April 15, 2025 • 42 mins
Watch Joe and Kailey LIVE every day on YouTube: http://bit.ly/3vTiACF.
The European Union and US made scant progress bridging trade differences this week as officials from President Donald Trump’s administration indicated that the bulk of the US tariffs imposed on the bloc will not be removed.
The EU’s trade chief, Maros Sefcovic, left the meeting with little clarity on the US stance, struggling to determine the American side’s aims, according to people familiar with the discussions. He met for about two hours with US Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer in Washington Monday.
The US officials indicated that the 20% “reciprocal” tariffs — which have been reduced to 10% for 90 days — as well as other tariffs targeting sectors including cars and metals would not be removed outright, said the people, who spoke on the condition of anonymity.
Bloomberg Washington Correspondents Joe Mathieu and Kailey Leinz deliver insight and analysis on the latest headlines from the White House and Capitol Hill, including conversations with influential lawmakers and key figures in politics and policy. On this edition, Joe and Kailey speak with:
- Bloomberg's Tyler Kendall.
- Vice President of Federal Tax Policy at the Tax Foundation Erica York.
- Bloomberg Politics Contributors Rick Davis and Jeanne Sheehan Zaino.
- Chief Investment Officer for US Bank Asset Management Eric Freedman.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
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(00:20):
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Speaker 2 (00:25):
Hayley lines alongside Joe Matthew, who was back in Washington,
but yesterday our focus here in Washington was actually in
what was happening in Argentina where the Treasury Secretary Scott
Bessett was and sat down for an exclusive interview with
our colleague Anne Marie hor Dern. And a really interesting
part of their conversation Joe was when he was talking
about the ongoing negotiations and what he really thought the
hardest part of them would be. He suggested tariffs might
(00:47):
actually be the easy thing to address. It is what
he described as the insidious non tariff barriers that he
said is the demon that needed to be exercised. And
I wonder if that's what's factoring into are understanding Bloomberg's
reporting today that Europe is not really getting clarity on
the administration's aims here as non tariff barriers with Europe
when it comes to the value added tax and regulation
(01:09):
or things this administration has been graping about.
Speaker 3 (01:11):
How true really something to find a story on the
terminal as well, that with this lack of progress when
it comes to the VAT or whatever it is we're
talking about, the EU is essentially suggesting that these tariffs
are going to be in place for some time, maybe indefinitely,
preparing for the worst. That's where we start right now
with Bloomberg's Tyler Kendall, who joins us live from the
(01:33):
White House.
Speaker 4 (01:34):
Tyler, Yeah, Hey, Joe, welcome back. Well. Bloomberg News reporting
that the European Union the US have made very little
progress when it comes to trade talks. The EU's trade
chief was here in Washington just yesterday. We know that
he met with the USTR Jamison Greer, as well as
the Commerce Secretary Howard Lutnik, and people familiar with that
meeting telling Bloomberg News EU officials left with very little
(01:55):
clarity on exactly what the US needs to see in
order for a deal to get done. We know that
the EU had paused its plan retaliation actually slated to
go into effect this week in concert with the White
House's ninety day pause on that so called reciprocal tariff plan.
But the sense per our sources is that the EU
is bracing for very little reprieved when it comes to
the so called reciprocal teriffs as well as those sector
(02:17):
specific tariffs that are already in place, including on steel
and aluminum as well as autos.
Speaker 2 (02:22):
The European Union.
Speaker 4 (02:23):
Has put forward at least some proposals that we know of,
including that both sides should drop their trade barriers when
it comes to industrial goods, as well as pledging that
the EU will boost its imports of US L ANDNG,
but at this point, we haven't seen any indications that
the US is taking those proposals seriously, even though we
do know that President Trump has previously signaled that he
would like to see energy potentially rolled in to a
(02:44):
deal with the EU. We know last week, according to
Bloomberg News reporting that the European Union was putting together
a so called term sheet with some things that they
might be willing to concede in these negotiations that include
those non tariff barriers that you were talking about, like
standards and regulation. It remains to be seen, though, if
they would go as far to include the that or
the digital services taxes that this White House often points to, because,
(03:06):
as Kaylene mentioned at the top there Scott Bessen saying yesterday,
tariffs aren't the difficult part of the negotiations. It's those
non tariff barriers that can prove more insidious.
Speaker 5 (03:15):
As he said, well.
Speaker 2 (03:18):
And I guess there's at the very least the idea
that the EU's Trade chief Tyler did get to sit
down with the Commerce Secretary in USTR yesterday. Those conversations
at least seem to be happening. I'm not sure the
same can be said about conversations with China, as no
one has yet to pick up the phone in Beijing
as far as we understand. And now President Trump's obviously
upset with the latest from China the halting of Boeing deliveries.
(03:40):
He says on True Social Today that they're were nagging
on a deal.
Speaker 4 (03:45):
Right, just the latest tip for TAD and what is
an escalating trade war. Our statistics show us that China's
forecaster to make up to twenty percent of global aircraft
demand over the next two decades, so this really will
have a significant impact in the marketplace going forward as
we watch both of them, these sides escalate. Scott Bessent
in his interview yesterday saying that the US's planned tariffs
(04:06):
are not a joke, even though that's how it's been
characterized by Beijing. With that now one hundred and forty
five percent total tariff in place, and when we're talking
about who's not engaging, it's interesting to see who these
countries are engaging with. This White House has repeatedly said
that it is prioritizing those countries that are geographically close
to China, like Japan, South Korea, Vietnam, India, these countries
(04:28):
that Scott bessen continues to reiterate that they are engaging with.
But then Joe and Kelly look at the other side.
Jijingping currently on a Southeast Asia tour visiting countries like
Malaysia and Vietnam, as he tries to show up his
own support to counter this White House.
Speaker 2 (04:44):
All right, bloombergs Tyler Kendall live at the White House
for us on this Tuesday, thank you so much. And
of course not just any Tuesday. It's also tax Day
in the US, and as we consider what kind of
actual revenue razor tariffs will be in terms of import
taxes that are charged. We have to consider as well
all of the other tax revenue that is or is
not coming into the Treasury's coffers as we wait for
(05:04):
clarity on what the receipts this.
Speaker 3 (05:06):
Tax season actually, Well, the administration has been telling a
pretty good story about that, pushing back on ideas, on
the idea that revenue will be lower. In fact, we're
up three percent in the fiscal year through March according
to the latest That doesn't tell us what's going to
happen the rest of the year though, because we just
found out twenty thousand more workers these are not probationaries
this time, have taken the buyout offered by the administration
(05:29):
that follows more than seven thousand probationary workers being cut.
Speaker 6 (05:32):
Hard to quantify the impact.
Speaker 2 (05:34):
Well, yeah, does that mean that there will be fewer audits,
for example, maybe encouraging some who are on higher income
brackets not necessarily to pay all the taxes that are
do These are the questions that we have in the
kind that we'll pose now to Erica Yorke, who is
joining us here on Bloomberg TV and Radio. She's vice
president of federal tax policy at the Tax Foundation, Erica,
welcome back to balance of power. When we just consider
(05:54):
what Joe was just speaking to, the reduction and the
actual force of labor at the IRS that will be
processing everyone's returns as they come in. Do you expect
it's going to make a real difference in what the
end receipt figure looks like.
Speaker 7 (06:08):
We haven't seen that so far in the data. If
you look at the filing season statistics, so far, we're
pretty much on pace with last year's tax year. The question,
of course, will be what happens with all of the
returns that people submit last minute before midnight tonight.
Speaker 5 (06:23):
Several of those several million of those.
Speaker 7 (06:25):
Are likely to be sent in via mail with paper checks,
So we really won't get the final answer on what
the tax season looks like for a while yet. I
don't anticipate, though, a huge sudden drop. I think the
question of IRS hiring IRS firing is a bit of
a medium term question as to what happens going forward
(06:47):
with tax their service, with guidance, with enforcement, not this year,
but in years to come.
Speaker 3 (06:54):
Talk to the Deputy Treasury Secretary on Friday on Bloomberg TV.
Erica who pointed to the receipts. The actual facts here,
gross US budget receipts for the fiscal Europe three percent.
This is through March to two point twenty six trillion
dollars according to the Treasury. Michael Flokanders says, that's a
(07:14):
robust tax filing season.
Speaker 6 (07:16):
Could that in fact be the story?
Speaker 5 (07:19):
It very well could be.
Speaker 7 (07:20):
And if we look at the tax gap over time,
and we look at how the US compares to other countries,
we're not like a major outlier. Most people pay their taxes,
most people pay them on time. Our tax gap averages
about fifteen percent. That's the difference between what the IRS
estimates should be paid and what ultimately is paid after
audits and follow ups. And that's tended to be pretty steady.
(07:44):
So I don't think we'll see you sudden, overnight, huge drops,
but it may be something that plays out over time.
Speaker 5 (07:51):
Probably not this year, though, well.
Speaker 2 (07:54):
In this year, of course, we are facing down a
kind of clock here with the debt ceiling that still
needs to be raised by Congress. The Congressional Budget Office
ERICA obviously has suggested they think the X state will
come sometime in August or September. But just how easily
could that be moved up, knowing there's only so far
the Treasury's extraordinary measures are able to go.
Speaker 7 (08:16):
Yeah, that could be subject to change, especially as we
see timing delays with tax payments related to natural disasters.
So several states have extended periods far when they actually
have to pay taxes, and some of those go out
past that estimated X date into November. So you could
see timing issues there where it's not that the taxes
(08:38):
aren't being paid, it's just they're delayed because we also
have this natural disaster tax relief that we provide through
the tax code, So that could be one factor to
watch and see how that could potentially move up the
X state.
Speaker 3 (08:53):
We've talked a lot about a wealth tax erica YORKE
over the years. Now we've apparently narrowed this down to
a millionaires tax is being discussed by Republicans on Capitol
Hill and the White House. Our political team reporting that
Donald Trump is actively considering these ideas. The House proposal
specifically would set the new rate at forty percent for
(09:13):
taxpayers earning a million dollars or more a year. What
kind of impact would that have?
Speaker 7 (09:20):
Well, that wouldn't be a huge tax increase relative to
where that tax rate is scheduled to go. Recall that
after the end of this year, the top tax rate
is scheduled to rise already from thirty seven percent to
thirty nine point six percent, So going to forty percent isn't.
Speaker 5 (09:36):
A massive change from there.
Speaker 7 (09:38):
What it is a massive change from, though, is the
way we typically hear Republican lawmakers talk about tax cuts,
which is lowering those top marginal rates so we boost
incentives to invest into work in the economy. You know,
much better ways to raise revenue exist than raising marginal
tax rates on work and investment. Things like broadening the
tax base, clamping down on itemized deductions, looking at types
(10:03):
of income that aren't subject to tax at all, would
be much more fruitful than something like raising the top
rate even higher.
Speaker 2 (10:12):
Okay, So, if this is really just a marginal potential
increase in the top rate, how far would it realistically
go to offset other initiatives we understand Republicans are pursuing, like,
for example, raising the cap on the salt deduction or
no tax on tips or overtime programs that we understand
could add materially to the total cost of this bill.
Speaker 7 (10:34):
So it really depends how they design those other types
of tax cuts. The full proposals that Trump campaigned on
would add you know, two to three trillion dollars to
that cost when we look at no tax on social security,
no tax on tips, no tax on overtime. Depending how
lawmakers design those though, they could tailor them. They could
(10:55):
put income limitations, they could put total limitations on the
amount of the tax benefit available and really narrow down
the cost so then you wouldn't have to look too
hard to find an offset. And really that's the kind
of stuff I wish we would be seeing from Congress already.
But so far, you know, we're close to one hundred
days into this administration, into this Congress, we've really seen
(11:17):
the debate center around procedure and politics and not even
delve into policy yet. So those are questions Congress needs
to answer and needs to answer quickly because the deadlines
are coming for you know, decisions on what to do
on the tax bill, decisions on what to do as
far as the debt sealing goes, and all of that
is wrapped up into one legislative vehicle right now.
Speaker 3 (11:39):
Talk to us about enforcement Erica. A big part of
the narrative today, whether it's true or not, is that
tax cheaters will have an easier time, and maybe some
tax payers will become cheaters because it's getting easier to
pull a fast one on the agency.
Speaker 6 (11:53):
Is that real or not?
Speaker 5 (11:55):
Potentially? We don't really We don't really know, you know.
Speaker 7 (12:00):
I would say one of the best ways to raise
tax revenue is to raise the revenue that should.
Speaker 5 (12:06):
Be paid right now.
Speaker 7 (12:08):
So rather than lifting rates, rather than creating new types
of taxes, making sure that people pay the taxes that
is due is a really good way to raise revenue.
We we don't really know how this firing at the IRS,
this workforce reduction is going to play out, but I
would say one of the things that it that it
(12:30):
threatens is what you just said.
Speaker 5 (12:33):
People lose faith in the system.
Speaker 7 (12:35):
People distrust that you know, their neighbors are paying their taxes,
so why should I pay mine. That's not the type
of vibe we want to create around taxes. We want
trust in the system, we want transparency in the system.
And really large workforce reductions without complementary simplifications to the tax.
Speaker 5 (12:54):
System don't go in the right direction.
Speaker 7 (12:56):
You shouldn't significantly reduce the IRS workforce if you're still
maintaining a really complicated tax code that has all different
kinds of programs run through it. The first step should
be dramatically simplify the tax system so there are less
opportunities for abuse, and then you can shrink the workforce
along with that simplification in the tax code.
Speaker 2 (13:19):
And finally, Erica, what factor will tariffs ultimately play in
the overall revenue picture? Knowing that while the higher reciprocal
rates are paused for ninety days, there is that ten
percent global baseline hundred and forty five percent now effectively
on Chinese imports autos, steel, and aluminum. What's the net
effect of all of.
Speaker 5 (13:36):
That right now?
Speaker 7 (13:38):
We've estimated that it will raise somewhere in the park
of one hundred and fifty billion to one hundred and
seventy billion dollars this year.
Speaker 5 (13:45):
In twenty twenty five, that is highly uncertain.
Speaker 7 (13:48):
It's uncertain because the tariffs are really on again off again.
You only get revenue if they're on. If they go
off again, you don't get that revenue. They're also subject
to other types of uncertainty. If Congress decides to challenge
the president's authority. If those authorities get challenged in court
and are struck down, that could be another reason that the.
Speaker 5 (14:10):
Revenue goes away.
Speaker 7 (14:11):
But ultimately, even with all of the tariffs that the
Trump administration has outlined so far, it doesn't come close
to paying for even extension of the Tax Cuts and
Jobs Act, not to mention all of the other tax
cuts they.
Speaker 5 (14:24):
Want to add on top.
Speaker 7 (14:26):
So right now falls short of paying for tax reform
is highly uncertain and is very economically harmful. So isn't
even a good way to try to offset the cost
of tax cuts, because you're probably harming the economy more
with a trade war than you're helping it with the
tax bill.
Speaker 5 (14:43):
Congresses, considering it's like.
Speaker 3 (14:46):
A holiday for you, Eric, is this Christmas morning at
the Tax Foundation?
Speaker 5 (14:51):
I need a holiday after this day?
Speaker 6 (14:53):
I bet you do.
Speaker 3 (14:54):
I appreciate your joining us on what must be the
busiest day in your world, Erica York Tax Foundation or
she is vice president of Federal tax Policy. He's not
going to be talking about the irs when he's speaking
nationally in Chicago later on, Kaylee. But another agency that
we've been talking about today, and that is Social Security
the return of Joe Biden, something we'll be talking.
Speaker 6 (15:16):
About later on.
Speaker 2 (15:17):
Yeah, he's going to be speaking around the time of
the late edition of Balance of Power, his first big
speech since leaving office back in January. I guess the
question is, while Democrats may like his message, are they
happy with him as the messenger?
Speaker 3 (15:29):
That's true, we'll find out together. That's around five pm.
We'll be watching our panels next. On Bloomberg.
Speaker 1 (15:36):
You're listening to the Bloomberg Balance of Power podcast. Catch
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You can also listen live on Amazon Alexa from our
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Speaker 2 (15:55):
This is Balance of Power, the early edition just after
one twenty pm Eastern time in Washington. It was roughly
around this time yesterday actually, that we got news from
Harvard University, which throw the lawyers it's working with rejected
a proposal from the Trump administration, which had threatened to
revoke up to nine billion dollars in federal funding if
the the Harvard administration didn't acquiesce to what the Trump
(16:20):
administration would like to see when it comes to DEI
hiring practices, admissions practices, anti Semitism efforts as well. And
we learned last night how quick the White House was
to react to that, with two point two billion dollars
in federal funding now polled in the President today Joe
threatening to take things even.
Speaker 3 (16:38):
Further along with a sixty million dollar contract. This is
pretty remarkable and maybe not much of a surprise to
those who have been following this story. Some of the
reporting had suggested that Donald Trump would like to see
this happen to any number of Ivy League schools.
Speaker 6 (16:52):
It's something we've talked to.
Speaker 3 (16:53):
Our panel about quite a bit, and they're with us now.
Rick Davis, partner at Stone Court Capital or Republic and strategist,
alongside Gidi Shanzho, Democratic analyst and Senior Democracy Fellow with
the Center for the Study of the Presidency and Congress.
Speaker 6 (17:08):
Did this need to happen, Rick, I think it's something
that you saw coming. Yeah.
Speaker 8 (17:12):
Look, I mean this administration has been after what they
call woke universities. They see it as a core culture
issue in in their in their agenda, and and they're
doing They're going after these universities, both public and private,
under the guise of attacking the university's acquiescence to anti Semitism,
(17:38):
which I think they think is universally acceptable. But they're
really in essence trying to gut the DEI programs and
other more liberal efforts on these university parts in their
curriculum and in their personnel. So it's a it's a
pretty significant war on education. And right now, I would
(18:02):
say Harvard has at least struck out to be one
of the institutions, one of the few institutions to really
decide to pick a fight with the federal government.
Speaker 2 (18:15):
Well, and we're seeing what the consequences of that fight
may turn out to be. Again, Genie, two point two
billion dollars of multi year grants frozen as a consequence
of this, with the President today on True Socials suggesting
that Harvard's tax exempt status may need to be looked
at as well. You obviously exist in the higher education universe.
Can you just describe for us what the actual consequence
(18:37):
of that will be for Harvard, for the research that
is done at Harvard in addition to it's an educational mission.
Speaker 9 (18:46):
Yeah, I mean, ultimately there would be a chilling effect.
I mean, we can't forget Harvard gets nine billion, which
is a staggering amount from the federal government, and they
are the wealthiest university in the country, if not the world.
They have a lot of resources. Unlike many universities, they
have a huge endowment, so they can take this fight
(19:06):
to the administration. The problem is if Harvard doesn't, nobody
else can do it. And so you know there are
implications for higher ed across the board. But the reality
is is that we are either a nation of laws
or a nation of one man. If we are a
nation of laws, you follow processes and procedures, you follow
(19:28):
the law. And that's the problem here. There is a
law in place, Title six. It lays out that federal
government can give funding to these universities public and private,
provided they're not discriminating. So the anti semitic portion of
this is exactly right on the part of the administration.
The problem is they have gone overboard if you look
(19:49):
at their demands on Harvard and other universities where they
are trying to decrease freedoms, academic freed of freedom of speech,
you know, cancel DEI programs, curriculum and the rest and
that is outlawed in this law. So if Donald Trump
wants to take this fight on, he needs to do
(20:10):
something he doesn't want to do. Follow proper procedures, Go
to Congress, get Title six rather rewritten, and past that
law with Congress, and then you have the law behind you.
But as it stands now, he does not have that
behind him, and that is the root of the problem
with everything we're seeing in this administration. He doesn't want
(20:30):
to follow procedures. He wants to follow Donald Trump's whims.
Speaker 3 (20:35):
Rick, I know Harvard called this illegal activity, but was
there a better way for the university to handle this,
Maybe acknowledge some of the points that the White House
was asking for, maybe, you know, categorize them differently than
the others. There was specifically a request for the university
to report foreign students who commit conduct violations to federal authorities.
(20:58):
Is there something here that Harvard could have done differently?
Speaker 6 (21:02):
Yeah?
Speaker 8 (21:02):
Sure, I mean there are always things these universities can
do to fit into this concept that the Trump administration
is promoting, and other universities similar to Harvard, Columbia and
others have basically worked out arrangements with the Trump administration
to continue to get federal grants and federal aid, you know,
(21:25):
by adjusting some of their criteria as to how they
run their universities. And I don't think there's any doubt
that there are questions that have been raised. Is that how
these especially these Ivy League universities conducted themselves, how they
were managed, how they made decisions, who they hired, were
major issues in the summer of last year when you
(21:46):
had basically riots on these campuses, promoted by agitators in
advance of the Palestinian issues, and I think that it
opened the door to this kind of criticism. But there
are some people who think Columbia did the right thing
by working on a deal maintaining their financial support by
the federal government, and at the end of the day,
(22:09):
probably did not lose the construct of who Colombia is,
what they teach, and how they act. So there are
universities that are taking a different route, and it's kind
of hard to decide right now whether or not Harvard's
taken the right approach or Columbia took the right approach well.
Speaker 2 (22:27):
And I guess that raises the question, Genie, if you
expect more higher educational institutions to follow Harvard's path or Columbia's.
Speaker 9 (22:35):
You know, it's a really difficult choice because most universities
do not have the resources that Harvard has. And you
see the two conservative lawyers they have hired, well respected,
one of whom Representative Steve Bannon, and many of Donald
Trump's friends. So Harvard knows how to fight this fight.
But the reality is Columbia is in a problem because
(22:56):
when you capitulate to this type of illegal and bullying behavior,
then you are left with the kind of chaos that
Columbia has been left with at the top of its board.
And so Donald Trump can do this, and Congress can
do this, but you've got to do it properly. It
is funding by Congress. They need to change the title,
(23:18):
they need to change the legislation, and then Donald Trump
needs to follow proper procedures. But we can't live in
a country where you give a grant, which is like
signing a contract, and then because somebody new comes into
the presidency pull that back if they don't meet demands.
Republicans would not like it if Joe Biden or the
next Democratic president does it, and Democrats don't like it.
(23:41):
So the reality is you've got to be agnostic. We
are a country of laws. Follow those laws, and it's
particularly important when it comes from the president. And that's
sort of a running theme throughout everything we've been talking about.
Is a president not want to follow procedures but his
own whims and interests, and that is not workable in
(24:01):
the United States if we're going to maintain a rule
of law society.
Speaker 6 (24:05):
Rick, you know that Harvard is an easy target.
Speaker 3 (24:10):
And as somebody who used to live right across the
river in Boston, it receives criticism nowhere more than in
its own backyard.
Speaker 6 (24:19):
Is this good politics in the end for Donald Trump?
Speaker 8 (24:22):
I think it's probably good politics for Donald Trump. I
mean every day that he gets to go out and
say that Harvard was receiving nine billion dollars of taxpayer
assistance when they have an endowment of over fifty billion
doesn't make sense to most voters. Why in the world
would we give federal dollars, our taxpayer dollars, our money
(24:45):
as voters to a private university named Harvard, which is
beyond exclusive and out of the reach of virtually every
American citizen across the board. They select few to get
the benefit of a Harvard education, and so I think
on the surface it is a very difficult issue for
(25:07):
Democrats to claim foul because you know, once again they'd
be out there pitching for the you know, liberal Northeast
Ivy League institutions, by the way, well represented in the
Trump Cabinet and White House. There are a lot of
Harvard grads in Congress and in the White House and so,
(25:29):
but you don't hear any of them stepping forward and
complaining about this. So how much of this is legal,
how much of it is policy, I think is the
debate that we're into now. But the optics for Republicans
they can fight with Harvard all day long and they're
not going to lose any votes, and they may pick
up a few as.
Speaker 6 (25:46):
They go along.
Speaker 2 (25:49):
Genie, I want to return to the point you were
making about this president in particular not necessarily being the
most in keeping with procedure or with the existing legal
system as we know it, because that is what will
be in focus today is there's another hearing in the
Kilmar Obrego Garcia case. Of course, the al Salvadoran who
was deported to El Salvador, which the administration admitted was accidental.
(26:12):
We all watched in the Oval Office yesterday when both
the Trump administration and the President of Al Salvador said
they neither of them have the power to return him
back to the US, even though the Supreme Court has
said that must be facilitated. Do you see this ultimately
ending and potentially contempt of court proceedings for these officials
that to this point have been largely stonewalling the judge
overseeing this case.
Speaker 10 (26:33):
Yeah.
Speaker 9 (26:34):
I don't know if we're going to see that, because
part of the problem is is the Supreme Court left
a hole that the administration could drive a truck through.
You know, facilitate is a return, but explain to us
what you mean by effectuate. And oh, by the way,
defer to the White House on foreign policy. And we've
seen Steven Miller, the President and others take wild advantage
(26:55):
of that. And so I don't know that it's going
to end in contempt. We see some of that, but
I think the reality is it is disingenuous for both
Bukelly and Donald Trump to sit there and say we
can't return this individual. And by the way, if he's returned,
they can deport him legally following the laws within hours.
But it's disingenuous for them to make that argument, considering
(27:18):
we saw them already return nine people. And so once
again Donald Trump does not want to follow proper procedures.
You messed up, admit it, Send him back, then deport
him again, but do it in the proper way. And
by the way, don't cavalierly in the White House giggle
as you talk about sending Americans down there as well.
(27:39):
It is flirting with something we haven't seen in over
two hundred and fifty years of this country. And it
is a rule of law country. And he, as the president,
knows better.
Speaker 5 (27:48):
All right.
Speaker 2 (27:49):
Jeanie Shanzeno and Rick Davis our political panel on this Tuesday,
Thank you so much for joining us. And we still
have more ahead here on Balance of powers. We turn
back to tariff policy and the intersection with markets. It's
next on Bloomberg TV and radio.
Speaker 1 (28:05):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
Apple Coarclay, and Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 3 (28:21):
Ballance of Power Live from Washington on Bloomberg TV and radio.
You can always find us on YouTube as well search
Bloomberg Business News Live. We're going to have a conversation
as we stick with the markets here for a moment
with Eric Friedman, chief investment Officer US Bank Asset Management,
with Kaylee. The idea of uncertainty driving things for better
or worse. Here we've apparently flattened things out for the
(28:42):
most part today. It's not really a session to write
home about. But when you consider the impact on the
markets that we've seen over the past couple of weeks
when it comes to tariffs specifically, it's hard to overstate
how powerful.
Speaker 2 (28:55):
This has been, well, including the power to change Trump's
mind about recip tariffs at least to a certain degrees.
He noted last week wheaziness in the bond market, people
getting yippie, and then announced the ninety day pause on
the higher reciprocal rate for most countries. And of course
we understand that instrumental in helping the President make that
decision were Wall Street voices within the administration, like the
(29:17):
Treasury Secretary Scott Bessen, who of course used to run
a hedge fund, Keys Square Group, And there's those kind
of voices all throughout Republican politics. Commerce Secretary Howard Lutnik,
formerly of Canter Fitzgerald. I guess you could include in
that as well. But another is actually the Governor of Virginia,
Glenn Youngkin, of course, used to be at Carlisle Group,
and he joined our colleagues on Bloomberg Surveillance earlier today
(29:38):
to talk about the policy and financial market bridge and
the impact of tariff's overall.
Speaker 11 (29:43):
The net of it is that President Trump was clear
he's continued to be clear that in resetting bad trade
deals over the last decades and re establishing reciprocal trade opportunities.
By the way, with nations that are out lies China
is a whole different topic, but with nations that are
(30:04):
our allies, we just need fair trade and we haven't
had it. And so in to reset those trade in
reset those trade imbalances, you see him do what he
does well, which just creates space for negotiating. And I
think that's exactly what's happening when the first weekend after
April second, you read in every publication that seventy five
(30:25):
countries had called within a day to start the negotiations,
and you've already seen those negotiations, at least reported in rumor.
I think this will be this opportunity to take a
big step in resetting hold On and I think that's
what the market needs to see.
Speaker 12 (30:39):
Part of the problem, I think, and you know this
very well, having invested heavily as a co CEO of
Carlisle and been investing in infrastructure, which takes a long time.
There's a maturity mismatch between when some of this negotiation
is happening, when these tariffs go on, and how long
it takes to bring that investment to the United States.
There is a lack of clarity about what that those
(31:00):
policies will be continued in perpetuity, and it's leading to
paralysis at so many companies. What do you tell to
companies in your jurisdiction who's come to you and say,
how can I plan?
Speaker 6 (31:11):
How can I hire?
Speaker 12 (31:12):
How can I invest? When this could change? I don't
even understand the parameters we're talking about.
Speaker 11 (31:16):
Yeah, I have to disagree with you on the long
term planning, because we're seeing a pipeline of economic investment
that has been as full as it's ever been, and
these are long term investments. Fortune fifty companies wanting to
build in America and in Virginia hopefully if we can
recruit them there. And these are long term investments. And
(31:40):
you saw Nvidia yesterday talk about five hundred billion dollars.
We've seen most of the big pharmaceutical companies commit to
building in the United States. We're seeing technology investments, advanced
manufacturing all in the United States. These are long term investments.
I think the difference in a lot of people's understanding
is that during mark get ups and downs, well, yes,
(32:01):
IPOs get postponed, and yes, corporate deals get postponed. But
these long term commitments are actually coming in very large numbers,
and that's good for states like Virginia. I mean, listen,
we're in the sec of economic Development. I compete every
day with Tennessee and North Carolina, South Carolina, Georgia, Florida, Texas.
Speaker 6 (32:21):
And we've got to compete.
Speaker 11 (32:23):
And I think that much of that investment will come
to this region, and that is a long term commitment.
Speaker 3 (32:29):
The Governor of Virginia, Glenn Youngkin, speaking on Bloomberg Surveillance
on Bloomberg TV earlier today, speaking to the veracity of
long term investment here, there's a big question when it
comes to what near term investors are doing, whether it's
stocks or bonds. That's why we wanted to spend some
time with Eric Friedman with our eyes on the markets
here on the Politics show.
Speaker 6 (32:51):
As I say, you can't separate them.
Speaker 3 (32:52):
He's the chief investment officer US Bank Asset Management.
Speaker 6 (32:55):
Eric, great to have you. Welcome to Bloomberg TV and Radio.
Speaker 3 (32:58):
You write that we've shifted from a glass half full
perspective to a glass half spilled perspective.
Speaker 6 (33:05):
So how do we get the water back in the glass?
Speaker 10 (33:08):
Yeah, I think it's an analogy that we're using more
often than we'd like right now. And really we look
at this from a very apolitical lens. From an investment standpoint.
You all do a great job of covering both sides
of the aisle. We have to think about this in
terms of buying and selling, and ultimately, we really think
that getting the water back of the glass really sits
with the idea of what is the objective function we're
(33:30):
trying to solve for a here. And I think you've heard,
including the Governor's comments, that you just played this notion
of the long term economic plan, and that certainly is
of interest to us as investors, but we also have
to invest in something that's open, you know, Seeingneen twenty
four to seven, which is the global capital markets, which
aren't necessarily focused too much on the long term. So
(33:53):
for us, really the key is what is the spectrum
of choices the administration wants to solve for and is
it partial restoring, is it more full restoring, is it
just a more level playing field because there's so much
nuance in what that objection objective function might be in
the mean term. In the meantime, we have to really
(34:14):
focus on what is the actual economy doing, and that
for us is probably the time difference between where we
are right now and when some of these longer term
projections may actually come to play.
Speaker 2 (34:26):
Well, and to your point, on what will the economy
be doing in the shorter term. As the administration Eric
has talked about short term pain, We got a take
on what that pain actually could look like or the
probability of pain from David Costin, the chief equity strategist
over at Goldman Sachs. This is what he told our
colleagues on open interest this morning.
Speaker 13 (34:44):
Well, certainly there's a high degree of uncertainty, largely that's
around the policy of the exact nature of the tariff
and the likelihood or not whether there'll be a recession.
And our economists here ascribe around a forty five percent
probability of recession in the next twelve months. So the
base case is in fact not a recession. The economy
(35:06):
continues to grow.
Speaker 2 (35:09):
Is the recession in your base case?
Speaker 14 (35:10):
Eric, it's not, Kale. I think it's a great clip
to play.
Speaker 10 (35:14):
And if you think about the you know what I'm
going to call to bring in your your colleague Tom
Keane for a second. This is now becomes a why
access problem for investors like us, meaning what is the
time difference between you know, right now and resolution. So
we felt coming into you know, the pre April second
period that the economy was certainly slowing but still in
(35:37):
a good spot. We had estimates when we were about
nine ten estimate growth for the S and B five
hundred in terms of earnings for this year, that's probably
going to come down to something more flatish, if even
you know, potentially negative. So you know, as you have
more time that goes on, we actually have more vulnerability,
particularly with middle income consumers that was the most vulnerable
(35:58):
consumer set heading into the April second news, this was
a group that's done okay from an employment standpoint, has
done okay with respect to wages. But we think we
avoid recession as long as we get that objective function clarity.
Speaker 14 (36:13):
Let's call it in a matter of sixty to ninety days.
Speaker 10 (36:17):
If this goes past the current pause to tariff deadlines,
that's where we could see consumers really starting to question
the endgame here. So I think that again, this notion
of the economy will likely be able to endure this
uncertainty for a period of let's call it sixty to
ninety days. More than that, that's when you have both
businesses and consumers really questioning what they should do. And
(36:40):
when when business and investors think about questioning if you will,
they pull back. They don't double down if you will.
So that's why we think we'll avoid recession. But again,
this why access problem is an administration's.
Speaker 14 (36:52):
End right now.
Speaker 3 (36:54):
Well, without getting into Tom Keane's triple leverage cash, I
do wonder if you're waiting with your own money, here,
is it sixty to ninety days before you put new
money to work.
Speaker 10 (37:05):
You know, we've been saying our clients really fall in
three buckets. Bucket one would be those clients who are
in let's call it the right asset allocation for their
time horizon. They're they're fine, They're in a good spot.
We have a ton of global exposures that go beyond
the bond in stock market, so they're in a good spot.
Those clients that have an excess of cash for whatever reason,
those clients we've been saying, hey, use this volatility as
(37:27):
your friend, be more incremental peace in But for those
clients that are probably overweight domestic equity exposure, that they've
really been riding that wave, if you will, which has
not been our advice, but they've been sort of sticking
with it. We've been saying, hey, this is an opportunity
on big up days to reduce and broaden out. So
we don't think we have to wait sixty to ninety
days for, you know, just to be fully resolved.
Speaker 14 (37:50):
But some inkland. Again, you did a great job reporting
on this earlier.
Speaker 10 (37:53):
You know, the European Trade union lead negotiator is also
unclear about what the endgame is. We need more concrete
messaging about hey, we're on a path towards resolution here.
Until we get that we think this back and forth
like the continues. We'd be concerned if the s and
P retested that forty eight hundred level, which again we
saw on Monday of last week. We think, you know,
(38:15):
we're going to grind it out between forty eight hundred
and probably fifty six hundred and the SMP for some
time the ten year. You know, again, north of four
fifty four sixty, that becomes a little more of a
concern on our radar screen, But we think we probably
live in those ranges in the immediate term. But again,
that resolution and a path towards outcomes is what we're
looking for to get more comfortable with putting fresh money
(38:37):
to work here.
Speaker 2 (38:39):
Well, and it's interesting to hear your comments and kind
of cash allocation knowing we got the latest Bank of
America fund manager survey today and the strategist led by
Michael Hartnett there said they do not see peak fear
yet reflected in the market or in cash allocation, which
currently stands at about four point eight percent of assets.
They say there are they see max bearishness on the
macro without actually investor sentiment around economic prospects the lowest
(39:03):
in thirty years. But not quite max bearishness on the market,
and Eric, if we haven't reached mac bearishment max bearishness yet,
words can be difficult at times like these. Does that
suggest we might actually see a retesting of those lows
you were talking about?
Speaker 10 (39:19):
Yeah, I think that we haven't seen what I'm going
to call that that capitulatory action, if you will, Kayley,
And so what would that mean? That would mean a
really sharp spike in the vix. That would mean that
put call ratios get highly skewed towards puts and we
see the you know, hey, let's let's sell not not
what I want to, but what I what I have to.
(39:40):
We haven't seen that moment. We got close to it
a week from a week ago yesterday, just with respect
to the Monday print, just given a lot of back
and forth over over that that preceding weekend, but we
didn't see.
Speaker 14 (39:51):
It, and so that doesn't mean we have to see
it again.
Speaker 10 (39:54):
Our viewpoint is that if we can live within this
range and the ten year between let's call it four
to four seventy five and again S and P forty
eight hundred to fifty four hundred and ultimately fifty six
hundred that to us would be a level of let's
not called complacency, but that says that the market is
okay with these negotiations pressing. We get concerned if we
(40:18):
get closer to that ninety days and there aren't signs
of more concrete resolutions occurring, and that's going to happen
more on the ground. That's why we'll be certainly focused
and on what you're reporting, because again, for all the
things we look at in terms of data, we're bringing
a lot of attention on high frequency data, but in
terms of how those negotiations acture are going on the ground,
that for us is certainly sitting front seat for markets
(40:40):
right now.
Speaker 6 (40:41):
Just one minute left here, Eric.
Speaker 3 (40:43):
This has been fascinating and we appreciate your insights here
with what you're saying, if I'm reading you correctly, as
Wall Street will be dependent upon Washington and specifically tariff
policy maybe for the rest of the year.
Speaker 6 (40:56):
Do tariffs impact your year end target? Will you even
go there?
Speaker 10 (41:00):
Yeah, I mean we think that that this is going
to be a case where you just to talk about
our earnings vestments. You know, we felt that coming into
this year, we thought that you know, up ten percent
from a growth standpoint on earnings was more likely, and
that put a number on the S and P that
was you know, had a six in front of it.
We think that probably something with the filing from it's
more important, you know, for this year. I would say
(41:21):
this just really quickly. You know, ultimately this is uh,
you know, a resolvable issue, but we need to see again,
you know, the the end game. Is this about isolating China?
Is this about you know, gaining a broader you know,
consortium of non China countries.
Speaker 14 (41:38):
And there's lots of spots in between.
Speaker 10 (41:39):
But again, we think that the markets are not going
to wait for tax reform to kick in, which of
course you've done a great job of covering. There needs
to be some more guidance before we before we start
focusing on fact reform.
Speaker 2 (41:50):
All right, we appreciate your kind words and your insight.
Eric Friedman, chief investment officer for US Bank Asset Management, thanks.
Speaker 6 (42:00):
For listening to the Balance of Power podcast.
Speaker 3 (42:03):
Make sure to subscribe if you haven't already, at Apple, Spotify,
or wherever you get your podcasts, and you can find
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(00:20):
wherever you get your podcasts, or watch us live on YouTube.
Speaker 2 (00:25):
Hayley lines alongside Joe Matthew, who was back in Washington,
but yesterday our focus here in Washington was actually in
what was happening in Argentina where the Treasury Secretary Scott
Bessett was and sat down for an exclusive interview with
our colleague Anne Marie hor Dern. And a really interesting
part of their conversation Joe was when he was talking
about the ongoing negotiations and what he really thought the
hardest part of them would be. He suggested tariffs might
(00:47):
actually be the easy thing to address. It is what
he described as the insidious non tariff barriers that he
said is the demon that needed to be exercised. And
I wonder if that's what's factoring into are understanding Bloomberg's
reporting today that Europe is not really getting clarity on
the administration's aims here as non tariff barriers with Europe
when it comes to the value added tax and regulation
(01:09):
or things this administration has been graping about.
Speaker 3 (01:11):
How true really something to find a story on the
terminal as well, that with this lack of progress when
it comes to the VAT or whatever it is we're
talking about, the EU is essentially suggesting that these tariffs
are going to be in place for some time, maybe indefinitely,
preparing for the worst. That's where we start right now
with Bloomberg's Tyler Kendall, who joins us live from the
(01:33):
White House.
Speaker 4 (01:34):
Tyler, Yeah, Hey, Joe, welcome back. Well. Bloomberg News reporting
that the European Union the US have made very little
progress when it comes to trade talks. The EU's trade
chief was here in Washington just yesterday. We know that
he met with the USTR Jamison Greer, as well as
the Commerce Secretary Howard Lutnik, and people familiar with that
meeting telling Bloomberg News EU officials left with very little
(01:55):
clarity on exactly what the US needs to see in
order for a deal to get done. We know that
the EU had paused its plan retaliation actually slated to
go into effect this week in concert with the White
House's ninety day pause on that so called reciprocal tariff plan.
But the sense per our sources is that the EU
is bracing for very little reprieved when it comes to
the so called reciprocal teriffs as well as those sector
(02:17):
specific tariffs that are already in place, including on steel
and aluminum as well as autos.
Speaker 2 (02:22):
The European Union.
Speaker 4 (02:23):
Has put forward at least some proposals that we know of,
including that both sides should drop their trade barriers when
it comes to industrial goods, as well as pledging that
the EU will boost its imports of US L ANDNG,
but at this point, we haven't seen any indications that
the US is taking those proposals seriously, even though we
do know that President Trump has previously signaled that he
would like to see energy potentially rolled in to a
(02:44):
deal with the EU. We know last week, according to
Bloomberg News reporting that the European Union was putting together
a so called term sheet with some things that they
might be willing to concede in these negotiations that include
those non tariff barriers that you were talking about, like
standards and regulation. It remains to be seen, though, if
they would go as far to include the that or
the digital services taxes that this White House often points to, because,
(03:06):
as Kaylene mentioned at the top there Scott Bessen saying yesterday,
tariffs aren't the difficult part of the negotiations. It's those
non tariff barriers that can prove more insidious.
Speaker 5 (03:15):
As he said, well.
Speaker 2 (03:18):
And I guess there's at the very least the idea
that the EU's Trade chief Tyler did get to sit
down with the Commerce Secretary in USTR yesterday. Those conversations
at least seem to be happening. I'm not sure the
same can be said about conversations with China, as no
one has yet to pick up the phone in Beijing
as far as we understand. And now President Trump's obviously
upset with the latest from China the halting of Boeing deliveries.
(03:40):
He says on True Social Today that they're were nagging
on a deal.
Speaker 4 (03:45):
Right, just the latest tip for TAD and what is
an escalating trade war. Our statistics show us that China's
forecaster to make up to twenty percent of global aircraft
demand over the next two decades, so this really will
have a significant impact in the marketplace going forward as
we watch both of them, these sides escalate. Scott Bessent
in his interview yesterday saying that the US's planned tariffs
(04:06):
are not a joke, even though that's how it's been
characterized by Beijing. With that now one hundred and forty
five percent total tariff in place, and when we're talking
about who's not engaging, it's interesting to see who these
countries are engaging with. This White House has repeatedly said
that it is prioritizing those countries that are geographically close
to China, like Japan, South Korea, Vietnam, India, these countries
(04:28):
that Scott bessen continues to reiterate that they are engaging with.
But then Joe and Kelly look at the other side.
Jijingping currently on a Southeast Asia tour visiting countries like
Malaysia and Vietnam, as he tries to show up his
own support to counter this White House.
Speaker 2 (04:44):
All right, bloombergs Tyler Kendall live at the White House
for us on this Tuesday, thank you so much. And
of course not just any Tuesday. It's also tax Day
in the US, and as we consider what kind of
actual revenue razor tariffs will be in terms of import
taxes that are charged. We have to consider as well
all of the other tax revenue that is or is
not coming into the Treasury's coffers as we wait for
(05:04):
clarity on what the receipts this.
Speaker 3 (05:06):
Tax season actually, Well, the administration has been telling a
pretty good story about that, pushing back on ideas, on
the idea that revenue will be lower. In fact, we're
up three percent in the fiscal year through March according
to the latest That doesn't tell us what's going to
happen the rest of the year though, because we just
found out twenty thousand more workers these are not probationaries
this time, have taken the buyout offered by the administration
(05:29):
that follows more than seven thousand probationary workers being cut.
Speaker 6 (05:32):
Hard to quantify the impact.
Speaker 2 (05:34):
Well, yeah, does that mean that there will be fewer audits,
for example, maybe encouraging some who are on higher income
brackets not necessarily to pay all the taxes that are
do These are the questions that we have in the
kind that we'll pose now to Erica Yorke, who is
joining us here on Bloomberg TV and Radio. She's vice
president of federal tax policy at the Tax Foundation, Erica,
welcome back to balance of power. When we just consider
(05:54):
what Joe was just speaking to, the reduction and the
actual force of labor at the IRS that will be
processing everyone's returns as they come in. Do you expect
it's going to make a real difference in what the
end receipt figure looks like.
Speaker 7 (06:08):
We haven't seen that so far in the data. If
you look at the filing season statistics, so far, we're
pretty much on pace with last year's tax year. The question,
of course, will be what happens with all of the
returns that people submit last minute before midnight tonight.
Speaker 5 (06:23):
Several of those several million of those.
Speaker 7 (06:25):
Are likely to be sent in via mail with paper checks,
So we really won't get the final answer on what
the tax season looks like for a while yet. I
don't anticipate, though, a huge sudden drop. I think the
question of IRS hiring IRS firing is a bit of
a medium term question as to what happens going forward
(06:47):
with tax their service, with guidance, with enforcement, not this year,
but in years to come.
Speaker 3 (06:54):
Talk to the Deputy Treasury Secretary on Friday on Bloomberg TV.
Erica who pointed to the receipts. The actual facts here,
gross US budget receipts for the fiscal Europe three percent.
This is through March to two point twenty six trillion
dollars according to the Treasury. Michael Flokanders says, that's a
(07:14):
robust tax filing season.
Speaker 6 (07:16):
Could that in fact be the story?
Speaker 5 (07:19):
It very well could be.
Speaker 7 (07:20):
And if we look at the tax gap over time,
and we look at how the US compares to other countries,
we're not like a major outlier. Most people pay their taxes,
most people pay them on time. Our tax gap averages
about fifteen percent. That's the difference between what the IRS
estimates should be paid and what ultimately is paid after
audits and follow ups. And that's tended to be pretty steady.
(07:44):
So I don't think we'll see you sudden, overnight, huge drops,
but it may be something that plays out over time.
Speaker 5 (07:51):
Probably not this year, though, well.
Speaker 2 (07:54):
In this year, of course, we are facing down a
kind of clock here with the debt ceiling that still
needs to be raised by Congress. The Congressional Budget Office
ERICA obviously has suggested they think the X state will
come sometime in August or September. But just how easily
could that be moved up, knowing there's only so far
the Treasury's extraordinary measures are able to go.
Speaker 7 (08:16):
Yeah, that could be subject to change, especially as we
see timing delays with tax payments related to natural disasters.
So several states have extended periods far when they actually
have to pay taxes, and some of those go out
past that estimated X date into November. So you could
see timing issues there where it's not that the taxes
(08:38):
aren't being paid, it's just they're delayed because we also
have this natural disaster tax relief that we provide through
the tax code, So that could be one factor to
watch and see how that could potentially move up the
X state.
Speaker 3 (08:53):
We've talked a lot about a wealth tax erica YORKE
over the years. Now we've apparently narrowed this down to
a millionaires tax is being discussed by Republicans on Capitol
Hill and the White House. Our political team reporting that
Donald Trump is actively considering these ideas. The House proposal
specifically would set the new rate at forty percent for
(09:13):
taxpayers earning a million dollars or more a year. What
kind of impact would that have?
Speaker 7 (09:20):
Well, that wouldn't be a huge tax increase relative to
where that tax rate is scheduled to go. Recall that
after the end of this year, the top tax rate
is scheduled to rise already from thirty seven percent to
thirty nine point six percent, So going to forty percent isn't.
Speaker 5 (09:36):
A massive change from there.
Speaker 7 (09:38):
What it is a massive change from, though, is the
way we typically hear Republican lawmakers talk about tax cuts,
which is lowering those top marginal rates so we boost
incentives to invest into work in the economy. You know,
much better ways to raise revenue exist than raising marginal
tax rates on work and investment. Things like broadening the
tax base, clamping down on itemized deductions, looking at types
(10:03):
of income that aren't subject to tax at all, would
be much more fruitful than something like raising the top
rate even higher.
Speaker 2 (10:12):
Okay, So, if this is really just a marginal potential
increase in the top rate, how far would it realistically
go to offset other initiatives we understand Republicans are pursuing, like,
for example, raising the cap on the salt deduction or
no tax on tips or overtime programs that we understand
could add materially to the total cost of this bill.
Speaker 7 (10:34):
So it really depends how they design those other types
of tax cuts. The full proposals that Trump campaigned on
would add you know, two to three trillion dollars to
that cost when we look at no tax on social security,
no tax on tips, no tax on overtime. Depending how
lawmakers design those though, they could tailor them. They could
(10:55):
put income limitations, they could put total limitations on the
amount of the tax benefit available and really narrow down
the cost so then you wouldn't have to look too
hard to find an offset. And really that's the kind
of stuff I wish we would be seeing from Congress already.
But so far, you know, we're close to one hundred
days into this administration, into this Congress, we've really seen
(11:17):
the debate center around procedure and politics and not even
delve into policy yet. So those are questions Congress needs
to answer and needs to answer quickly because the deadlines
are coming for you know, decisions on what to do
on the tax bill, decisions on what to do as
far as the debt sealing goes, and all of that
is wrapped up into one legislative vehicle right now.
Speaker 3 (11:39):
Talk to us about enforcement Erica. A big part of
the narrative today, whether it's true or not, is that
tax cheaters will have an easier time, and maybe some
tax payers will become cheaters because it's getting easier to
pull a fast one on the agency.
Speaker 6 (11:53):
Is that real or not?
Speaker 5 (11:55):
Potentially? We don't really We don't really know, you know.
Speaker 7 (12:00):
I would say one of the best ways to raise
tax revenue is to raise the revenue that should.
Speaker 5 (12:06):
Be paid right now.
Speaker 7 (12:08):
So rather than lifting rates, rather than creating new types
of taxes, making sure that people pay the taxes that
is due is a really good way to raise revenue.
We we don't really know how this firing at the IRS,
this workforce reduction is going to play out, but I
would say one of the things that it that it
(12:30):
threatens is what you just said.
Speaker 5 (12:33):
People lose faith in the system.
Speaker 7 (12:35):
People distrust that you know, their neighbors are paying their taxes,
so why should I pay mine. That's not the type
of vibe we want to create around taxes. We want
trust in the system, we want transparency in the system.
And really large workforce reductions without complementary simplifications to the tax.
Speaker 5 (12:54):
System don't go in the right direction.
Speaker 7 (12:56):
You shouldn't significantly reduce the IRS workforce if you're still
maintaining a really complicated tax code that has all different
kinds of programs run through it. The first step should
be dramatically simplify the tax system so there are less
opportunities for abuse, and then you can shrink the workforce
along with that simplification in the tax code.
Speaker 2 (13:19):
And finally, Erica, what factor will tariffs ultimately play in
the overall revenue picture? Knowing that while the higher reciprocal
rates are paused for ninety days, there is that ten
percent global baseline hundred and forty five percent now effectively
on Chinese imports autos, steel, and aluminum. What's the net
effect of all of.
Speaker 5 (13:36):
That right now?
Speaker 7 (13:38):
We've estimated that it will raise somewhere in the park
of one hundred and fifty billion to one hundred and
seventy billion dollars this year.
Speaker 5 (13:45):
In twenty twenty five, that is highly uncertain.
Speaker 7 (13:48):
It's uncertain because the tariffs are really on again off again.
You only get revenue if they're on. If they go
off again, you don't get that revenue. They're also subject
to other types of uncertainty. If Congress decides to challenge
the president's authority. If those authorities get challenged in court
and are struck down, that could be another reason that the.
Speaker 5 (14:10):
Revenue goes away.
Speaker 7 (14:11):
But ultimately, even with all of the tariffs that the
Trump administration has outlined so far, it doesn't come close
to paying for even extension of the Tax Cuts and
Jobs Act, not to mention all of the other tax
cuts they.
Speaker 5 (14:24):
Want to add on top.
Speaker 7 (14:26):
So right now falls short of paying for tax reform
is highly uncertain and is very economically harmful. So isn't
even a good way to try to offset the cost
of tax cuts, because you're probably harming the economy more
with a trade war than you're helping it with the
tax bill.
Speaker 5 (14:43):
Congresses, considering it's like.
Speaker 3 (14:46):
A holiday for you, Eric, is this Christmas morning at
the Tax Foundation?
Speaker 5 (14:51):
I need a holiday after this day?
Speaker 6 (14:53):
I bet you do.
Speaker 3 (14:54):
I appreciate your joining us on what must be the
busiest day in your world, Erica York Tax Foundation or
she is vice president of Federal tax Policy. He's not
going to be talking about the irs when he's speaking
nationally in Chicago later on, Kaylee. But another agency that
we've been talking about today, and that is Social Security
the return of Joe Biden, something we'll be talking.
Speaker 6 (15:16):
About later on.
Speaker 2 (15:17):
Yeah, he's going to be speaking around the time of
the late edition of Balance of Power, his first big
speech since leaving office back in January. I guess the
question is, while Democrats may like his message, are they
happy with him as the messenger?
Speaker 3 (15:29):
That's true, we'll find out together. That's around five pm.
We'll be watching our panels next. On Bloomberg.
Speaker 1 (15:36):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm. He's durn
on Apple, Cockley and Android Auto with the Bloomberg Business app.
You can also listen live on Amazon Alexa from our
flagship New York station Just Say Alexa played Bloomberg eleven thirty.
Speaker 2 (15:55):
This is Balance of Power, the early edition just after
one twenty pm Eastern time in Washington. It was roughly
around this time yesterday actually, that we got news from
Harvard University, which throw the lawyers it's working with rejected
a proposal from the Trump administration, which had threatened to
revoke up to nine billion dollars in federal funding if
the the Harvard administration didn't acquiesce to what the Trump
(16:20):
administration would like to see when it comes to DEI
hiring practices, admissions practices, anti Semitism efforts as well. And
we learned last night how quick the White House was
to react to that, with two point two billion dollars
in federal funding now polled in the President today Joe
threatening to take things even.
Speaker 3 (16:38):
Further along with a sixty million dollar contract. This is
pretty remarkable and maybe not much of a surprise to
those who have been following this story. Some of the
reporting had suggested that Donald Trump would like to see
this happen to any number of Ivy League schools.
Speaker 6 (16:52):
It's something we've talked to.
Speaker 3 (16:53):
Our panel about quite a bit, and they're with us now.
Rick Davis, partner at Stone Court Capital or Republic and strategist,
alongside Gidi Shanzho, Democratic analyst and Senior Democracy Fellow with
the Center for the Study of the Presidency and Congress.
Speaker 6 (17:08):
Did this need to happen, Rick, I think it's something
that you saw coming. Yeah.
Speaker 8 (17:12):
Look, I mean this administration has been after what they
call woke universities. They see it as a core culture
issue in in their in their agenda, and and they're
doing They're going after these universities, both public and private,
under the guise of attacking the university's acquiescence to anti Semitism,
(17:38):
which I think they think is universally acceptable. But they're
really in essence trying to gut the DEI programs and
other more liberal efforts on these university parts in their
curriculum and in their personnel. So it's a it's a
pretty significant war on education. And right now, I would
(18:02):
say Harvard has at least struck out to be one
of the institutions, one of the few institutions to really
decide to pick a fight with the federal government.
Speaker 2 (18:15):
Well, and we're seeing what the consequences of that fight
may turn out to be. Again, Genie, two point two
billion dollars of multi year grants frozen as a consequence
of this, with the President today on True Socials suggesting
that Harvard's tax exempt status may need to be looked
at as well. You obviously exist in the higher education universe.
Can you just describe for us what the actual consequence
(18:37):
of that will be for Harvard, for the research that
is done at Harvard in addition to it's an educational mission.
Speaker 9 (18:46):
Yeah, I mean, ultimately there would be a chilling effect.
I mean, we can't forget Harvard gets nine billion, which
is a staggering amount from the federal government, and they
are the wealthiest university in the country, if not the world.
They have a lot of resources. Unlike many universities, they
have a huge endowment, so they can take this fight
(19:06):
to the administration. The problem is if Harvard doesn't, nobody
else can do it. And so you know there are
implications for higher ed across the board. But the reality
is is that we are either a nation of laws
or a nation of one man. If we are a
nation of laws, you follow processes and procedures, you follow
(19:28):
the law. And that's the problem here. There is a
law in place, Title six. It lays out that federal
government can give funding to these universities public and private,
provided they're not discriminating. So the anti semitic portion of
this is exactly right on the part of the administration.
The problem is they have gone overboard if you look
(19:49):
at their demands on Harvard and other universities where they
are trying to decrease freedoms, academic freed of freedom of speech,
you know, cancel DEI programs, curriculum and the rest and
that is outlawed in this law. So if Donald Trump
wants to take this fight on, he needs to do
(20:10):
something he doesn't want to do. Follow proper procedures, Go
to Congress, get Title six rather rewritten, and past that
law with Congress, and then you have the law behind you.
But as it stands now, he does not have that
behind him, and that is the root of the problem
with everything we're seeing in this administration. He doesn't want
(20:30):
to follow procedures. He wants to follow Donald Trump's whims.
Speaker 3 (20:35):
Rick, I know Harvard called this illegal activity, but was
there a better way for the university to handle this,
Maybe acknowledge some of the points that the White House
was asking for, maybe, you know, categorize them differently than
the others. There was specifically a request for the university
to report foreign students who commit conduct violations to federal authorities.
(20:58):
Is there something here that Harvard could have done differently?
Speaker 6 (21:02):
Yeah?
Speaker 8 (21:02):
Sure, I mean there are always things these universities can
do to fit into this concept that the Trump administration
is promoting, and other universities similar to Harvard, Columbia and
others have basically worked out arrangements with the Trump administration
to continue to get federal grants and federal aid, you know,
(21:25):
by adjusting some of their criteria as to how they
run their universities. And I don't think there's any doubt
that there are questions that have been raised. Is that how
these especially these Ivy League universities conducted themselves, how they
were managed, how they made decisions, who they hired, were
major issues in the summer of last year when you
(21:46):
had basically riots on these campuses, promoted by agitators in
advance of the Palestinian issues, and I think that it
opened the door to this kind of criticism. But there
are some people who think Columbia did the right thing
by working on a deal maintaining their financial support by
the federal government, and at the end of the day,
(22:09):
probably did not lose the construct of who Colombia is,
what they teach, and how they act. So there are
universities that are taking a different route, and it's kind
of hard to decide right now whether or not Harvard's
taken the right approach or Columbia took the right approach well.
Speaker 2 (22:27):
And I guess that raises the question, Genie, if you
expect more higher educational institutions to follow Harvard's path or Columbia's.
Speaker 9 (22:35):
You know, it's a really difficult choice because most universities
do not have the resources that Harvard has. And you
see the two conservative lawyers they have hired, well respected,
one of whom Representative Steve Bannon, and many of Donald
Trump's friends. So Harvard knows how to fight this fight.
But the reality is Columbia is in a problem because
(22:56):
when you capitulate to this type of illegal and bullying behavior,
then you are left with the kind of chaos that
Columbia has been left with at the top of its board.
And so Donald Trump can do this, and Congress can
do this, but you've got to do it properly. It
is funding by Congress. They need to change the title,
(23:18):
they need to change the legislation, and then Donald Trump
needs to follow proper procedures. But we can't live in
a country where you give a grant, which is like
signing a contract, and then because somebody new comes into
the presidency pull that back if they don't meet demands.
Republicans would not like it if Joe Biden or the
next Democratic president does it, and Democrats don't like it.
(23:41):
So the reality is you've got to be agnostic. We
are a country of laws. Follow those laws, and it's
particularly important when it comes from the president. And that's
sort of a running theme throughout everything we've been talking about.
Is a president not want to follow procedures but his
own whims and interests, and that is not workable in
(24:01):
the United States if we're going to maintain a rule
of law society.
Speaker 6 (24:05):
Rick, you know that Harvard is an easy target.
Speaker 3 (24:10):
And as somebody who used to live right across the
river in Boston, it receives criticism nowhere more than in
its own backyard.
Speaker 6 (24:19):
Is this good politics in the end for Donald Trump?
Speaker 8 (24:22):
I think it's probably good politics for Donald Trump. I
mean every day that he gets to go out and
say that Harvard was receiving nine billion dollars of taxpayer
assistance when they have an endowment of over fifty billion
doesn't make sense to most voters. Why in the world
would we give federal dollars, our taxpayer dollars, our money
(24:45):
as voters to a private university named Harvard, which is
beyond exclusive and out of the reach of virtually every
American citizen across the board. They select few to get
the benefit of a Harvard education, and so I think
on the surface it is a very difficult issue for
(25:07):
Democrats to claim foul because you know, once again they'd
be out there pitching for the you know, liberal Northeast
Ivy League institutions, by the way, well represented in the
Trump Cabinet and White House. There are a lot of
Harvard grads in Congress and in the White House and so,
(25:29):
but you don't hear any of them stepping forward and
complaining about this. So how much of this is legal,
how much of it is policy, I think is the
debate that we're into now. But the optics for Republicans
they can fight with Harvard all day long and they're
not going to lose any votes, and they may pick
up a few as.
Speaker 6 (25:46):
They go along.
Speaker 2 (25:49):
Genie, I want to return to the point you were
making about this president in particular not necessarily being the
most in keeping with procedure or with the existing legal
system as we know it, because that is what will
be in focus today is there's another hearing in the
Kilmar Obrego Garcia case. Of course, the al Salvadoran who
was deported to El Salvador, which the administration admitted was accidental.
(26:12):
We all watched in the Oval Office yesterday when both
the Trump administration and the President of Al Salvador said
they neither of them have the power to return him
back to the US, even though the Supreme Court has
said that must be facilitated. Do you see this ultimately
ending and potentially contempt of court proceedings for these officials
that to this point have been largely stonewalling the judge
overseeing this case.
Speaker 10 (26:33):
Yeah.
Speaker 9 (26:34):
I don't know if we're going to see that, because
part of the problem is is the Supreme Court left
a hole that the administration could drive a truck through.
You know, facilitate is a return, but explain to us
what you mean by effectuate. And oh, by the way,
defer to the White House on foreign policy. And we've
seen Steven Miller, the President and others take wild advantage
(26:55):
of that. And so I don't know that it's going
to end in contempt. We see some of that, but
I think the reality is it is disingenuous for both
Bukelly and Donald Trump to sit there and say we
can't return this individual. And by the way, if he's returned,
they can deport him legally following the laws within hours.
But it's disingenuous for them to make that argument, considering
(27:18):
we saw them already return nine people. And so once
again Donald Trump does not want to follow proper procedures.
You messed up, admit it, Send him back, then deport
him again, but do it in the proper way. And
by the way, don't cavalierly in the White House giggle
as you talk about sending Americans down there as well.
(27:39):
It is flirting with something we haven't seen in over
two hundred and fifty years of this country. And it
is a rule of law country. And he, as the president,
knows better.
Speaker 5 (27:48):
All right.
Speaker 2 (27:49):
Jeanie Shanzeno and Rick Davis our political panel on this Tuesday,
Thank you so much for joining us. And we still
have more ahead here on Balance of powers. We turn
back to tariff policy and the intersection with markets. It's
next on Bloomberg TV and radio.
Speaker 1 (28:05):
You're listening to the Bloomberg Balance of Power podcast. Catch
us live weekdays at noon and five pm Eastern on
Apple Coarclay, and Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
us live on YouTube.
Speaker 3 (28:21):
Ballance of Power Live from Washington on Bloomberg TV and radio.
You can always find us on YouTube as well search
Bloomberg Business News Live. We're going to have a conversation
as we stick with the markets here for a moment
with Eric Friedman, chief investment Officer US Bank Asset Management,
with Kaylee. The idea of uncertainty driving things for better
or worse. Here we've apparently flattened things out for the
(28:42):
most part today. It's not really a session to write
home about. But when you consider the impact on the
markets that we've seen over the past couple of weeks
when it comes to tariffs specifically, it's hard to overstate
how powerful.
Speaker 2 (28:55):
This has been, well, including the power to change Trump's
mind about recip tariffs at least to a certain degrees.
He noted last week wheaziness in the bond market, people
getting yippie, and then announced the ninety day pause on
the higher reciprocal rate for most countries. And of course
we understand that instrumental in helping the President make that
decision were Wall Street voices within the administration, like the
(29:17):
Treasury Secretary Scott Bessen, who of course used to run
a hedge fund, Keys Square Group, And there's those kind
of voices all throughout Republican politics. Commerce Secretary Howard Lutnik,
formerly of Canter Fitzgerald. I guess you could include in
that as well. But another is actually the Governor of Virginia,
Glenn Youngkin, of course, used to be at Carlisle Group,
and he joined our colleagues on Bloomberg Surveillance earlier today
(29:38):
to talk about the policy and financial market bridge and
the impact of tariff's overall.
Speaker 11 (29:43):
The net of it is that President Trump was clear
he's continued to be clear that in resetting bad trade
deals over the last decades and re establishing reciprocal trade opportunities.
By the way, with nations that are out lies China
is a whole different topic, but with nations that are
(30:04):
our allies, we just need fair trade and we haven't
had it. And so in to reset those trade in
reset those trade imbalances, you see him do what he
does well, which just creates space for negotiating. And I
think that's exactly what's happening when the first weekend after
April second, you read in every publication that seventy five
(30:25):
countries had called within a day to start the negotiations,
and you've already seen those negotiations, at least reported in rumor.
I think this will be this opportunity to take a
big step in resetting hold On and I think that's
what the market needs to see.
Speaker 12 (30:39):
Part of the problem, I think, and you know this
very well, having invested heavily as a co CEO of
Carlisle and been investing in infrastructure, which takes a long time.
There's a maturity mismatch between when some of this negotiation
is happening, when these tariffs go on, and how long
it takes to bring that investment to the United States.
There is a lack of clarity about what that those
(31:00):
policies will be continued in perpetuity, and it's leading to
paralysis at so many companies. What do you tell to
companies in your jurisdiction who's come to you and say,
how can I plan?
Speaker 6 (31:11):
How can I hire?
Speaker 12 (31:12):
How can I invest? When this could change? I don't
even understand the parameters we're talking about.
Speaker 11 (31:16):
Yeah, I have to disagree with you on the long
term planning, because we're seeing a pipeline of economic investment
that has been as full as it's ever been, and
these are long term investments. Fortune fifty companies wanting to
build in America and in Virginia hopefully if we can
recruit them there. And these are long term investments. And
(31:40):
you saw Nvidia yesterday talk about five hundred billion dollars.
We've seen most of the big pharmaceutical companies commit to
building in the United States. We're seeing technology investments, advanced
manufacturing all in the United States. These are long term investments.
I think the difference in a lot of people's understanding
is that during mark get ups and downs, well, yes,
(32:01):
IPOs get postponed, and yes, corporate deals get postponed. But
these long term commitments are actually coming in very large numbers,
and that's good for states like Virginia. I mean, listen,
we're in the sec of economic Development. I compete every
day with Tennessee and North Carolina, South Carolina, Georgia, Florida, Texas.
Speaker 6 (32:21):
And we've got to compete.
Speaker 11 (32:23):
And I think that much of that investment will come
to this region, and that is a long term commitment.
Speaker 3 (32:29):
The Governor of Virginia, Glenn Youngkin, speaking on Bloomberg Surveillance
on Bloomberg TV earlier today, speaking to the veracity of
long term investment here, there's a big question when it
comes to what near term investors are doing, whether it's
stocks or bonds. That's why we wanted to spend some
time with Eric Friedman with our eyes on the markets
here on the Politics show.
Speaker 6 (32:51):
As I say, you can't separate them.
Speaker 3 (32:52):
He's the chief investment officer US Bank Asset Management.
Speaker 6 (32:55):
Eric, great to have you. Welcome to Bloomberg TV and Radio.
Speaker 3 (32:58):
You write that we've shifted from a glass half full
perspective to a glass half spilled perspective.
Speaker 6 (33:05):
So how do we get the water back in the glass?
Speaker 10 (33:08):
Yeah, I think it's an analogy that we're using more
often than we'd like right now. And really we look
at this from a very apolitical lens. From an investment standpoint.
You all do a great job of covering both sides
of the aisle. We have to think about this in
terms of buying and selling, and ultimately, we really think
that getting the water back of the glass really sits
with the idea of what is the objective function we're
(33:30):
trying to solve for a here. And I think you've heard,
including the Governor's comments, that you just played this notion
of the long term economic plan, and that certainly is
of interest to us as investors, but we also have
to invest in something that's open, you know, Seeingneen twenty
four to seven, which is the global capital markets, which
aren't necessarily focused too much on the long term. So
(33:53):
for us, really the key is what is the spectrum
of choices the administration wants to solve for and is
it partial restoring, is it more full restoring, is it
just a more level playing field because there's so much
nuance in what that objection objective function might be in
the mean term. In the meantime, we have to really
(34:14):
focus on what is the actual economy doing, and that
for us is probably the time difference between where we
are right now and when some of these longer term
projections may actually come to play.
Speaker 2 (34:26):
Well, and to your point, on what will the economy
be doing in the shorter term. As the administration Eric
has talked about short term pain, We got a take
on what that pain actually could look like or the
probability of pain from David Costin, the chief equity strategist
over at Goldman Sachs. This is what he told our
colleagues on open interest this morning.
Speaker 13 (34:44):
Well, certainly there's a high degree of uncertainty, largely that's
around the policy of the exact nature of the tariff
and the likelihood or not whether there'll be a recession.
And our economists here ascribe around a forty five percent
probability of recession in the next twelve months. So the
base case is in fact not a recession. The economy
(35:06):
continues to grow.
Speaker 2 (35:09):
Is the recession in your base case?
Speaker 14 (35:10):
Eric, it's not, Kale. I think it's a great clip
to play.
Speaker 10 (35:14):
And if you think about the you know what I'm
going to call to bring in your your colleague Tom
Keane for a second. This is now becomes a why
access problem for investors like us, meaning what is the
time difference between you know, right now and resolution. So
we felt coming into you know, the pre April second
period that the economy was certainly slowing but still in
(35:37):
a good spot. We had estimates when we were about
nine ten estimate growth for the S and B five
hundred in terms of earnings for this year, that's probably
going to come down to something more flatish, if even
you know, potentially negative. So you know, as you have
more time that goes on, we actually have more vulnerability,
particularly with middle income consumers that was the most vulnerable
(35:58):
consumer set heading into the April second news, this was
a group that's done okay from an employment standpoint, has
done okay with respect to wages. But we think we
avoid recession as long as we get that objective function clarity.
Speaker 14 (36:13):
Let's call it in a matter of sixty to ninety days.
Speaker 10 (36:17):
If this goes past the current pause to tariff deadlines,
that's where we could see consumers really starting to question
the endgame here. So I think that again, this notion
of the economy will likely be able to endure this
uncertainty for a period of let's call it sixty to
ninety days. More than that, that's when you have both
businesses and consumers really questioning what they should do. And
(36:40):
when when business and investors think about questioning if you will,
they pull back. They don't double down if you will.
So that's why we think we'll avoid recession. But again,
this why access problem is an administration's.
Speaker 14 (36:52):
End right now.
Speaker 3 (36:54):
Well, without getting into Tom Keane's triple leverage cash, I
do wonder if you're waiting with your own money, here,
is it sixty to ninety days before you put new
money to work.
Speaker 10 (37:05):
You know, we've been saying our clients really fall in
three buckets. Bucket one would be those clients who are
in let's call it the right asset allocation for their
time horizon. They're they're fine, They're in a good spot.
We have a ton of global exposures that go beyond
the bond in stock market, so they're in a good spot.
Those clients that have an excess of cash for whatever reason,
those clients we've been saying, hey, use this volatility as
(37:27):
your friend, be more incremental peace in But for those
clients that are probably overweight domestic equity exposure, that they've
really been riding that wave, if you will, which has
not been our advice, but they've been sort of sticking
with it. We've been saying, hey, this is an opportunity
on big up days to reduce and broaden out. So
we don't think we have to wait sixty to ninety
days for, you know, just to be fully resolved.
Speaker 14 (37:50):
But some inkland. Again, you did a great job reporting
on this earlier.
Speaker 10 (37:53):
You know, the European Trade union lead negotiator is also
unclear about what the endgame is. We need more concrete
messaging about hey, we're on a path towards resolution here.
Until we get that we think this back and forth
like the continues. We'd be concerned if the s and
P retested that forty eight hundred level, which again we
saw on Monday of last week. We think, you know,
(38:15):
we're going to grind it out between forty eight hundred
and probably fifty six hundred and the SMP for some
time the ten year. You know, again, north of four
fifty four sixty, that becomes a little more of a
concern on our radar screen, But we think we probably
live in those ranges in the immediate term. But again,
that resolution and a path towards outcomes is what we're
looking for to get more comfortable with putting fresh money
(38:37):
to work here.
Speaker 2 (38:39):
Well, and it's interesting to hear your comments and kind
of cash allocation knowing we got the latest Bank of
America fund manager survey today and the strategist led by
Michael Hartnett there said they do not see peak fear
yet reflected in the market or in cash allocation, which
currently stands at about four point eight percent of assets.
They say there are they see max bearishness on the
macro without actually investor sentiment around economic prospects the lowest
(39:03):
in thirty years. But not quite max bearishness on the market,
and Eric, if we haven't reached mac bearishment max bearishness yet,
words can be difficult at times like these. Does that
suggest we might actually see a retesting of those lows
you were talking about?
Speaker 10 (39:19):
Yeah, I think that we haven't seen what I'm going
to call that that capitulatory action, if you will, Kayley,
And so what would that mean? That would mean a
really sharp spike in the vix. That would mean that
put call ratios get highly skewed towards puts and we
see the you know, hey, let's let's sell not not
what I want to, but what I what I have to.
(39:40):
We haven't seen that moment. We got close to it
a week from a week ago yesterday, just with respect
to the Monday print, just given a lot of back
and forth over over that that preceding weekend, but we
didn't see.
Speaker 14 (39:51):
It, and so that doesn't mean we have to see
it again.
Speaker 10 (39:54):
Our viewpoint is that if we can live within this
range and the ten year between let's call it four
to four seventy five and again S and P forty
eight hundred to fifty four hundred and ultimately fifty six
hundred that to us would be a level of let's
not called complacency, but that says that the market is
okay with these negotiations pressing. We get concerned if we
(40:18):
get closer to that ninety days and there aren't signs
of more concrete resolutions occurring, and that's going to happen
more on the ground. That's why we'll be certainly focused
and on what you're reporting, because again, for all the
things we look at in terms of data, we're bringing
a lot of attention on high frequency data, but in
terms of how those negotiations acture are going on the ground,
that for us is certainly sitting front seat for markets
(40:40):
right now.
Speaker 6 (40:41):
Just one minute left here, Eric.
Speaker 3 (40:43):
This has been fascinating and we appreciate your insights here
with what you're saying, if I'm reading you correctly, as
Wall Street will be dependent upon Washington and specifically tariff
policy maybe for the rest of the year.
Speaker 6 (40:56):
Do tariffs impact your year end target? Will you even
go there?
Speaker 10 (41:00):
Yeah, I mean we think that that this is going
to be a case where you just to talk about
our earnings vestments. You know, we felt that coming into
this year, we thought that you know, up ten percent
from a growth standpoint on earnings was more likely, and
that put a number on the S and P that
was you know, had a six in front of it.
We think that probably something with the filing from it's
more important, you know, for this year. I would say
(41:21):
this just really quickly. You know, ultimately this is uh,
you know, a resolvable issue, but we need to see again,
you know, the the end game. Is this about isolating China?
Is this about you know, gaining a broader you know,
consortium of non China countries.
Speaker 14 (41:38):
And there's lots of spots in between.
Speaker 10 (41:39):
But again, we think that the markets are not going
to wait for tax reform to kick in, which of
course you've done a great job of covering. There needs
to be some more guidance before we before we start
focusing on fact reform.
Speaker 2 (41:50):
All right, we appreciate your kind words and your insight.
Eric Friedman, chief investment officer for US Bank Asset Management, thanks.
Speaker 6 (42:00):
For listening to the Balance of Power podcast.
Speaker 3 (42:03):
Make sure to subscribe if you haven't already, at Apple, Spotify,
or wherever you get your podcasts, and you can find
us live every weekday from Washington, d C at noontime
Eastern at bloomberg dot com,
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