Biden Should Reverse China Tariff Fiasco: HFE's Weinberg

with China, particularly the economic challenges with China. Nobody better to have that discussion than Carl Weinberg, founder and chief international economist at High Frequency Economics. Carl, thanks so much for joining us here. It's been a rough, bumpy four years, to say the very least between the US and China as it relates to trade. How do you think things

will be different with a Biden administration? Well, that is the question of the day, and I personally am looking forward to see what's kind of a team UH President Elect Biden puts together at the U s Special Trade Representatives Office to give us some guidance as to how this is going to go. The tariffs have not worked they haven't reduced China's trade surplus with the United States

in any measurable way. Since they've come on board. China's increased its exports to the United States by six and it's imports are up only eleven point eight percent um. That's not a winning strategy, and it's a tax on Americans. Tariffs are one of the few tax areas president elect a President Biden could reduce on US taxpayers without having

to go through Congress. So there's a lot of potential there, But of course we don't want to be backing away from the critical issues of differences that we have with China. A sharp guy at the trade representatives, if you took President Trump out of the picture and the last four years, we could just, you know, erase that for the moment. What would a Biden plan towards China be. It feels like maybe he has to be a little bit more inviting to China given the last four years, but if

that hadn't happened, he could be a lot tougher on China. Yeah, well absolutely, I mean he's certainly a lot tougher on China now than he was when he was vice president. And of course the playing field has changed a lot. It's more than just economic issues that separate us. We have human rights issues. We have Hong Kong on the table. Just within the last twenty four hours forty eight hours, we've seen China make moves to impose its rule on

Hong Kong, which the US can't accept. We've got Taiwan issues, We've got India issues, We've got all kinds of human rights issues. So, um, it's not just a simple matter of commercial tariffs to achieve commercial goals. So the tricky part here is going to be to back down, I think, on the tariffs, but at the same time, to find ways to put pressure on China, perhaps through non economic ways or through economic ways, to try to achieve and to maintain our belief in some of these other goals.

So says it sounds like from what we can see that China is getting back to work, that their economy, Um, they've seen the worst of it as it relates to COVID. What do you know about the economy in China and how that may influence kind of their negotiating posture. Yeah, so China's economy is growing. They seem to have contained the coronavirus better than we have there. There's no sign

of a second wave of outbreaks over there. Whatever outbreaks we've seen have been contained in clusters rather than becoming community spread, and the numbers are quite low. And as a result, their economy is growing. At the same time, they're increasing their exports for the rest of the world because they can, because they're at work and they're producing stuff, and they're being aggressive in terms of getting their merchandise

out there. So we're seeing their export revenues go up, and we're also seeing them we deploy those export revenues into direct investment in other countries, building up their silk roots and making direct support and aid investments in other countries, sometimes against the wishes of the United States, like in Iran, and that's helping them promote their economic agenda and project

their economic and diplomatic power around the world. They're taking good advantage of their advances and their their windfall on public health. Yeah, speaking of which, Carl, how is the U s economy these days? We we just got poor confidence data this morning, and and poor inflation data this week too. Yeah, well, Ronnie, you don't need me to tell you that we're in for a rough time here.

You know. J Powell said it yesterday at the Virtual ECB Confidence and everybody who talks about the U. S economy tells the same story, and they're all right, the coronavirus outbreak that we're currently experiencing is debilitating. It not only causes us to lock down our enterprises, but it forces enterprises that are in lockdown to shut down as infection spread. This is going to be a loss of production. We're in for a really, really dark fourth quarter of

this year. Carl, what do you make just broadly defined of a Biden administration, a Democratic House and I'm sorry at a Democratic House and a Republican controlled Senate. What does that mean do you think for economic policy over the next several years. Well, if that's the way it works out, and as you know, the Senator is still a programs. We still have to by elections in Georgia.

But assuming that the Republicans keep the House, that's gonna sty me Biden's efforts to pump stimulus into the economy. The Republicans just don't seem to be going forward. And um, it's going to mean that a lot of the objectives on social level as well as an economic and political level that the Democrats wanted to do just simply aren't going to happen. It's also going to constrain choices of

biden administration for cabinet jobs. I don't think Republicans will block all appointments, but some of the requests of the more rest a wing of the Democratic Party for more progressive cabinet members, they're going to be hard to bring about with the Senate having to approve all appointments. So it's going to be a tougher haul for Biden to be successful in his agenda that the Republicans keep the Senate, and that, of course, as you know, it is in

the hands of the voters of Georgia right now. Yeah, that's for sure. I mean, won't the Republicans want the economy to do well as well though, in order to

sort keep up their support. Well, you know, I'm not a Republican bunny, and I'm trying really hard to understand Republicans each program, and I wish that they would explain to me why they think it is in their interests, in the national interests to slow down, you know, support for the economy as it goes through this terrible contraction and to um, I understand some of the disagreements in principle, uh, and that's okay, but I don't understand why they would

want to shut down the business of government trying to promote the general welfare right now. So you'll have to ask a republic in that question. But from my point of view, I admit that on yours, don't it's not often the Carl Weinberg. Yes, that's right, Carl. We could talk all day, but unfortunately we're coming to the end. Just briefly, your you know, GDP forecast GDP forecast fourth

quarter is probably going to be down. Let's broaden it to the world, okay, because what we're seeing in Europe it's a lot more severe in terms of the outbreak and a lot more severe in terms of the shutdowns that we're seeing. And of course in the emerging world, where they produce a lot of the world materials that feed our industrial machine. They're going to be problems in debt service, they're gonna be problems with bond holders, are

going to be a lot of restructuring coming up. It's going to be a really grim fourth quarter and it's going to carry over into next year, and certainly johny yelling news to talk about the feedback loop all the time from international economies to the US and vice versa. Carl Weinberg, thank you for joining us today. That's Dr Carl Weinberg, Founder and chief International economist for High Frequency Economics. It is time now to take a look at Disney.

Shares began the session higher. They're still up for they have been raising some gains off about one point one now. Severe changes throughout the pandemic to the business model. Let's bring in Tara la Chapelle Bloomberg Opinion, who knows everything there is to know about Disney. She is Media and

Deal's columnist. So Tara, your takeaway thoughts after last night's earnings. Yeah, I mean the takeaway is that streaming is front and center right now, and that's not such a bad thing because these other businesses are still being bluddended by the pandemic. The cruises aren't going to be back in operation until at least after this year. Not all the theme parks are open, and the ones that are open are operating

at reduced capacity. Of course. Uh, the film business obviously really had nothing significant this year because movie theaters were closed, and the TV networks, I mean, they're they're doing okay because they they're costs. They're down because they couldn't really you know, produce much content for the year. But the the outlook isn't you know, great obviously with streaming taking

over and more people cutting the cords. So I think, you know, investors just want to hear them talk about streaming, streaming, streaming. It's all about Disney Plus. And I think that's why the stock is up despite you know, the company not reporting great results expectively because of covid Terry. You've got a great, great column out on this Disney earnings and in your column you say, Disney recently was you know, a theme park company, a media network company, a film

studio plus some streaming. Now you think of it now is a streaming giant plus some other stuff. That's a big change. Yeah, It's like everything's kind of moved to the other side of the plus sign, you know, Disney Plus. It's it's obviously not making money. I maybe can't you know that that is still true, Like Disney Plus doesn't make money. It's going to be a little while before it does. But just in terms of the growth in

the direction of where this industry is going. There are positive signs that Disney is doing a pretty decent job with it. They've got seventy three million subscribers to Disney Plus um and it's all about, you know, trying to catch up to Netflix and just keeping those subscribers loyal.

And Bob Chapek, the CEO, talks on the call last night about how they do that, which is really ramping up the number of shows and movies that are available to Disney Plus subscribers, either in the form of what they did with Mulan, where you're Disney Plus subscriber paying seven dollars a month and then you pay thirty dollars one time charge on top of that to watch Mulan, or like what they're doing with Pixar Soul, which is just going to be available for no extra charge to

Disney Plus users. And so they're kind of experimenting with that and with this big reorganization that Shapeck announced the other day where they're going to, you know, put all the content creation side of the media and entertainment business into one unit and they're just going to focus on making content and then they're going to have this other group that just focuses on figuring out where to put that content, whether it's on the traditional cable networks, whether

it's in a movie theater, whether it's on Disney Plus or for you know, going back and forth between those. Uh. For instance, A T and T is is going to release Wonder Woman ninetem four, uh supposed to be Christmas Day, and then a couple of weeks later they might put it right on HBO Max. So we're really starting to see these companies change their strategy when it comes to where content, big content, expensive productions are going to wind up. Wow,

that is fascinating. What about the theme parks? Do they emerge much smaller, much less staffed. It's it's really hard to know right now. I mean, it seems like Tapic and also Brian Roberts that Comcast, which owns Universal Studios, are really optimistic about the theme parks business that that will come back. They don't seem to be talking is optimistically about movie theaters, but theme parks. They really seem

to like that business a lot. For Disney, the Parks and Cruises division, how to over one billion dollar loss for the fourth quarter and the total impact on profit from COVID so far just for that business has been almost seven billion dollars, So they're really hurting. But I think that these companies are optimistic that it will come back.

It's just going to take a while. A combination of you know, in California with Disneyland, trying to work with the state government there, which is really opposed to reopening, and then also you know, trying to get people comfortable again with travel and and visiting these you know, big crowded spaces tera. What do we know about the role

of Bob Iger. You know, he stepped down a CEO too much fanfare, uh, going to be a chairman for a while, then as COVID came on, um potentially coming back and taking it's a little bit more of a bigger role. Do we know what his role is right now? Yeah? I mean, I think that the speculation when he did step back and then COVID hit was that Bob Iger is going to come back and kind of be pulling the strings behind the scenes, even though he's no longer CEO,

you know, he's still executive chairman. But I'm not sure that it's actually working out that way to Disney's credit, Bob Sack is really calling the shots, and that's at least what it looks like to people on the outside.

I mean, this is his reorganization, and as someone who came up through the park side of the company, I mean, he's really doing a lot to put the focus on streaming and so I think he's making the right moves and and you know, people are pretty pleased with what he's doing and making the best of a tough situation this year. And we haven't really heard anything from Bob Eiger. He didn't speak on the call last night, I don't think,

and it's just been really quiet on that front. And I think that's what they needed to do in order for it to be seen as an actual, you know succession where Bob Chapek is the CEO of Disney. Now, what about sports viewing. Disney was insisting that it's not a problem that the live sports going away for the

most part, is not hurting. Yeah. I mean, the you know sports came back in the fourth quarters, so that hurts them in some ways because it meant that their costs went up a lot because sports programming is very expensive. But I think overall they're happy to see sports back. It's just without the vaccine, we don't know what this is going to look like. And by the time you know,

we're able to go back to quote normal in some way. Uh, you know, people have been cutting the court in our they hanging on to these expensive, you know, sports subscriptions. I don't know. I mean, it's really hard to know. ESPN is cutting like three jobs right now, so it's it's not looking great. It makes me wonder. You know, for a long time people have speculated whether Disney whatever kind of spin off ESPN or separate from it, And now in hindsight, it's like, you know, maybe they should

have done that. You know, that's the business that it really there's a lot of unknowns because of COVID and because of streaming, so they're getting hit from both sides. Terry, how's some people reacting to that organization you've referenced There was a pretty big reorganization of the management team to try to focus more on streaming. Some people was kind of scratching their heads. What's kind of the feedback you're hearing. Yeah, I mean, I think it's going to be really tough

if you work in those businesses. Right now. If you're a manager, you know, you've kind of had some of your responsibilities taken away, perhaps because if you're just if you know, if you work for the cable network and you're just focusing on content now, you don't really have a stay over where that content goes. And streaming has kind of become the big thing that they're focusing on, and so if you're in these other businesses, you might

feel a little bit slighted. Um. But I think what Bob try to say on the call last night is that they're doing this in a very organized way, and they're making it clear what people's responsibilities are. That if you're a creative you're in a creative role, focus on that. And if you're in a role to market and and distribute content, focus on that. And that will make it a more organized, um, you know, process, and maybe make it easier for Disney to do this in a way

that doesn't disrupt the empire so much. But of course, right now, I mean, I imagine it's gonna be really hard to be there. It's just like everything just changed overnight. Absolutely. Hey, Tara, thanks so much for joining us. Always appreciate your thoughts and insight Tara La Chappelle. She's a Bloomberg opinion column she covers entertainment, telecommunications, UH and deal. She joins us on the phone from New York City and again better

than expected results out of Disney. I think the expectations were quite low given the pandemic and we know the impact it's having on its business. But again, this is a company that's pivoted toward streaming business and they put

us some really good streaming numbers last night. When you think about the U. S. Agricultural sector, rural America, that lots of challenges, climate related disasters, weak ethanol and bio fueld demand, US China trade tensions and that that's not enough, COVID nineteen pandemic, many many challenges for the U. S.

Agricultural industry and rural America. To get a sense of what rural America, US Big agg look like potentially under a Biden administration, we welcome our next guest, Run sunder Room, Equity Research analysts for c f R A research based in Washington, d c uh Aaron, thanks so much for joining us here. Again, tough times for the U. S. Agricultural sector, rural America, what's the feeling under a Biden administration about potential changes, Paul, Yeah, thanks for having me. Yeah,

you mentioned you under the Trump administration. You know, although the Trump administration is trying to pay itself as an ally to farmers, the unfortunate truth is, you know, the past few years have been nothing short of difficult for the agriculture sector. You know, we've had the US trying to trade war, various climber related disasters, weak demand for ethnom biofuels, and then obviously the COVID nineteen pandemic has

wrecked havoc on the sector. But we believe under a Biden administration, you know, there'll be a lot more positive implications for the sector um rather than negative ones. You know, Joe Biden's policies are much more moderate than most of the other Democrats that are running in the Democratic primary.

You know, Bidden's biggest goal is to achieve that zero emissions by two as the fifties, So I think he'll want to work with the agriculture industry to practice more you know, sustainable farming methods, and I think he'll incentivize them to do so. So, really, anything that's related to green, clean energy should support farmers, particularly corn farmers, I think in the United States because they have been increasingly reliant

on the ethanol industry. But unfortunately the ethnicol industry over the past few years have been that the industry has been significantly pressured. Um you know, I think last year's of nineteen dethnel industry productions for the first time in nearly a decade. So, um, when when Joe Biden comes in, I think anything that it's way to clean green energy should support UH farmers, agrie businesses and be a big relief for the industry. And what about the relationship with

China and how farmers fit into that. China, you know, sending cops and so on to the United States and vice versa. Exports. Yeah, yeah, that's right. So the good news right now at least is over the past few months, China has significantly accelerated uh it's imports of US agricultural products. Um. But unfortunately they are still you know, well short of its UH commitment requirements as part of the Phase one US China trade deal that was signed earlier this year. Um.

You know. Unfortunately, that trade deal was signed I think less than ten days before China went into lockdown. So obviously China has been slow to to uh purchase US agricultural products. But the good news is, at least right now it looks like they are accelerating their their imports. But I think when when Joe Biden comes in, UM, I don't think he'll completely scrapped existing Phase one agreement or immediately removed tariffs because you know, it will be

prudent to get something in return, you know. I think instead Joe Biden will work with other allies to set some ground rules for China which includes topics like you know, human rights, climate change, um, and and then go go go from there. But um, but like I said, the good news is China is accelerating their their U s agricultural imports then and hopefully that continues. What are some of the areas that have been particularly hard hit when you look at the US egg industry. What are some

of the big areas. Yeah, the biggest areas are you know, Harry farmers, Uh, you know, soybean farmers, corn farmers. You know, they've they've all been you know, like I said, going through uh, the past few years have been just incredibly

difficult on all of them. Um, but you know, I think when when when Biden comes into um into uh the seat, I think when when he goes to choose his agriculture secretary, I think, here she will need to focus on, you know, the long term and it makes a more impactful change then you know, some of the short term I call short term band aids that are being handed out right now to farmers. Right now, there's a lot of you know, subsidies and grants being handed

out to farmers. But but farmers want to make their own income. So I think going forward, you know, we'll need to you know, expand trade opportunities and um really open up the market for for our farm economy. How are they doing out there? I mean I've been asking questions over the last several days about supply chains and so on, and you know, how has the farming community dealt now with eight months of you know lockdown in many parts of the country. Yeah, so the past the

past eight months have been very difficult. You know. In the beginning, um, you know, farmers had to know, had to leave their their crop and the plants they are unable to harvest them. And then also um, the knee processing industry has has has gone through some challenges as well. You know, uh, many farmers had to had to call their livestock because there was just there was just no end demand for for their products because of the essential

shutdown to the food service industry. Um. But but but the good news now is, you know, the economy is recovering. I don't. I don't think anyone is expecting to economy to recover as fast it is right now, and and therefore supply and demand levels are beginning to balance, which is a good sign. But obviously right now the number of COVID cases are rising, and then there's a chance that you know, we could have lockdowns again in the future, um, which could have put you know, an imbalance to the

supply and demand levels. But um, the good news is we've we've gone through lockdowns once, and I think the industry is a lot more prepared to go through one again. Aarons, thank you. We will ask you to come back soon and give us a further update. Our own syndrome is Anquity analyst at c f r A Research talking there about commodities, farmers, US China relationship, and lots lots more difficult time for everybody, but rural America has also had an extremely tough There is a few mikes, but only

one in studio right now. Mike mcglogan's with US Commodity strategist for Bloomberg Intelligence and Mike a loot to get to. But give us an update on cryptocurrencies because we had that huge rally for bitcoin, remember, and I guess I haven't really looked since then what happened in that sector after that big, big rally. Bitcoin is a bullmarket that's had a significant correction, impairing to disdain, and it's just resuming that bullmarket. The key thing is that's really happened.

This year's fundamentals have really increased and improved. We have more demand, more adaption. It's going mainstream. You see that from from place companies like micro Strategy and Square. They're digging in. Even people like Standing Drucklander saying how he holds bitcoins. What I think is happening is bitcoin is it's the virus that isn't going away, and it's becoming more mainstream. And this year this supplied basically was cut

in half. So next year, if history is a guide, is can potentially be a very big up year for the price of bitcoin. All right. Well, here's my anecdotal evidence about the the you know, bubble nature of bitcoin. They're actually talking about it for long periods of time on sports radio in the morning. You've got the Post not talking Mets and not talking Yankees. They're trying to explain to each other, Mike, what is bitcoin? And no one knows, by the way, and why it's going higher?

No one knows, by the way, but they're all buying it. So that you know that has to be you need to call in sometimes. I know I'm gonna I'm gonna have Mike call in because they're just dying for some information. Mike. Um, let's talk crude oil here. Um, You've got this, no doubt. And for those listening, Mike has by far, no question the best charts at Bloomberg Intelligences. Charts are so much detail,

you can spend hours just looking at them. You've got a great chart where you're talking about more of a permanent bear market for crude. What's what's what's your basis there? Well, thank you for that, boy. I missed working with you and b I, but I do enjoy conversing with you on the radio, UM and on TV and the key point about crude oils. It's a bear market that's come back to good resistance and fundamentals remain parish. So that to me is the key thing that makes me look

very fearful. That w t I around forty is more likely to go to thirty than the fifties. The key thing is just got back to this fifty two weeks moving average, which is heading lower for the first time since January. We see what's having in covid Opec has a meeting coming up and they have to sustain cuts, yet they need money. It's getting really bad. So it's almost a perfect storm for the bear market to simply continue and resume. And the key thing, it's highly correlated

with bond yields. So a lot of people am looking for steeping in curve higher bond yields. And I like to say, is good luck with that one. If crude oil takes the next leg lower and it's you know, it's enduring bear market, right, We that the effort, let's say, at a solid a few dollars of a game, but or back down ninety cents today was still about forty barrolable flirting with that level. So is there a catalyst that sends it much lower or matire more the same.

That's the problem. It needs more cuts. It needs to reduce supply, which is indicative of the biggest problem in crude oil, rapid lead vancing technology, demographic ships, and now we have COVID. Supply is just supply is very much just waiting to come on and elastic, and demand is just no more, no longer elastic like it was in our you ten twenty years ago. Hey, Mike, we just had a guest on an analyst talking about some of the agricultural companies talking about some of the consumer products

companies under a Biden administration. If I'm a farmer, you know what am I thinking? You're saying, yeah, thank you. The end is over for Trump, for the Trump bottom. Now, the good news is President Trump wrote checks to farmers. They enjoyed that, But that just increased production. That's the

world's worst way to end the market. So I think we're gonna look back and at the Trump administration is the enduring low in grain prices as we used to look back at two thousand twelves in during high because what we have going forward is a potential week dollar. The trade war of China over exports picking up, and they they used to say in commanities, the cure for low prices is low prices. That's really kicking in. So the key thing I'm watching is corn looks like it's

finally staying above four. It looks like it's heading closer to five or six, and four dours should now be which was resistance for five years and during the Trump administration, should probably become support. Mike, a quick word on things like soy wheat, all those commodities that sort of trade

outside the country as well as inside. Yes, a key derivative and demand indicator for prices is US exports because soybeans and corn and wheat, the primary most liquid futures in the world are based on US products that are exported and then delivered and traded in the U S. So, US exports of kick and picking up, for instance, soybeans, and we just went past the fifty threshold of production and that should contin in you, particularly if we have a weaker dollar. Mike mclogan, thank you so much for

joining us. Always learned so much about the commodity space. Mike mcloge covers all commodities. He's a strategist there for Bloomberg Intelligence, and he's probably the only one in the Bloomberg building that understands bitcoin, and he's explained it to us a million times. But I am not. I am not. But when I hear sports, uh, you know, guys on radio talking about bitcoin, it it just kind of gets me a little bit nervous. But maybe they know something, uh,

that we don't know. Mike's been on top of that bitcoin story from day one, so it's really fascinating. And you take a look at that chart and it is a good looking chart for bitcoin, but uh, I think I'll stick to stocks and bonds and some of those them were boring instruments. Thanks for listening to Bloomberg Markets podcast. You can subscribe and listen to interviews at Apple Podcasts or whatever a podcast platform you prefer. I'm Bonnie Quinn.

I'm on Twitter at Bonny Quinn, and I'm Paul Sweeney. I'm on Twitter at pt Sweeney. Before the podcast, you can always catch us worldwide at Brig Radio. H m hmmm.