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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and a Marie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always, on the Bloomberg Terminal and the Bloomberg Business app. The Common Secretary
joins us now for more. Mister Secretary, thank you for making time for us on a busy morning for you and the team appreciate it. As always, let's talk about those deadlines, those dates. Baseline tariff start on April fifth, Higher tariff start on April ninth. What happens between now and then.
Well it really We are talking to all the trade ministers, but nothing really happens between now and then. What CEOs are thinking about is, finally, let's think about building in America. You've got almost five trillion dollars of commitments coming to America to build their factories. That number is only going to grow as people realize it's time to bring manufacturing home to America, where the greatest economy and the greatest
market in the world is. It's time for America to stop taking care of every other economy in the world and building them up. Let's build the American economy up. Let's build American GDP, and you're going to see great growth from America.
Mister Secretary, as you know, capitals around the world watching this program right now wants to understand what they can do between now and then to avoid those tariffs. What do they need to do. Have you communicated any metrics to them, whatsoever.
Well, we've been talking to the trade ministers of the major trading partners for more than a month, and we've been talking to them, and so you have to understand it. And this is what's difficult for your audience to understand. That tariffs are easy to understand. Right, we have a two and a half percent tariff on autos, and Europe has a ten percent tariff, and other people have twenty percent or fifteen percent tariff, and that's sort of easy, so they can all come down. But it's the non
tariff trade barriers that are the difference. Some countries have that and they take that that tax of twenty percent and they use it to subsidize the production of their domestic industries. That's why we can't sell cars there because they give a rebate either they give it directly. One country told me yesterday that they give it directly to their car manufacturer to make their cars cheaper. That's why
they sell successfully and we don't. Others take the money and use it and give cheap energy costs to this production. And that's why the steel industry. Why is everybody else so good at steel and we're not, It's because their governments subsidize it. We really need to change the way trade works around the world. It's tariffs, but don't get confused that these non tariff trade barriers, they are the monster that needs to be slaved.
You've been consistent about this argument subsidized production, manipulated currencies, foreign trade barriers, something the President addressed just last night.
Can we just sit on the numbers just for a moment.
The EU twenty percent, twenty four percent on Japan, thirty four percent on China. Just what exactly was the methodology to go through all those different barriers to entry that you want to knock down.
How did you come up with these numbers?
Well, the Council of Economic Advisors, you know, the PhD economists of the administration, coupled with USTR, the United States Trade Representative, they publish a book called Trade Barriers about this thick right, and they've been analyzing for decades all of these different tools that these other economies use to hurt America.
Right.
They won't take our corn in India, they won't take our beef almost anywhere, it's unbelievable.
They won't take our agricultural products.
They just treat us badly because we've allowed them to treat us badly.
And when you finally go back at them and say this has got to.
End, it's going to be tough for them because they've built their whole social network, their whole economies on basically exploiting America. And Donald Trump has said it's time for America to change that.
It's going to be difficult for them to change that.
But eventually America is going to be treated fairly and the production of American factories is going to the incredibly strong growth and you're going to see that growth reverberate through GDP. Remember, people forget the d gross domestic production. If you buy a foreign made Toyota, that is not domestic production. Making a car in America that's domestics.
It's a secondar We could just sit on the methodology just for a beat longer and address it directly. This is what we understand, what most people understand.
You did that.
Essentially, you divided the country's trade surplus with the United States by the total exports and then divided the number by two and produce this discounted rate. If you're a trade partner right now and you've just watched how America's put together that policy, how are you meant to negotiate with that?
What are those countries meant to say? What are they meant to do?
The country is understand that their trade policies were exploited, in exploitation of America.
Everybody understands.
One country actually said to me, I was amazed that we were able to get away with it for this long.
I mean, imagine that.
We share that country, Because they don't. They never say this on the record. You've got the potential, the option, the ability right now to share say it who's saying that to you?
Come on, oh stop.
I mean the country told us that they give the subsidy to the car companies.
Another country he.
Admitted that they give their subsidy to their steel companies. I mean, they're not going to repeat it on here. What's on here is that this is going to change. That it's time for these things to change, and they're going to be more fair and America is going to do well.
And in the middle of that time, all the.
Factories are going to come back to America. You're going to see an enormous number of factories come back to America, or you're going to see incredible change globally. It's going to take time, but the factories are going to be built in America.
That's the most important thing.
Donald Trump wants to see steel and aluminum made in America so we could defend ourselves. He's going to want to see pharmaceuticals made in America. Who on your audience doesn't want us to make the ingredients for pharmaceuticals todaybody ever ask themselves why the ingredients for our drugs should be made in China? Why is that that's not labor, that's factor, that's high tech factories in China. Why because
their government helped create it. They created cheap goods there, they oversupply them, They drive the capitalist American who don't think like this out of business, and then they make it in China.
And Donald Trump has said, I've had nothing.
It was the secretary. Most people weren't totally agree with you. They would totally agree with you because China is an adversary. It is not a partner for the United States. Europe would make a very different argument. And Europe might be wondering this morning why they're being thrown into the same bunket as the Chinese. What explanation can you give them?
Europe does not treat our products fairly. They do not treat our companies fairly. They treat themselves incredibly well, to the detriment of the United States of America.
Right, it is time for them to treat us fairly.
And that is the point, is not it's not free and fair trade there. Tariffs are higher, the non tariff trade barriers are incredible. Like I'd asked you, why don't they take our beef? Why don't they take our agricultural products?
Why?
Because they don't want them? Because they want to make the money themselves. Why is it okay for every other country to feel this way, and it's not okay for America. I tell you why, because we were the world's piggybank. And Donald Trump has said our thirty six trillion dollar deficit, our one point two trillion dollar trade deficit, one point two trillion dollars. We buy other people's things more than we sell them. Ours has got to be rebalanced. It's
a national emergency. Let's fix America and we can.
Mister Secretary, for you, it's beef for the president.
I know it's Ford and Berlin's.
But there are products that Europe takes, things like LNG, things like Microsoft services. Do you want to see balance trade product by product?
No? No, no, it's not product by products. It's a big macro issue. Okay.
Fairness comes when one decides that they can stop. They can't get away with it any longer. So let's make a great deal with the United States of America. Okay, They've got core issues. They have a that tax of twenty percent or twenty Europe has twenty one percent. I mean, so when our goods are sold there, we pay twenty one percent.
They say, everybody pays that, and then they.
Use that money to beat us down in other ways.
I mean, come on, we need to.
Have fair trade macro, not product by product. But I think the way Donald Trump looks at it is country by country.
And what's going to happen is you're going to see domestic production grow.
You're going to see interest rates come down in America. You're going to see growth in America, great jobs in America.
Robotics is going to come to America.
It's going to replace cheap labor overseas. Robots can make things, you know what, the job there's going to be mechanics who fix robots, kind of like a high end BMW. Robots are going to need to be fixed, and those jobs are going to be high paying jobs, and they're going to be here.
We're tired of them being overseas.
For some countries, there's the ten percent base. That's the only levee that they were hit with yesterday. I'm think, give you United Kingdom. I think of Australia. But those countries have a trade surplus with the United States.
So why put the terrify on.
Well, I think the President understands that all of these countries even if they have a trade surplus, if you dig into it, like for instance, the UK, there are trade surplus counts that they have this London Medals exchange.
And so gold and silver bullion going in counts. I mean, come on, that doesn't really count.
So and Australia, which is one wonderful partner of ours, they buy a lot of our planes, right, and if you buy our commodity gas, I mean, that's really what you need, not really what we need to sell you.
It's not the same.
So the President decided, why don't we have a baseline of ten percent? Okay, to really understand that everybody needs our economy. Our economy is the magnet of the world.
Everybody needs our economy.
Let's them pay coming in and let's change that deficit of one point two trillion dollars, and let's make America's economy grow and let's balance that out. Let's fix that first, and then we'll go and readdress the rest of the world. But we need to fix our trade deficit one point two trillion dollars. It's unbelievable. Why we don't have those jobs and the rest of the world does.
Treasury Secretary Scott Besson told me last night, this is a ceiling. Potentially we can see a different floor. Are you prepared to negotiate all of these rates?
Is that?
Is this truly the start of the negotiation.
Well, it's the start of a rebalancing of the way the world works. I agree with the Secretary that our view is that the only way these rates are going up is if countries decide to retaliate. But why would you retaliate against your biggest client, your biggest clients?
Is I want to reorder things.
I mean, the United States of America is the largest client in the world. And yes, of course the countries are going to talk to us, but they talk too casually. They always talk about their tariff rates. I mean it's like they say, oh, I'm going to cut my tariff.
Right.
You think the reason we don't sell a car is because Europe charges a ten percent tariff and we were only charging two and a half.
That was outrageous. But the key is they.
Have all these rules, rules and rules and rules. Like one of my favorites is the Koreans. When we made a deal with them in twenty twelve, we took their cars right, Kia and Hundai, and we were going to sell agricultural products to them, right, And when McDonald's went to.
Send in French fries, they wouldn't.
Let them go in because we couldn't prove the origin of the potato.
I mean, you don't understand the scale and.
Depth of how they keep our products out.
And Donald Trump has said I've had enough. We are going to be treated better.
America is going to be treated better, and that starts today.
Missus Sancrigy, Why exactly wasn't Russia on that list yesterday?
Because we have sanctions against Russia, North Korea, Belarus, and Cuba, and so we're not supposed to be trading with them.
Thanks for clearing that out.
The additional question that other people had too about Mexico and Canada, they were also noticeably absent.
Why would they absent?
Well, they are operating under a rule that was set on for fentanyl, right that they needed to close the border and stop fentanyl. And what that rule is that USMCA major trading is exempt, right, and the other products that they do have a twenty five percent tariff when that is resolved, So we're not going to double count it.
That's just not the way it works.
When that's resolved, they will fall into a model like this. But I think USMCA in the order, USMCA continues to be exempted. So car parts, for instance, don't come with a tariff if they end.
Up being finished in American car.
So if you're building your car in America and you're getting parts from Canada and Mexico, that's fine.
The American cars still come with no terror.
Okay, that's how full The additional question we had on just a few numbers because we're all trying to make sense of this in real time, and you've got the numbers. What's the tariff on China? Now, the complete tariff including everything? What is that number?
Now, Well, there was a twenty percent tariff because they continue to make the ingredients for fentanel and send them out right, and those ingredients have the highest subsidy rate in China, meaning the Chinese government is paying these factories to make these goods that the ingredients for fentanyl, which is killing Americans. Right, So Donald Trump put a twenty percent taff on that, and now the regular trade deficit number.
Right.
The analysis by the Council of Economic Advisors and the United States Trade representative, we have a thirty four percent TAFT, so it's fifty four percent. But when they stop making the ingredients for fentanyl. And I want to point out, in twenty nineteen, President Chi told President Trump that he would put the death penalty on anyone who made fentanyl, and now he's actually subsidizing them.
And that's just it's just so so so.
Wrong that Donald Trump is just he's not going to stand for it, and he's got to hit them with the only thing you get, which is economic.
China as well, on China as well. What about the three oh one terrifs that we're put in place under Trump one point zero and then carried on to the Biden administration, it's about twenty five percent. Are those still in place? Do they get added to this cumulative number?
They do?
Indeed, but those are on specific product segments and those still are as well.
Autos are not.
So we're talking about seventy nine. So we're talking about seventy nine percent for some imports cumulative, we're talking about a seventy nine percent tariff from China.
Is that accurate.
On certain products? That could be true?
Sure, but they've got to stop the UA All they have to have is a phone call. All they have to have is a phone call from President She to President Trump saying I'm going to in fentnyl production that's killing Americans and it drops twenty percent. I mean, that's a pretty inexpensive phone call. But you have to make the decision. You got to stop killing Americans, and so far they haven't.
Made that decision.
Shocking that they haven't made that decision, And you really got to.
Think about that for a minute. Think about that for a minute.
A phone call would save them twenty percent on all their products, but they'd have to stop making the ingredients of fentanyl, and they refuse outrageous.
Has your counterpart reached out to set up that phone call between President Trump and Shojipeing?
You know, President Trump and President.
She, they have away, they're not going to be when their phone call gets made. I don't think they're asking me to set it up. I think that's above.
Me and missus Secretary.
Does that tell you something about maybe the lenforce you think you have, perhaps you don't have over the Chinese. The fact that they aren't reaching down, they aren't doing those things, despite the fact you've put taras up as much as you have.
Well, we'll see.
Remember these tariffs are just going into place, and you know, I think they will have that phone call and they will have lots of conversation together. I think for me, the greatest thing for me is that Donald Trump is sitting behind the resolute desk and the Oval office and he is the greatest dealmaker and he will decide how he wants to play his hand. But the way he's played his hand now is he's been talking about this for.
Thirty five years.
He wants to reorder trade, to have the world stop exploiting us, to bring the factories back, to bring employment back. You know, no one thought about when NAFTA, which he called yesterday the worst trade deal ever. When NAFTA did it gave Canada and Mexico sort of the economic right to be a state of the United States without paying federal tax and without respecting the Constitution. But you could build in Mexico and drive to Texas and build in Canada,
just drive across the border. Was all fine, and no, you know, economically equal to being Alabama and Georgia. Yeah, And so what happened is our manufacturing left America and put those Americans out of jobs, and Donald Trump wants to bring back factories, bring back those jobs, and they can come back. Five trillion dollars worth of commitments to bring back those jobs is pretty unbelievably impressive, and that's what Donald Trump's capable.
Also impressive is the sound of demonic and a big question the markets, asking how much pain you're willing to tolerate. The SMP's down by three point seven percent, the dollar is being sold quite aggressively against the euro. Was saying one of the biggest moves we've seen in the last decade, mister secretary, how much pain are you willing to tolerate? How much market pain are you willing to tolerate?
Donald Trump has focused on the economic pain that the United States of America has suffered over decades since NAFTA, ninety thousand factories, not jobs, factories, five million high paying jobs gone overseas. He's focused on the US worker and
the US economy. And what's going to happen is people are going to realize it is the great American economy that is the winner here, and anyone who doubts it, and anybody who shorts Donald Trump or anybody who doubts the strength and the power of the American economy is making a foolish bet.
Sure, importers are going to have a tough time figuring.
Out what to do because they went and found the cheapest production in the world. It's time to bring that production home, to have the smart, amazing people who run American companies figure it out.
Bring robotics back to America.
And I would say that United States domestic growth is going to have the greatest resurgence ever under Donald Trump, and that's what he has set in motion yesterday.
You'll accept it takes time to engineer a supply side response, though, sir, and in the mad time you can see bad things happen.
Do you accept that?
Well, what I can accept.
Of course, takes time to build factories, but companies understand how to do it, they will do it. The United States of America is the greatest economy in the world.
People have to do business with it.
The rest of the world will bring down their trade barriers and you'll see a great resurgence in our ability to sell agriculture overseas. You'll see factories being built here and that factory production will be faster. So sure, there will be a rebalancing of those who make things in cheap labor markets figuring.
Out how to make them here.
But ultimately speaking, and I think in much less time than you think, the world will reorder itself, will figure it out, and the United States growth rate will turbocharge compared to the rest of the world. We've been too close to them because we've been Our presidents have been presidents of the world.
And Donald Trump ran on the policy that.
He was going to be the president of the United States of the workers of the United States, and he was going to place American workers first. And that's what he did yesterday. And that's what everybody's feeling. Those workers have been disrespected and now they're going to be respected.
To miss the secretary, just the final question, if we might any course schedule for today with the Europeans to those negotiations start this morning immediately. Can you give us a sense of things?
Absolutely, we are our teams are talking to all the great trading partners today and we are available for our great.
Trading partners every day.
It is time for them to do deep soul searching of how they treat us poorly and how.
To make it right. It is time for them to do that.
That is going to be difficult for them because they've taken advantage of US for so long.
They should just.
Be disappointed that the free ride is over. It's time for them to be realistic and to change the way they look at the United States of America. And I think that's going to happen starting today.
I think it's changing in real time, so in many ways, Miss the Secretary, appreciate your time. The US COMMAS Secretary Hammut Latinik on the trade tariffs announced overnight from the United States of America. Joining US now for the next thirty minutes or so, the perfect guest. Jim's out, the president of Apollo Global Management. Jim, it's good to see you.
Good morning, good morning as always.
Congratulations on the new title, because how mu's focus to you for a number of months.
Thank you.
It's been a long journey and I appreciate the note.
Well, let's get straight into it. You've called it macro paralysis.
What is it now?
Well it is.
I mean, I sit here this morning and this really can't be a surprise. The reality of the surprise is a little bit more painful for everybody to digest. But this administration was very clear during the campaign what their objective was. They really wanted to revitalize American industry. They wanted to bring back manufacturing, focus on energy, focus on industrial renaissance, and tariffs. As Amrita said, tariffs, taxes, and deregulation were a three legged stool, and right now the
focus is on tariffs. They have been probably signaling I know you're having Secretary Lutnik on later on this morning, but they've been signaling this was the dialogue. This is obviously a long negotiation, but again, this was part of the administration's agenda. This is what they wanted to accomplish. They've been very clear in the communication. So the pain of the announcement is being felt this morning in the market.
But again I'm not.
Saying preaching patients and perspective, but certainly this should not be a surprise. And I think now as we think about the big trends in the last twenty thirty years, the first of which is globalization. Globalization is not going to be like we have seen it in the past. It's a new global world order. How the US manufacturing and financial base fits into that as a TBD, but certainly it's going to be one that plays out over the next several months.
I can't think of many people outside of you and the team more doubt into the C suite and corporate America. How are they planning for the changes in the global economy that you and the team are anticipating A plans going ahead?
Do they on hold? Are they totally derailed?
Yeah? Listen.
I've used the term macro paralysis because I think we came into the year the busiest folks on Wall Street were supposed to be the M and A bankers and the ECM folks, and that has not taken place, and so the pace of broad activity in the public markets
has certainly been muted. And I think this really plays into and I've been on the show before talking about the role of public markets and the role of private markets, and not just private credit, but overall private markets, and you're going to see this will be a turning point where private markets play a larger role for a lot of these corporates that are still they have long term plans, whether it's what's going on in technology, energy mining, a
lot of US domestics, who's going to finance this reshoring that's part of the master plan.
So no doubt. I think in c suites and.
In boardrooms there's vision, there's a desire, but the practical reality is things have come to a stop. And I know you're going to have Torston on later on today. The soft data, when you see what's going on with consumers, consumer concern, corporate concern, it's really certainly it's amazing what the President has been able to do in seventy five days, what four hundred basis points didn't do over two or
three years. As I said here, a couple of years ago, we talked about the tightening of financial conditions.
It didn't happen.
The US consumer led in a massive rally and a strength in the US economy in seventy five days. Talk of today has really slowed down the economy. So the soft data and anecdotes would tell you that we have the recession went from a one to five to one in three that now, depending on who you talk to, it's north of fifty percent. It's probably fifty percent going higher depending on what happens on the ninth.
There's a lot to unpack there.
I want to go back to something that you said that this shouldn't have been a surprise.
To anyone, and maybe the objective shouldn't have been a surprise, but the execution is raising some questions for people about how it is going to be past through.
Is there anything about what you have seen over the past week that makes you materially change some of your strategy about how you go forward, how you advise the c suite.
Sure, well, let's just go through two or three things about investing today. And a lot depends on the portfolio or the liabilities you manage. If you run a domestic US long short fund, this is obviously much more fundamental. We're a long term, long duration investor with a lot of investment great assets. So when you look around the globe right now, is anything cheap?
Not really.
Our rates probably going to be notwithstanding the rate move in the last twenty four hours, Our rates going to be materially higher over the next few years, and they have been because of deglobalization probably, And then you have to weigh the geopolitics. So certainly your risk parameters and how you want to calibrate risk has certainly gone up
the last several months. And the idea of the hurdle of an equity return has certainly gone up the last several months, and with base rates high and getting a coupon, it's all about your calibration of risks. So certainly this has taken a situation where in terms of what you can get in base rates, in terms of bonds, in terms of fixed income, in terms of fixed income replacement, it certainly made the equity risk premium a lot higher.
And certainly for us we are in the private equity business, where we are in the equity business, and for us as risk premiums arisen, it's a really high heartle for equity these days, which.
Raises a question, especially if Apollo has really seen the debt portion. If your business grow and exceed what you see in the equity, is that only set to expand, especially if rates are going to remain structurally higher in this new regime.
There's a reason why we positioned our business the way we have over the last five to seven years, not suspecting a day like this would occur. But the reality is around the globe you have millions and millions of folks that are ill prepared, unfortunately for their retirement their pension.
I was in Asia and Australia last week. Even as well as the superannuation funds have done for Australia, they do not really have a system on post accumulation and post retirements and so around the globe, and even in this country, eleven thousand people a day are becoming sixty or turning sixty five. We're ill prepared for the pension system of tomorrow in terms of the needs. And that's why listen what's being written recently about public about private markets.
Certainly in Larry Fink's letter, it's a tune that we've been talking about the last several years about changing market structure, the role of private markets with retirement systems financing. What this administration is putting forth. We think we're primed to be a position of First and Maine in what's going on right now, but certainly a wake up call for retirees around the globe.
Jim, let's talk about Europe. There's been a major sentiment shift towards the European side of financial markets and a pullback from the United States. For a long time we talked about so called US exceptionalism, and one big feature of that maybe even the secret source I think Jeff Bezos and self set.
It is risk.
Seeking capital, abundant markets, really really deep markets, tons of liquidity.
Is any of that under threat?
Well, I think that what you're seeing is maybe not the US going down, but also parts of our globe coming up. I mean the Drogy letter that was put out last September that everybody had in the file. They've quickly pulled it out the last three or four weeks because certainly this administration has woken woken Europe up. And as they wake up, they're saying, how do we create an economic environment where capital can grow? Capital being created
for growth companies. Think about a securitization market. You've got a twenty three trillion economy with a nascent securitization market. And I think this administration has woken up Europe in terms of thinking about how they actually fund finance and grow in this industrial renaissance that's going around the globe
right now. So it's certainly been a massive wake up call, and I think again, you're going to see private market solutions for me any of these countries, companies and industries, not only in the US but in Western Europe as they rise to the challenge.
One discussion point has been that US exceptionalism was predicated both on the AI trade as well as fiscal stimulus that's going into reverse a bit, maybe at the same time that the fiscal expansion is going on in places like Europe, in places like China. How much do you see that continuing in terms of market performance and something that you're willing to follow.
Well, what you're really addressing is mostly on the equity performance, in the public equity performance where public equity dollars go. Certainly there's been a massive amount of global investment in the US equity markets in the S and P, and that's going to be muted as there's a global pullback as investors think about other parts of the globe right now.
But the bigger question, which you're really getting at, is if a recession coming into If I was here six months ago, we would have said a recession in twenty five twenty six was one in five, and now that's certainly one in two, if not higher, with what's going on over the next several weeks. The other scenario is a stagflation scenario that went from a one in six one and seven to probably one in five right now,
one in four and that's the concern. That's got to be the concern of policy makers in the US but also around the globe.
Just building on that, before it sounded like you didn't think the FED could cut rates. You said that this is going to be a permanently higher rate environment, and that happens with both the US as well as Europe. Why you think that they're destined to allow that kind of scenario.
No, but I think they have a When you look at the balance of the dual mandate right now, it's certainly much more challenging. Certainly the White House is going to want to see them cut rates, but and certainly some of the economic data in terms of slower growth, would portray that to be the next move. I think the FED is going to have to practice much more patience in here.
Lisa, this is the number one question in financial markets right now. Is that Fed put constraint because of higher inflation further down the road?
Right now, the market is betting that.
No, it is not, because what you are seeing is more than three rate cuts, almost four rate cuts being priced into the market by year end, with some like City saying that they're going to accelerate them, and others like Morgan Stanley taking away their call key question at a time we're coming off a real inflationary bomp.
Jim.
We caught up with the Treasury Secretary yesterday in the immediate aftermath of the announcement from the President, and he was asked by a Marie about the equity market sell off since February, the highst of the year, and he pointed to the nastack and said, it seems like a Max seven problem and not a MAGA problem. Now you can push back against that, pour some cold water over it, but he has kind of got a point. There's something else going on here outside of just trite.
Well that goes back to my point earlier, like you know, when you look around, like what is an investor right now?
Are things cheap?
No, they've gone down in price, But don't confuse a price move with something being cheap. And it was a marketplace that the mag seven took the market up, and now the mag seven has taken the market down. But again, this is a very very complex economy. And again this is the big theme that we've been talking about years and I know we're talking about financial markets in the equity market, but these public markets only reflect a very
very small portion of the US economy. Yes, these are great growth companies or global companies, but so much of the US economy, so much of the European economy, is private companies, and how do they navigate this? And that's what gives us a great deal of enthusiasm because what's going on for investors in private markets but also for companies needing capital. There's a lot more tools in the toolbox, and there was.
A decade ago.
Can we just finish that on data centers which has been a major thing, sure, not just in public markets. There have been some warnings about over capacity in the last few weeks.
How are you even the team navigates in that.
We've certainly taken on much more as a debt provider to date. Certainly, those who have been around for a few decades, you feel like you're seeing a bit of the conversation about dark fiber from ninety eight to ninety nine and two.
Thousand and one, two thousand and two. Build it and they will come.
Certainly, there are economics that still need to be developed in terms of the economic model of the data center business. A lot of capital has been created upfront to purchase the land, secure the power, create the facility. But who's the long term off take of that, who's the long term capital? And again this goes back to the conversation I had earlier about the pension deficit issue. There's a tremendous amount of long term capital that wants to be
matched up with that opportunity set. But to date we've been much more of a debt provider. But I certainly think that questions that were raised last week by Joe Sai pretty legitimate questions about the long term economics and the short term supply demand mismatch about how these things come online and what the economics are.
Jim, we could talk you all monic, and I've got a job to do, though we appreciate your time always with job.
Thank you, Jim.
Jim's out to that the president of a public global management.
As for that conversation, I'm pleased to be dry by a front of the show. Terry Haynes of PENJEA Policy. Terry, you put ot a note last night, you said Liberation Day tariffs, now watch for many quote path dependent negotiations. Do you think all of these rates that the President outlined yesterday can come down.
I think a lot of them can, sure. And the one reason I would say that is that Secretary of Commerce Lutnik has been kind of pre loading everything over the past days and weeks with a lot of different countries, saying, you know, here's what we'd like on tariffs, here's what we'd like on tariff barriers. You know, here's the realm of things we want to talk about. They've already been those other countries have already been discussing that internally, and
they'll have internal politics as well as external politics. Things they can do, things they can't.
Commerce Secretor Harold Lounik has been in touch with his counterparts a few times. He's been on our program. He've been saying he was going to talk to say's European counterpart that day when Trump came out with a two hundred percent tariff on wine, champagne and cheese. Why not then just do the deal? Why have the destructive what some would call in the market moment right now? To get to that point.
I think the administration wagers that trade negotiations of those kind never end and they get bogged down and not being able to finish them. I think they think that there's more value in kind of a shotgun awe approach that brings people to the table and in sens them to do things and actually get something done.
April fifth is when the ten percent baseline goes into effect, and an April ninth, for if you're one of those countries that has a higher level, like the European Union at twenty percent. Do you think we get a deal before April ninth?
I doubt that some places will probably have that happen, yeah, but I think the big places won't. There's too much complexity internally in a very large country to be able to check off with stakeholders, figure out how you want to change things go through the legislative or regulatory process. I think that's all very unlikely.
Trump's entire agenda is a three legged stool, deregulation, tariffs, and tax cuts. If one of these stools collapses, the entire agenda might collapse. How quickly do they need to get the tax cuts to make sure they keep this economy afloat?
I have it at eighty percent by the end of this calendar year, because that's the way the congressional process will work. Third quarter is largely screwed up because of the need to deal with spending bills. But at the same time, can they do it fast? Sure? And that's exactly what Besson told you yesterday.
Is that why they're including the debt ceiling into this record?
Well, exactly. But he's going to now turn He's told you he's now going to turn his attention to dealing with the tax cuts. I joked on your radio side this morning that Beson's going to be the Gary Cone of twenty twenty five. And that's largely the way I think markets should look at it. But Lutnik's going to be the guy who deals with the terariff issuing.
Okay, But when it comes to those tax cuts and how quickly they need to get it done, we're just talking about an extension of current policy, the sweeten theer's no tax on tips and tax on Social Security. Does that actually get done? Trevie Secretary seems to think so. I'm not so sure when I speak to sources on Congress.
Do I think it gets done? Yeah? I do, certainly by the end of the yetras, yeah, I think so.
You think all of them, this economy, the budget hawks, the deficit hawks, are willing to sign.
Up for that they eventually will be. Yeah, because one of the many reasons why there's Trump urgency is because Trump understands that his biggest leverage points politically with members, particularly deficit hawks, come up in the midterms, all right, and I think that's where you'll see a lot of that.
Terry, thank you so much for your time this morning, Jonathan, of course. Terry Haynes of Panji a Policy, a friend of the show. He thinks it's a shock and off a moment to get negotiators to the table, but doesn't sound like we'll get deals before April nine.
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