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Obviously, the question is how do you factor in any Trump policies? Right? Was a JP Morgan that said they're going to have like a tariff trade desk now working like twenty four hours a day, try to do on top of it, right, just try and like understand what
the input means for their models. So we wanted to get more on that with Branda Murray, Bloomberg Global Trade Editor, on all these tariffs, Let's just start with what we know in terms of Mexico and Canada and what we could expect come February first.
Yeah, so, so Trump in an Oval Office press briefing late yesterday said that he was going to put twenty five percent tariff on Mexico and Canada starting February five. So you know, less than two weeks from now, thirty percent of all US trade imports would have would have a what would be you know, a quoter more expensive. Uh. Now, whether those are threats that are aimed at driving those two countries to the negotiating table or I promise that
he'll actually follow through on is We don't know. But he has the authority to do so. And uh and and and the currency markets at least are taking him at as word.
Brendan, would these be enacted via an executive orders at simply signing a pen uh and they're put in place?
Yeah, there's there's a there's some legal mumbo jumbo that he would have to go through and and declare quote unquote a national emergency. Uh and and and and you know that could be the fentanyl uh you know problem, or the migration illegal migration problem from from both countries, although Canada there's that's a lot that's a lot less
acute from the northern border. He there is executive authority that the president has to put tariffs at least temporarily on countries that are causing you know, a big trade and balance or some kind of economic emergency.
Right.
That's what's really confusing, because if we look at tariff policy as a negotiating tool, and you could look at what wasn't said about China as a window into that. What is the US trying to negotiate with Canada?
Yeah, I mean it's a good question. Trump basically looks at bilateral trade relationships and says, if you have a surplus for US, we're losing and we're going to fix those. So he would want, you know, Canada to to buy more US products or subsidize less of its own products at the expense of American producers. So it would be to drive you know, concessions the US MCA. This is the successor to the NAFTA agreement that was renegotiated in Trump's first term, is up for review in about a
year and a half. So perhaps this is a tactic to you know, to kind of put put the US on the front foot in those talks that will undoubtedly start this year.
It's only been a very short time for this administration, but we've not heard much as relates to China and Tarish. Where do you think that the policy wins are blowing there?
Yeah, So lost in all all of the you know, Mexico Canada headlines yesterday was the actual executive action that the President put out on trade policy, and there were a number of things in that that he asked his departments heads, his cabinet secretaries to investigate or assess. And one of those is oversized trade imbalances, currency misalignments, and those kinds of things that you know, the code word
you know, that's just code for for China there. So those will go through a more uh, you know, a longer department led review. The deadline is April first, so that's not too far out. That's you know, just a couple of months. And you know, and and those could be the legal justifications for a tougher tariff stance with China.
What's so interesting is when we're starting to get company calls or even in the fourth quarter, when we were getting third quarter earnings out CEO is talking about tariffs, they all seem to say, like, we can handle it. We're monitoring it very closely. We've already diversified maybe our supply base after the last Trump administration. What are do you feel like companies are prepared this time around? Because I'm trying to see where the equity impact is going to be.
Yeah, they would be, and I agree with you the lots of those reaped through those transcripts myself and and and try to see where the winds are blowing in the C suite, but they would be more more diversified in there in their supplier or supply chains. You know, a lot of a lot of companies started doing that well before Trump, uh, the move move outside China. That's sort of so called China plus plus one or plus
two strategies. So there would be you know, a bit of a you know, a shock absorber built in since the first Trump administration. But still there's no there's no getting around the fact that if if you know, a universal tax that Trump has floated even yesterday, uh, you know, on on all US imports, would start chipping away at earnings outlooks, you know, quarter by quarter as we go through the year.
Brennan, if we.
Heard anything from Mexico and Canada about what they would do if, in fact, these twenty five percent tariffs do start on February first, maybe.
Well Canada has Canada has said, you know, we'll retaliate in kind. And if you if you come at if you come at US with you know, a twenty five percent tariffs, then we have a list of US products that will that will do the same thing too. Mexico has I'm not sure, Mexico has threatened in kind retaliation, but Mexico has said, look, you're just going to hurt yourself because a lot of a lot of the imports at a lot of a lot of American companies are
in Mexico. And if you start, if you start, you know, putting tariffs on those on those, on those companies, those companies products, then then you're just going to hurt you know, the business back in the US.
Right, all right, we'll have to see how that plays out. Will follow it closely, of course. Brendan Murray, global trade editor, who's going to be busy going forward, that's for sure, Global Trade editor for Bloomberg News. He is based in London.
You're listening to the Bloomberg Intelligence Podcast. Catch the program live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
All right, now we want to go to the broader look on the market. Right, I'm getting all the notes of like Trump Day one had a position, what does it mean? The whiplash we've seen in the market, So how do you position if you're actually putting together an equity portfolio or an investment portfolio. Christopher Smart is managing partner at Abroth Group. He is joining us now. I guess the question really becomes, Chris, how do you model things we don't know but think are coming well?
Good to be with you, Alex, I think the answer is very carefully and very slowly. And you know, we're not quite twenty four hours into this new administration. We've had a slew of decisions and executive orders and comments by the new president, but I think we're many of us still scratching our heads as to what this might mean for any given portfolio. You have a series of macro decisions that are looming, whether that's around the budget or taxes or FED policy that we're still not clear about.
In terms of the president giving signals about what he has in store for what his preferences are for the upcoming budget. We have a lot of announcements on tax and tariff policy, which sort of takes you down to the corporate level. You know a lot of CFOs, as you were talking about earlier on your program, trying to figure out what this means for them, and then oh, by the way, this is earnings week, so there's just
a whole lot for investors to digest. And as I talked to my clients, I know they're working very hard and feeling that flashback to four or five, six, seven years ago in the first Trump administration, where if you haven't checked your news feed in the last couple of hours, you feel like you may be out of date.
So, Christopher, what do you think is some of the most important things for President Biden and his administration to achieve in the first one hundred days.
I think you meant President Trump Trump.
Yes, we're all going to get used to that.
I think it's really the thing that investors, I think are going to want to really get clarity on is the tariff's issue. And I think we have maybe less clarity on it today than we did a couple of
days ago. To my mind, the tariffs that are linked to non economic issues, whether it's ventanyl, or it's immigration Canada and Mexico, whether it's tariffs that were promised to China, you know, related to the byte dance, TikTok divestiture, those feel a lot like negotiating moves to kind of apply leverage to a non economic issue that will get resolved
before big tariffs are applied. I think the real thing that investors need to keep their eyes on are these these studies that he's now commissioned from the Department of Commerce and others to look at currency manipulation, to look at market protection, to look at all of these other things that is likely to bring on the wave of tariffs again, maybe you know, not at the sixty or one hundred percent level that were talked about during the campaign,
but really focused on countries where there is a trade imbalance, a bilateral deficit. Of the President is clearly focused on, even the most economists are not so much, and that those are the ones that I think we're gonna have to watch over time.
I should point out that Scott Bessant has won a Senate Finance Committee backing for Treasury.
A secretary job will of course.
Keep you updated in any one of those headlines as they continue to come across. Chris Stang on that clearly what happens to Treasury and issuance will have very dramatic effects on the Treasury curve particularly. Also, many factor in the debt ceiling. What are you telling your clients about that?
Well, we've of course got no word on any of that from the from the new president in the last in last twenty four hours in terms of what he may have in mind for debt's deficits and debt limits. I think again, this is going to be something that causes a lot of near term anxiety, but ultimately at the at the eleventh, twelfth or maybe thirteenth hour gets resolved in terms of both the debt limit and you know,
keeping the government funded. I think we're all expecting there to be some kinds of tax cuts, probably, you know, not much to close the deficit, just because no matter what the president wants, there just a whole lot of people in Congress who have, you know, an interest in some sort of spending program and those are very hard to close. You know, it's very narrow majority of the Speaker Johnson has there. So I think not a lot of change, not a lot of change there in the budget trajectory.
Chris, what do you think the president's policy will likely be as it relates to illegal immigrants, maybe returning some people back to their country of origin. How do you think that might play out, because that was certainly, if not the biggest, one of the biggest topics in the campaigns.
I think it was, and I think we'll see some very high profile while moves on that front. You're already seeing some of it in terms of the executive orders, the emergency declared on the border, the return to Mexico policy being put back into place. I wonder, though, how much tolerance voters and Americans will have for a lot of disruption to law abiding citis, law abiding immigrants in this country, whether they are documented or undodocumented, how much
disruption they will they will tolerate. You know, there are estimates of about eight to ten million undocumented Americans, some even higher estimates than that. It's really hard to see, you know, that number of people being removed from the country physically. So I think you're going to see a lot of drama around it and in the next few months, but maybe not so much to move the at least the economic needle in terms.
Of the labor force.
Is there any sector, Chris, before you let you go that feels really, really really not in a good place. And I'm just kind of setting you up to say offshore win, but doesn't have to be that.
It can pretty much be anything.
Well, you can start with offshore win you can start with anything that's related to renewables. You can go on to sort of, you know, anything that relies heavily on a single source of imports from China, and then you know, a lot of costs are going to go up. Whether you either have a customer living across the border or a supplier living across the border. You know it's going to be more and more difficult to operate in an
international footprint than it was before. So there are some key pain points initially, as you point out, but I think more broadly speaking, you know these costs are going to rise.
Chris, thanks so much for joining us. Really appreciated.
Christopher Smart.
He's a managing partner at our Growth Group, former Special Assistant to the President for International economics. Giving us the latest on some of these very very early hours of the Trump administration. Here day two of his administration, staying on top of some of the discussions around terrors and other economic policies that may emanate from this new administration.
You're listening to the Bloomberg Intelligence Podcast. Catch us Live weekdays at ten am Eastern on Apple, Cocklay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Alex Youl here alongside Paul Sweeney. This is the Bloomberg Intelligence Radio, and we are broadcasting to live from our interactive Broker studio right here in the very cold midtown Manhattan. I did see someone running this morning in fourteen degrees, which was a whole bunch of crazy. I don't know how you do that, but apparently that's something that we do.
Fortunate.
Yeah, in the.
Studio, it's called Anyway.
We were just talking about how to understand President Trump's policies when it comes to the markets.
Now, let's kind of pick apart.
What are those most important policies, what's the noise, what's the reality? Joining us now is Jennifer Lawless, Professor at University of Virginia. We've had less than twenty four hours to dissect President Trump's second term. There was so much coming out. What stood out the most.
To you, Well, yesterday really was a whirlwind.
What was typical was that when a new president comes in, he typically issues executive orders, undoing a lot of what the previous administration did.
So those kinds of things are pretty standard.
What struck me yesterday was this speed with which Donald Trump is willing to follow through on some campaign promises that didn't matter that much to most people. So, for example, he used both his inauguration address and the power of the pen to say that, moving forward, the federal government only recognizes two genders. He moved forward saying that the federal government is going to require a hiring freeze for all open positions and that people working for the federal
government have to return to work. These are not the reasons that people elected Donald Trump, but they're the quick things that he can do on day one.
Jenifer, can he talk to us about presidential It seems like the last days of the Biden administration and now the first day that Trump administration, these presidents have just gone to extraordinary lengths in terms of the number of pardons and the severity and the types of pardons. Has this always been a part of the American presidency?
What's happening?
It has not.
There have always been examples of pardons being issued. Sometimes it's to political friends, sometimes it's to people who were serving sentences that are no longer mainstream kinds of sentences because policy has evolved over time. What we've seen here from both the Biden and the Trump teams in terms of these pardons, are really a response to Donald Trump.
Over the course of the last four years, he's made it clear that he thinks he's been politically persecuted and that as a result, one of the first things he's going to do as president is seek retribution, and we've saw him yesterday continue to talk about that. We saw him pardon most of the January sixth insurrectionists.
The Biden pardons are related.
To all of this two though, because by pardoning members of his family and the January sixth committee, for example, what Biden was trying to do was inoculate those people from Trump's retribution. So it's unusual, but Biden and Trump's behavior is related to each other.
There was also some narratives that came out of the last twenty four hours from analysts saying that it's hard to know which Trump we are going to see, like are we going to see the Trump that spoke amongst his peers right after he was inaugurated That seemed a much more measured approach to policy and a much more politically savvy individual. Or do you see the one that was talking to his supporters later that night that seemed much more kind of out for blood and retribution, and
we got executive orders and pardons relating to both. How does that evolve you think over the next coming weeks.
I think we're going to see both Donald Trump's We know that he's happiest when he's talking to his supporters, when he's in campaign mode and when he's generating and getting up that kind of populace sentiment that got him elected.
But he's also aware of.
The fact that in order to pass any of his legislative initiatives, he needs Congress on board. So I think he'll try to thread that needle. But when push comes to shove, we've now had nine solid years of evidence that he ultimately prefers the campaign trail style.
Jennifer, what do you think in terms of some of these nominations to cabinet positions, which ones you think will be problematic?
Well, let me first say that I think the Marco Rubio nomination getting through so quickly with unanimous Senate approval was a smart move on the part of the Democrats. So that when they do vote against other nominees. I think problematic will be people like Pete Hegseth, like Telsea Gabbert, like Robert F.
Kennedy Junior.
That the Republicans won't be in a position where they can simply say that the Democrats are obstructing everybody. But you know, Donald Trump knew that he was putting forward controversial names. He was doing it as a signal both to his base to Republicans in Congress that he is going to usher in a new kind of government.
But I don't think what he.
Realized is that Senators do take quite seriously the nomination process, the confirmation process, and the experience of a lot of these people. So you know, I think a lot of them will get through, especially the lower profile ones. But Gabert, Hegsteth and Kennedy. My bet is we'll face some tough times ahead.
Talk to us about staffing currently in the White House, his White House chief of staff really in part, I mean drove through that election, that reelection campaign.
What do we expect there.
I think we'll see what we have generally seen with chiefs of staff early on, and then it'll just be a question of how long she can last. You know, we've seen this movie before, and people want to sort of protect Donald Trump from people that might otherwise want to get into the Oval office and influence him, who might want to move him away from what the administration's agenda is, might want to from away from sort of
the normal way of dealing with Congress. She has her work cut out for her, and at some point Donald Trump will probably get frustrated and replace.
Her, Jennifer.
How about Ukraine, that seems to be from an international perspective, one of the key areas for President Trump to act.
What do you expect, Well, based on what President Zelenski has said, you know, he's hopeful that the United States will continue to provide funding and will continue.
To you know, allow Ukraine to exist.
But based on Donald Trump's relationship with Putin and his general view of you know, world powers right now and mentioning things like invading Greenland and taking back the panic from the canal, if I were the Ukraine or supporter of people in Ukraine, I'd be concerned because the talk that's coming out of Donald Trump is more consistent with Putin's agenda than Zelensky's.
What are you watching for next so as we reap up the segment, like what's the number one thing on your radar right now, Jennifer, I.
Would say that over the course of the next week, the biggest thing will be whether the Senate is willing to just accept everything that Donald Trump pushes forward when it comes to these nominees. Are they going to provide the check that it seems.
Like they might be positioned too. If they don't, and they don't.
Do it now, then He's basically going to be able to get whatever he wants for at least the next two years.
Got it really interesting?
All right, Jennifer, thanks so much, Really appreciate it. Jennifer Lola's professor at University of Virginia.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, Corplay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Let's go now to the policy part.
I love what Paul was saying about the r between EV's between Tesla and everybody else that on a relative basis, it's less bad for Tesla. Ed Mills, Washington Policy analyst and managing director over Raymond James joins us, Hey, Ede, just on that point, what do you make of the fact you got Tesla down, like you know.
Three percent?
You have the EV mandate sort of being rolled back by President Trump. What do you make of that part of the policy and its impact.
Yeah, Alex, it's a good question. I don't think there's going to be a lot of policies that are enacted that are not favorable to Elon Musk. So there is the EV mandate that's going away. There will be a conversation when Congress deals with tax cuts if the tax.
Credits go away.
But I do think that if Elon steps in and says this is important to me, they stay. Or if he says, look, I actually have a better position visa the everyone else. He's going to let the market decide and be able to compete there. So I don't view this as a huge issue. Three percent move in Tesla is not a huge move. And you look at some of the moves that have occurred since the election, those are the moves that matter to him.
And what did your take away from day one? Yesterday? Very busy day for this administy for this new President. What were some of the things that kind of stood at it to you?
Yeah, Paul, I think that the interesting thing to me is when I've talked to folks in and around the Trump administration, they are insisting that they are going to go much faster in Trump two point zero than they did in Trump one point zero. And so we've had a lot of questions about tarifs and that they didn't go in on day one. Don't have that as your takeaway that the tariffs are not coming. They are absolutely coming. They're going to be aggressive, and they are going to
come this year. In Trump one point zero, he spent three years negotiating with China before he got a Phase one trade deal that was never implemented. So China very much on that list. Canada, Mexico. Real issues there on energy, big unleashing of opportunities and on energy. It's not about just oil and natural gas, but there was a lot of conversations about critical minerals as well as rare earth.
Minerals are definition of energies expanding. Those are opportunities to rebuild supply chain here in the United.
States, right as long as you're not offshore with because that is Forbotten and that feels like that. It's definitely not nothing's going to come from that anytime soon from the Trump administration. Which you talk about critical minerals though, which makes the Canada thing even more of a head scratcher because they have all that stuff, even the non critical minerals like a rare earth, they still have the stuff that we need to build the things.
Well, I was in Canada all last week.
I was in Montreal, Toronto talking to investor after investor, and the thing that they focused on, and what I've been talking to clients at Raymond James about is if you have something that Donald Trump wants, that's part of the solution. So Trump is going to put tariffs on but a deal will be struck. And if we expand out the definition of energy to include things that you own or you have as a natural resource, you should
get excited about that. So a deal with Canada that includes critical minerals and rare earth mineral extraction refinement in building a supply chain that is de risk from China is an opportunity, not necessarily a risk alex for Canada and other allies.
Interesting, Hey, Ed, talk to us about how you think this immigration and border security policies will evolve over time. Obviously a big, big part of the campaign, a very big issue for many American voters. But boy, if you think about the economic impact, where do these migrant workers go?
Will they go to?
Agricultural and construction? Are the two big areas as well as hospitality. But those two big areas agricultural and construction, that could be a problem.
How do you think that's going to play out?
Paul, and I think you're right to point this out because when we think about some of the policies that can be market positive or market neutral negative, the immigration executive orders, probably for clients at Raymond James have been the area where we've gotten the most concerned. Is this going to lead to labor market shortages? Is this going to be read inflationary? We saw labor shortages as we came out of COVID that had a real market impact.
I think this is an area where we're going to get headlines that are very aggressive, but the follow through actions, I guess I would take the under in terms of the actual number of immigrants that are deported from the United States as a result of this.
I think they're going to be very flashy.
They're going to have a signing of the Lake and Riley Act within the next day or two. It's going to be the first bill that Donald Trump signs into law. There will be deportations, but the first term of Donald Trump had fewer deportations than the second term of Barack Obama. So it is a conversation about there will be folks that are deported, but if it's folks with jobs, I think it's going to be less likely that there is
going to be an actual labor market impact. I could be wrong, but that's what I'm tracking.
We also know today in the next few hours that there may be quote, a massive announcement of things. So President Trump will start his first day in full in the office. He's a bunch of high level meetings. Literally in the afternoon, he's supposed to meet with two congressional partners, House Speaker Mike Johnson and Senate Majority Leader John Thune. And apparently they're going to discuss the legislative agenda and the approach to passing one or two reconcilient reconciliation bills.
This is according to people familiar with the matter. Okay, what does that mean? Like what would a massive announcement mean with the three of them.
So I think if it is one big beautiful bill as they've talked about, it is an extension of the tax cuts, but it's also a package that is immigration funding, defense funding, in permitting reform, under energy, and more leasing than what was released yesterday through the executive orders. If they want to do something quick, you separate the immigration, defense,
energy out of that. And what's really interesting there, Alex, is that we've had this focus on DOZE and that really impacted the defense contractors in government service contractors to the extent that we could see one hundred to two hundred billion dollars plus up in the defense budget this year. And when you look at the executive order for DOSE, they want a massive upgrade in it spend in systems
within the federal government for efficiency. That sounds like a lot more spending than a lot of cuts from where I sit. And on the tax cuts they absolutely get extended. The big conversation right now in DC is can you get a score that actually allows you to make them permanent by just saying all the current policy. Just extending that out is technically zero dollars because we're not making changes that's not priced into this market.
So all right, we've got a bunch of issues that you know, with the administration would like to get through. The question, though, is, while the Republicans control both houses of Congress, very very slight edge, is there in reality, giving your experience their ed what percentage of the stuff can they get done? Can they get some of the hard stuff done?
Do you think so?
I think that the base case, Paul, is that extension of the tax cuts, in adding something on that defense, immigration, energy provisions. I think it is going to be very difficult. I don't think we look at the majority in the House and have any concept that that is not going to be a fragile flower of consensus, very difficult to hold together one or two votes and it all gets sunk.
A different way of thinking about it.
Though, is when you are the one or two individuals that is standing in way of the Trump agenda, the pressure on you is going to be so difficult to vote no is to vote to get yourself unelected next term. So the fact that so snarrow actually could be something at the end of the day, the more you get the Trump Agenda on the line to vote know on that besides Massy, probably everyone is on board.
Interesting, right, so that would be a definite something to stomach. And we were talking earlier to a professor at the University of Virginia about how Congress deals with the confirmation process of all of the nominees. Will also tell us how willing Republicans may or may not be to go against that agenda. What sector are you telling clients to focus on the most, if.
You had to pick financials, I think we're going to see massive consolidation, especially among smaller banks. We're going to see a recision of some of the merger guidance that went in just in September. We see a massive deregulatory push something that really was under the radar. On Christmas Eve, the banks sue to overturn the stress test that the
Federal Reserve does. See car If that gets overturned and banks have more capital kind of freedom that they're not worried that the Fed could come in in a year from now and change that stress test and deny them the ability to return shareholder capital, I think you get a rerating in the banks. And one of the biggest debates at Raymond James is there was a lot of
optimism in twenty seventeen and a lot of promises. What's different this time in the fact that the Supreme Court made several rulings in the last several years, especially last year, just up ends what you can do on regulation and Trump two point zero versus what you were able to do in one point zero, So it's going to be much more aggressive in those heavily regulated areas. I put banks at the top of that as a keywinner.
Great stuff ed.
I'm sure we're gonna be talking to you a lot going forward at Mills, Managing Director, Washington Policy Anaels for Raymond and James.
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