't actually know.
If you look at corporate earnings, we're assuming earnings growth
slows down in Q two from double digit to single digit,
but still its still okay. And so I think, unfortunately,
(24:30):
from a data standpoint, you're looking at end of summer,
if not later, to really have a handle on this,
and it'd be great to have the administration be somewhat
consistent in the communication. I think that would help a
lot and maybe give Powell the amo that he needs
to actually move. I don't think he's gonna do anything
without some stability.
Speaker 5 (24:46):
Though thanks to come space.
Speaker 4 (24:47):
I mean we can sit here in a two year
treasure we can get done.
Speaker 5 (24:51):
Near four percent. Yeah, do your clients want to take
credit risk at this point or they are comfortable.
Speaker 6 (24:57):
In the treasure mark very comfortable in treasuries where we've
seen a little more interest in the muni market, So
some dislocation there, especially in the questions around Wilson. Of
these universities maintain their tax status, so that's created a
little bit of volatility. And if you're willing to take
muni risk, which historically has very low defaults, which most
of my clients are, that somewhere would lean into high
yield not so much spread most people feel aren't wide enough.
(25:19):
You're not getting paid enough. And then the other part
hybrid instruments like bank preferreds. We love financials here and
bank preferreds will give you, if you're a US taxpayer,
high single digit tax equial yields, and so that makes
a lot of sense if you're not concerned about some
more large banks.
Speaker 2 (25:34):
Is the lot of the sns of formula just as
simple as load the boat on Georgetown. Is that what
you're saying.
Speaker 3 (25:41):
About, George.
Speaker 6 (25:41):
I've not looked at their bonds lately, but perhaps some
other universities if you feel.
Speaker 3 (25:48):
Comfortable with them. Yeah, and I would want to.
Speaker 6 (25:50):
Diversified UNI portfolio for sure. But I have the privilege
of paying New York New York City taxes, so I'm
a big owner of meetings myself.
Speaker 2 (25:57):
You're in a meeting, there's seven fancy people from J
Pete Morgan, There's you know, some elderly high networth foreign domestic.
I don't care. With the kids, it's like it's like,
what's the TV show Succession? It's like she's in the
room with the Succession. That's our clients. Were they your clients?
Speaker 6 (26:14):
The characters from Succession?
Speaker 3 (26:17):
The actors are not.
Speaker 6 (26:18):
I would love to meet many of the very quickly here.
Speaker 2 (26:20):
If they say we've loaded the boat an apple or
pick a big stock, how do you talk about us
selling the mother load.
Speaker 6 (26:27):
It's a big struggle from many families they work with
now because they have massive embedded gains, and so oftentimes
the tax tail wags the dog and people don't want
to sell now. There are things you can do to
chip away over time. There were loss harvesting strategies. There
are things like exchange funds you can put a concert
position into. But I'm a big advocate of diversifying that concentration.
(26:48):
The constitutions are great for creating wealth, they're not great
for sustaining wealth over the long term, and so we
need to get the diversification going. It's just it can
be very difficult when someone's tethered to the stories.
Speaker 2 (26:58):
Jamie from Central Parks just emails ask her if she's
taken another year off, are you taking another year off?
Speaker 6 (27:03):
If Jamie's listening and he wants to offer that, I'd
be willing to to come back with perspective in a year.
Speaker 2 (27:09):
Thanks you so much. Monica Descenzo on a beach somewhere
here in the coming month. She is with JP Morgan.
Speaker 1 (27:15):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay 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 Play Bloomberg eleven thirty.
Speaker 2 (27:32):
Henrietta Trace joins in sentw in studio. We could talk
here for hours and hours. Richard Hass yesterday was heated
that the legislative branch, Capitol Hill, you're expert, has given
away the right to declare award after years and years
and years and years with this action, it's over the
(27:53):
president handles the Pentagon.
Speaker 7 (27:56):
Yeah, it's absolutely true. And you know, Leadershoomer's gonna file
War Powers resolution. They'll vote on that on Wednesday. But
this is a very partisan situation. I'd say like eighty
five to even ninety percent of the Republican conference is
very much behind the President making the choices that he made,
and so they're not they just don't have the votes
to force the issue. But absolutely, and I think Brand
Paul would very much agree with that sentiment.
Speaker 4 (28:18):
Where do we go here on the domestic stuff, the
one big beautiful bill?
Speaker 5 (28:23):
Where are we with that right now?
Speaker 7 (28:25):
Yeah, we are in a much tougher place than I
think it appears from the outside. I was with some
Republican Senate folks last night and talk to them constantly, obviously,
and I think that underneath the surface they are paddling
very furiously. I increase my odds from twenty percent to
forty percent that they could get this done by the
fourth of July, really, but that's mostly because there they
(28:46):
have the advantage of these crises, Launching weapons in Iran,
deploying the National Guard out to California. That all helps
advance the narrative around the immigration spending and the military spending.
The tax package itself, the medicaid cuts are very problematic,
and what the American public does know about this bill,
they don't like. It's got a sixty seven percent disapproval
(29:09):
rating on the healthcare side, and it's seventy one percent
disapproval rating from independent voters generally nationwide. So they need
to jam it through. That can grease the wheels, But
there's a lot of details to iron.
Speaker 4 (29:19):
Out, all right, Just I don't know how to put this.
Where's the Republican Party, I guess just in general? Where's
the Democratic Party? I'm sorry, where's the Democratic Party in general?
Speaker 5 (29:28):
And maybe as it relates to this legislation.
Speaker 7 (29:30):
The Democratic Party is not even remotely keeping up with
the pace of the conversation, especially around this. Yeah, not
at all. They're not even on target on an hourly basis,
let alone a daily basis, and I think that that's
really a part of the problem.
Speaker 2 (29:45):
Can let's just cut to the chase. We have an
election going on this morning in New York. We'll get
Henrietta Trece's view on that in a moment. She's the
only one I know who understands ring choice voting except
Gina Cervetti and Robert Brockton. What's so important your is
hockeing Jeffries seems to be where everybody goes to. Isn't
he supposed to be visible.
Speaker 7 (30:05):
And vocal, so much more visible and vocal than where
he is right now? And they're nowhere in terms of
getting a discussion about what's in this bill. The bill
is unpopular. Go talk about the unpopular stuff on every mediac.
Speaker 2 (30:18):
But you're in that chair fourteen at the Capitol girl
in Washington, you live there. Why Why for Republicans and
Democrats listening, Why is mister Jeffries, who everyone considers articulate silent?
Speaker 7 (30:33):
I think he can't break through and keep up with
the cycle, is really what I've seen. I don't understand
why they're not on tariffs all day, every day. If
you're making the price of a can of beer more expensive,
talk about it all day long, talk about it going
into the fourth of July Memorial Day. They're nowhere on tariffs,
they're nowhere on this War Powers resolution. They don't even
have a unanimous front there. They're expecting maybe one hundred
(30:54):
and ninety Democrats to sign on to the War Powers
Resolution bill in the House, but they're not going to
be comprehensive, and the pushback to this Senate bill is
not nearly as forceful or detailed or even talking about
the medicaid stuff, I think they're relying on the institutional
knowledge of the American voter to rail against medicaid cuts,
which the American voter can do very quickly. But I
(31:16):
don't think Democrats are advancing the narrative.
Speaker 5 (31:18):
So do you believe?
Speaker 2 (31:20):
So?
Speaker 4 (31:20):
We have just explained to us of the timing here.
We're going to get July fourth, is what date? And
then what do we do after July fourth?
Speaker 7 (31:26):
July fourth is meaningless. July fourth is a manufactured feel
good story. It doesn't do anything. The only deadline that
is real, and I just heard Kevin McCarthy say this
is the debt ceiling deadline, and that is, of course
exactly correct. The debt ceiling breach is going to happen
in mid August. They don't need to pass this bill
until they're ready to leave for the August vacasion, so
they've got time.
Speaker 2 (31:46):
Matt from large amount emails and it says, okay, salt
I think is back to forty thousand, but with a
lower income hurdle or something are we going to get
Would you explain, for Matt and for me, why does
Oklahoma salt in New York or New Jersey or California
needs to be adjusted?
Speaker 3 (32:07):
They don't.
Speaker 7 (32:08):
They absolutely do not. West Virginia for sure doesn't care.
And we've heard all the senators from those states say
that for years now. The reality on this bill is
that the senators have about a trillion dollars that they
can throw at various problems. We have a lot of
big problems. There's one hundred and twenty two billion dollars
they got stripped out of the snap cuts that the
parliamentarium won't allow. We have to fix the salt cap
(32:31):
more than ten k. It needs to stay probably at
forty K, but drop down to three hundred thousand dollars
in an income bracket, which is extremely expensive. Salt alone
is a one point two trillion dollar revenue raiser. We
need to extend more money on the IRA and get
some of these Medicaid cuts out so I can spend
a trillion dollars real fast, and that's what they need
to do. But even now in July fourth, so it.
Speaker 4 (32:53):
Looks like the Republicans do they have the run of Washington.
It just feels like obviously they have the majorities, but
slim majorities.
Speaker 5 (33:00):
But it feels not that slim. It feels like they
can get pretty much anything they want here.
Speaker 4 (33:04):
And that's good for policy maybe if you want to
get stuff done, But is that kind of where we are?
Speaker 7 (33:09):
Absolutely this is the Trump effect. So when you look
at the details of this bill and to get even
more granular, the reason Lisa Murkowski of Alaska is out
right now talking about maybe not supporting this bill is
because thirty five percent of Medicaid recipients in Alaska will
lose their coverage with this package. Dan Sullivan is up
for reelection this cycle, so there are members who are
taking a lot of heat from the members who are
(33:32):
at risk.
Speaker 2 (33:32):
So give us a vignette, Henri, to your expert this. Unfortunately,
we're near out of time a given congress person in
a room or over lunch like in the movies, Redford's
there the rest of them do they just say this
is all that matters to me. If I don't get this,
I won't vote for the bill. Does that Hollywood drama happen?
Speaker 7 (33:53):
Some of the members are like that. Ran Paul is
like that, he's a no go just because the debt ceiling.
But what really happens in these caucus lunches is members
will get much more vocal towards the end of the process.
So last night Tom Tillis of North Carolina, who's in
a tough race, Yeah, with a piece of paper showing
the top ten states who are going to lose Medicare coverage,
Medicaid coverage. He's going to lose six hundred thousand people
(34:14):
just in North Carolina. So members will go to the
mat for their individual issues. The Trump effect also is
such that they're trying to keep members from speaking out
publicly about their concerns. If you have a problem, goes
straight to the President, goes straight to Leader thun And
that keeps the expectation or the negative vibe, if you will, down.
But it is very much alive in these caucus meetings,
(34:35):
especially right now.
Speaker 5 (34:37):
Who's driving the bus here in Congress?
Speaker 2 (34:39):
Is it?
Speaker 5 (34:41):
I mean, who's pushing all this through?
Speaker 7 (34:43):
Leader Thun is doing a lot of heavy lifting on
the set side with Lindsay Graham.
Speaker 2 (34:48):
Is the President near in the vicinity like the Red
Sox or a lame duck? Okay, they're playing five hundred
ball again? Is the President near a lame duck?
Speaker 7 (34:57):
I think the reason he floats the idea of running
a third term is because he doesn't want anybody to
talk about him being a lame duck. Indeed, I also
heard that straight from the former speaker, So I think
he is presenting as though he will run again and
allowing that confusion to list so that there won't be
a shadow presidency.
Speaker 2 (35:12):
Do you know that New Orleans is seven degrees cooler
than New York City? Right now?
Speaker 3 (35:16):
Come on down, Henrietta Treys, thank.
Speaker 2 (35:21):
You so much. With Vada Partner's just a hugely popular
value add for the machinery of the Washington we're within.
Speaker 1 (35:35):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also watch
us live every weekday on YouTube and always on the
Bloomberg terminal.
Speaker 2 (35:49):
If you look at Emily Kilcreasee's bag collection, it's unbelievable.
She's never had an introduction like that joining us now
this is the conversation today for those of you coast
to coast looking at tariffs and trade. Emily kilcrease is
earned ability within our trade, our thinking of international affairs
(36:10):
with the National Security Council and working with mister Litthheiser
a few years ago. Emily, thank you so much for
joining Bloomberg Surveillance. How different is the day to day
trade tariff grind of Trump II versus Trump one, which
you lived.
Speaker 8 (36:29):
It's a great question. The trade space is fundamentally different
under the second Trump administration. He came into this term
willing to use tariffs at a scale we've just never
seen before in the era of a globalized economy. He
used them faster, he used them harder, and on both
strategic competitors like China as well as on close US allies.
(36:50):
So the goals of his tariff program have changed substantially,
and the candidly the chaos that we've seen in some
of his trade policy is just much different than what
we saw the first time around.
Speaker 2 (37:00):
You lived Lightheiser's book, No Trade Is Free. He came
out of a desperate northeastern Ohio and said, we need
to fix the system. What ice Emily killcrease is just simple.
It's a question of magnitude. Can this nation survive even
a blended seventeen percent tariff? Isn't that beyond Lightheiser.
Speaker 6 (37:23):
It's a good point.
Speaker 8 (37:24):
You know, tariffs do have a role in addressing unfair
trade practices that we've seen from other countries, mostly China. Clearly,
Investor Lightheiser and President Trump have been focused on that
they can have a role in protecting critical industries. But
the question that you've identified is can we use tariffs
at high levels for all of the different goals that
the Trump administration is now trying to use them for.
(37:46):
Can we use tariffs to generate revenue? Can we use
them to fix trade deficits? Can we use them to
combat unfair trade practices? When you add all of that up,
you do end up with a very high tariff rate
that could have some serious consequences for the US economy,
for US productivity and ultimately for the US workers that
the Trump administration is trying to help. So it's a
(38:06):
really big risk. It's a big experiment, and there are
certainly very good reasons to think that it might not
work out the way that the Trump administration wants it
to if you do have a tariff wall that exceeds
twenty percent or more.
Speaker 4 (38:20):
Emily, I think the premise for President Trump and his
economic supporters and his policies is that somehow the United
States is at some disadvantage or is not treated fairly
by some of.
Speaker 5 (38:31):
Its trading partners.
Speaker 4 (38:32):
But others would pushed back and say, hey, since World
War Two, no one has benefited better or greater than
the United States from free global trade.
Speaker 5 (38:43):
How do you think we should think about that?
Speaker 8 (38:46):
So there is a small bit of truth in what
the Trump administration is saying, what the President is criticizing
in terms of how our trading system works today, we
have a trading system that treats China the way it
treats everybody else. Are you politically that doesn't make a
lot of sense anymore. We also know that it's been
really hard to get even some of our closer trading partners,
(39:07):
like Europe to address long standing trade irritance in the relationship.
Trade is hard, it's hard to get other economies to
fix regulations, fixed barriers to trade sometimes. So it's not
that the Trump administration is completely wrong. It's a question
of whether their approach to fixing these problems is actually
going to have the effect they wanted to.
Speaker 2 (39:25):
Emily Gilchrist, your essay in Foreign Affairs is blistering, and
there has to be a change here in process. Is
a change here to go from Trump and deal making
back to a diplomacy of say the Uruguay round.
Speaker 8 (39:42):
So I don't think there's going back, right. I don't
think there's going back to a wto led system. I
don't think there's going back even to kind of a
more mild approach that we saw on the first Trump administration.
The point that I make in the essay in Foreign
Affairs with my co author Jeff Gertz is really one
about US credibility, and that's where we argue that the
US and particularly the Trump administration needs to show that
(40:05):
not only is it going to threaten tariffs, that it
can credibly commit to not impose tariffs if our trading
partners do what we ask them.
Speaker 7 (40:13):
To do.
Speaker 8 (40:14):
So far, we haven't seen that. We've seen continued threats
of tariffs. We've seen continued back and forth on again,
off again terror proposals that really hurts the US ability
to kind of usher the economic order into a better,
more sustainable state, and in many ways it's undermining the
Trump administration's own goals.
Speaker 2 (40:30):
Emily, thank you so much, and I'll get the essay
out from Foreign Affairs. Very valuable, short suite and really
thought provoking on this new regime of terrors. Emily killed
Crease joins us this morning off the Foreign Affairs Essay.
Speaker 1 (40:44):
This is the Bloomberg Surveillance podcast, available on apples, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Easter and on Bloomberg dot Com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
(41:05):
and always on the Bloomberg terminal
Popular Podcasts
Bookmarked by Reese's Book Club
Welcome to Bookmarked by Reese’s Book Club — the podcast where great stories, bold women, and irresistible conversations collide! Hosted by award-winning journalist Danielle Robay, each week new episodes balance thoughtful literary insight with the fervor of buzzy book trends, pop culture and more. Bookmarked brings together celebrities, tastemakers, influencers and authors from Reese's Book Club and beyond to share stories that transcend the page. Pull up a chair. You’re not just listening — you’re part of the conversation.
On Purpose with Jay Shetty
I’m Jay Shetty host of On Purpose the worlds #1 Mental Health podcast and I’m so grateful you found us. I started this podcast 5 years ago to invite you into conversations and workshops that are designed to help make you happier, healthier and more healed. I believe that when you (yes you) feel seen, heard and understood you’re able to deal with relationship struggles, work challenges and life’s ups and downs with more ease and grace. I interview experts, celebrities, thought leaders and athletes so that we can grow our mindset, build better habits and uncover a side of them we’ve never seen before. New episodes every Monday and Friday. Your support means the world to me and I don’t take it for granted — click the follow button and leave a review to help us spread the love with On Purpose. I can’t wait for you to listen to your first or 500th episode!
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Follow now to get the latest episodes of Dateline NBC completely free, or subscribe to Dateline Premium for ad-free listening and exclusive bonus content: DatelinePremium.com