Bloomberg Surveillance TV: November 24th, 2025

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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amerie 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.

Joining us now from Brussels is US Commerce Secretary Howard Lucknick Secretarynk, Thank you so much for being with us. I want to start on your discussions with the European Union. We were hearing some noise that it doesn't necessarily include reducing steel and aluminum terroiffts from fifty percent to fifteen percent? Is that off the table for now?

We're talking about everything is on the table when you have such a great partner as the European Union. They have four hundred and fifty million people and a twenty trillion dollar economy, so the opportunity is great. They would like to have steel and aluminum as part of this package. And we think it is very very important that they understand our digital companies and they reconsider their digital regulations

So we're talking to them about.

Take your foot off the regulatory statement, build those data centers in America, and in exchange for that, we'll come up with a cool steal and aluminum deal that we'll all be together.

So it's all trading. These are trade deals.

You're talking about opportunities together. Let's bring it all on the table. Let's see what we can accomplish.

Secretary Lutnik, what's the threshold in terms of reducing certain regulations in Europe on US tech companies that's required in order to create some sort of framework for this deal.

Well, what the.

European Union does is they say, well, our digital rules they only touch companies above a certain threshold. Of course, the only companies above those threshold are all American companies.

So come on, that can't be the rule. Let's take it off.

Let's settle the outstanding cases against Google and against Microsoft and against Amazon.

Let's put them behind us.

Let's come up with a reasonable framework where these companies can grow and build, and then those companies will agree to invest hundreds of billions of dollars of data centers here. So the idea is, if they take their foot off this regulatory framework and make it more inviting for our companies, they can get the benefit of hundreds of billions, possibly a trillion dollars of investment a year.

So the idea is, I'm trying.

To convince them that winning the way Donald Trump is winning in America is the way to go. Look at America, look at these growth rates.

Come on to realize our investment in AI.

Cape's last quarter exceeded consumer spending in America. We had three point eight percent GDP growth. We're going to grow over four percent and next year we could grow over five percent. You got to embrace what's coming. The AI world is coming. Come on, embrace it. That's what we're here doing, trying to bring and make our deal with Europe, which has a great deal done by Donald Trump.

Let's make that deal better.

Secretary Letnik just on that point and point take in on what you see as the benefit to embracing that tech with the EU over and over again has insisted said that it's digital laws are not up for discussion. Are you seeing any sort of relenting from them as you've been pushing it. Does it seem like they would agree to you on this point.

Well, you know, I see a lot of ministers member. There's twenty seven countries, so some are more open minded than others. But you know, it's a process which is talking to them and telling them that if they want to get that kind of investment here, they've got to change the model.

So there's the carrot and the stick.

You know, if you keep taxing these companies, they're not going to give you the investment. So that's my job to sort of talk about it and help those American companies find their way clear to invest here and to grow here. And another example for them, I show them that you know, they're ruling out clean diesel for batteries, and I try to remind them you don't make batteries in Europe. Come on, guys, don't make rules that harm your self because you don't make batteries. That's not a

Will help them grow and build with great trade with America.

But you can't be silly and sort of embrace just batteries which you don't make in Europe. So these are the kind of conversations I have. They're pretty fun if you ask me, because I get to point to the growth in America and say, come on, follow our lead and we will have a bigger, better, stronger trade deal. We'll add to it, will add excitement to it.

But you've got to come along with us. Secretary interests the model, the growth.

We've been seeing because the AI has been contributing a lot to this American economy.

And as a lot of it has been.

Said about the two speed nature of it. On one hand, AI is doing well, and on the other hand, you have consumers that are still feeling high prices. You saw that play out through the most recent elections. There's been a renewed concentration from this Trump administration to try to reduce tariffs, especially on things like food, give food, food goods.

Exactly.

The Trump administration is exactly about affordability. We are going through every line item to try to make sure we can drive affordability across the American consumer landscape. Two things though, American earnings are growing, right, the average earnings of America, their income is growing. So as that grows and we drive prices down, and you're going to feel that Golden age coming. So it's the combination of earnings growing and

We are working on it. The Trump administration is on it. We have a clear direction from the President.

We are going to lower prices and like things more affordable, build We're also going to raise income, raising income as.

Well, just to build up what Dan's talking about. Though, there is a feeling that there is a limit to how much tariffs can go up or how much the Trump administration may have to reduce tariffs going forward in order to address some concerns about cost of living. Has it affected your negotiations at all?

No, I think it's pretty easy.

The world understands that there's given take in these trade deals, and the benefits are clear that the Trump administration has created the greatest set of trade deals. You know, the President's talk about a two thousand dollars tariff given. Then coming back to the American people, you got the one big beautiful bill which is going to cut and there's going to be significant income growth from people next year as that bill comes into play. And we are going

Here.

Trump administration is going to win in affordability and income, two sides of the coin we're going to win.

Secretary Latnik, there's been a huge focus and you've been talking about how US tech has definitely been the fashion of the economic growth over the past couple of years. As the Trump administration decided whether or not to allow Nvidia to sell the H two hundred chips into China, that's been a discussion and something that increasingly people are speculating about.

Well, I've seen that speculation. That kind of decision sits right on the desk of Donald Trump. Right He's got Jensen from Nvidio who really wants to sell those chips, and he's got a good reasons for it.

There's an enormous number of other.

People who think that that's something that should be deeply considered. And the benefit that we have is we have Donald Trump in the Oval office. He is going to weigh those decisions. He understands President she the best. He will decide whether we go forward with that or not. That's on his desk with lots of different advisors. The President loves to hear lots of different voices to make those kind of decisions, and he'll decide whether we sell those chips or not, and then we will go execute it.

However, he decides to go forward.

There's a bigger question here, Secretary Lutnik, about what national security is. Is it more of a national security risk to give China some of these high powered chips or is it more of a national security risk to not have US tech in China?

Has your view on that changed?

Well, that's the question exactly as well, put and in front of the president, which is, do you want to sell China some chips and keep them using our tech and our tech stack, or do you say to them, look, we're not going to sell you our best chips. We're just going to hold off on that and we're going to compete in the AI race ourselves. So that is the question. It's in front of the president. He's going

Secretary Lutnick.

Meanwhile, use of IEPA for terroiffts in front of the Supreme Court. The feedback has been skepticism so far from many of the justices, conservative ones included. As this plays out, can you walk us through how you prioritize the different alternatives should the administration's use of terrorist via IEPA get struck down.

So I was in the Supreme Court. I sat through the whole argument. The justices were tough on on the beginning on the Department of Justices, you know, our person, but then they were much tougher on the other side, much much tougher. So I left that day feeling very confident that we and the President was going to prevail on these IEPA tariffs. So I think you're hearing it from me. I think I was there in the courtroom. I heard it all the way through. I didn't sort

Him to win.

But I want to remind you the president has lots of other authorities. He has two thirty twos, he has three ozh ones, he has three thirty eights, he has a whole variety one twelve, one twenty two. He's got all sorts of other powers. And tariffs are going to be part of this administration going forward, But I don't think they're going to be necessary because the President's going to win the IEPA case in front of the Supreme Court.

Secretary Lutnik.

Theoretically, if the US did lose that court in front of the Supreme Court, in terms of AEPA as justification, how quickly could you roll out that package of additional measures, whether it's Section three or one or section two thirty two.

I think many of them could come very very quickly. I really I don't think most of the big deals. I don't think are in jeopardy. I think the people who did those deals, they don't want their.

Tariffs to go up.

They want their auto tariffs that's durable. That was in a nine to zero at the Supreme Court. You have auto tariffs, you have semiconductors, you have pharmaceuticals, you have steal and aluminum, you have lumber. All of those are durable tariffs. They're not going anywhere. I think our big trade deals are here to stay the way they are now.

Right and the others.

I think we're going to win the case, but I think it would be relatively straightforward for the President to replace it with other means. But it's not going to be necessary because the President has used AEPA correctly, and he's going to win.

Case.

Secretary Lutnik, we know you've got a really busy morning, but before we let you go, has the Supreme Core Case influenced any of your discussions at all with trade partners in terms of what the potential limits are to your ability to negotiate or potentially keep some of the ongoing negotiations that have been already struck.

So that's exactly the point I'm here in Europe. It hasn't come up at all. The fact is we've made a great deal with Europe. They think it's important to them, it's important to us. Includes semiconductors, it includes pharmaceuticals, it includes autos. These are things that are important to the European Union, and they're important. The whole trade deal is

People want to.

Have their trade deals with America, and I think these deals.

Are durable, stay with us. Mulblindex Savanna's coming up off to.

This bil dot a runmap writing odds for December should be sub fifty. That Daily is saying December is an open question means it's probably caput. No December, it means no January.

Neil joins us now he is grumpy.

He wants the rate cuts, he doesn't see them. Why do you put this off so much given the fact that New York Fed President John Williams seemed to really open the door to a rate cut next week and next month, and we do have that closeness between him and Fed shir J.

Powell.

Well, you're doing me not a solid there. I mean I wrote that before Williams came out.

I mean it's again Meal data is positive for December rate because of John Williams.

I mean, I don't look, I think the sort of I think the bigger problem is that we're even debating whether it is or isn't really right. I mean, if they don't go in December, maybe they wait for the data. We know that the employment and the inflation numbers come out actually after the FED meeting, So perhaps they come up with some consensus where they pause, they want to

You know?

My sense is that it's much easier to tell a story for why unemployment is going up then why inflation is going to reaccelerate, and so the fact that we're having this big debate about whether or not we can go twenty five in December or January, to me is a bit ridiculous.

I mean, it almost feels like I.

Don't want to be fatalistic, but it does feel like the train has already kind of left the station. I mean, even if they are able to cobble together at consensus, Lisa, the likelihood is is that that's probably going to be it. They're not going to signal a path of ease and going forward.

So the train has.

Left the station implies that you see a greater chance of recession.

Is that correct? I do so for next year?

You see actually a greater chance of re session next year, which is completely counter we're hearing from every company and every Wall Street.

Strategist, which is often how it happens. But that's what you say, Yeah, I do.

I mean I think if you go like sort of industry by industry, like, what area do you think is going to look better going forward?

I mean.

With respect to employment? Right, I mean, so you know I've talked about residential construction. Home builders are sitting on more on soold inventory. So which way do we think residential construction jobs will go? The freight sector is in recession. It's in recession going into the holidays. As capacity comes out of the freight industry, which way do we think trucking and rail and trans employment is going to go?

Probably not?

So if you're in the woods product employment, which way do we think that's going? How about people working on oil rigs? Also probably down? So you know, there's a lot of this sort of myopic fixation on initial jobless claims, and you know initial claims have to go up.

We haven't seen initial claims.

Well, initial claims aren't really a leading indicator, right, They're just an indicator that comes out every week. What we know about how businesses behave is they shut hiring off first they've done that, and then they lay people off as a last resort. And so if you have to ask me which is the direction of layoffs over the next six to twelve months, my argument would be as probably higher.

This is an economy though that defied a lot of the worst expectations for a downturn after COVID, and a lot of it was attributed to the government giving out more stimulus. If we don't get cuts from the Fed. But what we do get is Washington, DC handing out two thousand dollars tare freebate checks. You get tax rebates too from the one big beautiful bill. Could that be enough to save a recession from this economy?

Well, I mean, I've never in my career been able to figure out a way to make tax refunds useful in terms of predicting what happens with consumption, because it doesn't actually change permanent income. That's what ultimately drives consumer spend. So to me, it's probable that people save the refunds that they get because they're worried about job loss. Right, So to me, it's that income constraint that matters. That's

So then there's a question about the five speakers voting speakers we've heard from that don't want cuts. What do they see that you don't reas appoint It's one of the possibilities Corporate America is really strong. Another possibility, and this was raised a few weeks ago by Evercore, was that it is FOMC members digging their heels in ahead of what they see as a Trump appointed chair who will want cuts, and then setting the groundwork now for

I mean, it's possible, but I also take them out their word. I mean, their basic argument seems to be that inflation has been high for a while and that as a result that, you know, expectations can become unanchored. I really see very little evidence for that. I mean, if you look at business inflation expectations just from the Atlanta Fed released last week, I mean, it's basically where it was last year, even before all the tariff started going.

You.

I'm old enough to remember when I was feeling bearish and you are yelling at me, like things are going so well, what are you talking about? And now I'm saying, you know, companies are doing really well, and you're saying it's not going to work. The train has left the station without rate cuts. When was the last time you were so negative on the state of the economy.

I mean, I'm a pretty young guy, so it's been a while.

I mean, you know, probably when I started my career, I worked for someone who was very bear so maybe that was the last time, and six maybe, But yeah, I mean, look, you can't say I'm a perma anything, right, So yeah, I mean I think that there's reason, there's more reasons to be cautious than bullish right now.

That's sort of the way I'm looking at.

It going forward, who do you expect the next feed chair to be? Evidently we were supposed to get a pick now than it was going to be next month now evidently January. Is there an indication to you based on the timeline that keeps getting moved depending on the moment.

I think the longer the process goes on, the more likely it is is that Secretary Besson becomes the fet chair. That's my view. I mean, I just think that what do we know. I mean, we know that President Trump wants secretary. Could you imagine being one of these other people? Like Kevin has it like it's so obvious that you're number two, because time every chance he gets to talk about the fetcher, he's like, well, I wish this guy over.

Here would do and he's playing to Scott Besson and neber One doesn't want it right and he keeps saying no, I don't know.

I mean to me, it's almost like a bet on do you think that Trump President Trump gets to make his personnel decisions or not? And if you do, then you have to assume that Secretary Besson is the one that takes the seat. The longer the process goes on, I think the more likely it is he's the.

One in that seat.

Stay with us, Molblemberg, Savannah's coming up.

Off to this.

The team at Morgan Stanley releasing their outlook for twenty twenty six, writing, we raise our S and P five hundred price target to seventy eight hundred, driven by strong earnings growth. We believe that we're in the midst of a new bull market and earnings cycle, especially for many of the lagging areas. Mich Wilson of Morgan Stanley joins, Now, wonderful to see you, Mike, Thanks Lisa. So let's start

We say, it's just a changing It's an evolving narrative we've had, which is that we think that the policy still misunderstood right, that they essentially came in this year to the growth negative stuff first, and now we're looking at the growth positive stuff. I'm not worried about the economy. What I am a little bit worried about is that

Twenty twenty six.

We think that seventy eight hundred is dependent on the earning cycle broadening out.

So there's a lot to unpack there.

I want to start with you agreeing with Neil, because Neil had a pretty negative assessment of the overall economy, saying he suspects the trains already left the station with respect to the pain from the FED keeping rates where they are for as long as they have, and that we could be looking at a recession. You seem to disagree on that. So where's the nuance here. What's the difference between preventing recession and really allowing the rotation into some of these other names.

Yeah, I mean, I think our view has been differentiated that we think we have had a recession. We went through a rolling recession in the private economy. So I would agree with Neils that the economy is weak, but

I say.

One of the things that Neil talked about was his fear that even if they cut in December, they're not going to lay out a path for continuous cuts, and Fed Governor Waller seemingly enforcing that speaking on Fox moments ago, saying you might see more of a meeting by meeting approach once you get to January. If you do get that posturing from the FED that maybe they cut in December, but it's a meeting by meeting approach, They're not necessarily

For that rotation?

Or do you need a clear passive cuts to get it?

No, we need a ladder. And I think we're going to get there one of two ways. Either the data, you know, the labor data is going to basically support our view or my view that we had a rate of change trough and the labor markets in April, okay, and so that data they will allow the FED to cut more or signal they're going to cut more. The second one is that we get more financial stress.

Okay, that's what's been going on.

We think the market We wrote about this back in September early October, we thought the market was going to have a ten to fifteen percent correction because the liquidity wasn't there, that the balance you was tightening, And we think there's evidence that that correction is well advanced. Okay, all the momentum stocks, you know, Crypto obviously is the topic of the day, down thirty percent for bitcoin. I mean, these things are telling you that the market is worried

Then the Federal respond to that.

So is this like a Many twenty eighteen in that regard, right, that you kind of go into end of the year and then there's stress in some of these financial metrics that the Fed cares about, and then they provide more balance sheet So we think there's sort of this title war going back and forth, but ultimately it results in a more dubbish policy path.

On the point of Crypto, a lot was made, I mean, even from Bill Ackman basically saying things that he thought weren't correlated all of a sudden were that Fanny and Freddy were selling off because the people who were buying Crypto were the same people in those names did last week in the week before's episode. Given how much crypto falls, show some vulnerability within the market structure, within who owns these stocks, and how fragile and weak some of those hands.

Are, I don't think it's showing anything new. I think this has been their whole time, right, I.

Mean, I don't people waking up to the idea that liquidity is important for the market. I mean, obviously I don't know what they're doing. I mean that's kind of crazy. Of course, liquidity matters. I mean liquidity is, and especially the last ten years or so, I think that the hard part about liquidity is it's sort of this sort of nebul this thing.

It's hard to measure.

And I've spent a lot, like the last two or three years trying to develop a better skill set around that, and I think we've got a better handle, but I would I would say it still is one of these things that's sort of the invisible hand. And so what you have to do is you have to look at the market to tell you when liquidity is tight or not.

So you kept mentioning the balance sheet. Are you saying QUE is going to start again?

Well, they may not call it Q, but yeah, the balance sheet needs to expand, not only to support financial markets, but to support the better growth that I think is coming next year. Right, So if CAPEX really picks up for the first time in ten years. OK, let's be honest, we haven't seen much capital spending, but the big beautiful bill is in scenting that that's a usage of capital that needs to be supplied by somebody.

So the balance sheet needs to grow.

Just to help the economy and the markets, and so we can call it QE, call it not QE, but generally they need to expand that.

How much is a seventy eight hundred target predicated on the idea of the FED cutting rates and using its balance sheet to help support liquidity.

It's very important.

I mean, I would say, if we don't get at least one of those items surprising the market's meaning more than three cuts, or we get more balance sheet expansion, call a queue, call it something else, okay, yo, curve control.

Whatever you want to call it.

Okay.

If we don't get some combination of that, then we're not going to reach our target.

So I'm assuming that we get.

There either through the labor data or through some financial stress.

So it has been so far that the AI trade has maintained any kind of equity valuation, despite the fact that people are getting increasingly worried about an economy that you think already.

Has gone through recession.

I just wonder do you think that ship sailed in terms of AI leadership propic things up. Do you think that if we don't get the real economy reaccelerating, you cannot get the multiples that we currently have.

Been seeing on the big tech names.

Yeah, I think it's one of the same. I mean, obviously, the investment in AI is on the premise that it will lead to higher productivity, adoption and all that works. I mean, that's the way technology investment works. So you're not going to these stocks are not.

Going to work.

Leaders aren't going to work if the foundation itself isn't being supported by the technology investment. We assume that is going to happen in twenty twenty six. That is part of our thesis, Okay, but it's not without risk. So our job is to lay out our narrative, which we have conviction in, but then to highlight these risks in the short term or in the medium term that could throw that They could throw that narrative off.

And he R.

Denny also joined us earlier just saying that some of the air is being taken out of the AI bubble, and to him that meant that the melt tup that we've been seeing is going to be harder to come by. Has something changed, at least with that blind willingness to continue to buy AI related stocks regardless of how much they're spending and what the return on that spend.

Is well, I mean, this is a natural evolution of any capital spending cycle. There's always going to be a challenge on the return you're going to get. And this is you know, we've seen this multiple times.

We saw it a year ago.

We've talked about this, you know multiple times. In July of twenty twenty four, that was the peak and sort of an AI CAMPACKX deceleration. So this is an EBB and flow. What I like to look at is the AI spenders, how are those stocks reacting? Is the market enforcing discipline on the AI spenders, which then trickles down into the campacks beneficiaries. But we think this is going

It's going to be spent.

The question is what's the payoff look like and what's the timing of that payoff. We think we'll see some of that in twenty twenty six, twenty twenty seven, and so now it's just this transition. You're kind of trading back and forth. So I want to make it clear we think there's a broadening out. That doesn't mean that all the AI stuff gets killed and everything else does really really well. It can work in harmony. In fact, it needs to work in harmony to some degree.

If you do get a scenario though where let's say I don't know, Meta that seems to be one of the poster children for not getting that return doesn't get it as much, and they need to pull back on their spending, but everybody else is still spending. Do you only need one pillar to fall to really hurt this trade or can just any sort of spending happening within this trade, regardless of who the winner is, continue to lift all the boats.

Well, look, I mean, look what's been going on, right, So we've seen a massive bifurcation or dispersion and the performance of not only the hyperscalers but names within that. To me, that's healthy. That's like, not everybody's going to win like that. There's all trophies here. I mean, you have to actually win the game. But all of these

So next year or maybe the end of this year, when we find out who the next FED chair is going to be, how much will that matter to you in terms of whether your goal case will get realized?

I mean, who will necessarily be.

Good for that and who might be a little more problematic for that.

You probably not.

Don't like my answer, but it doesn't matter to me because ultimately, the market's going to tell the.

FED what to do.

I mean, that's my general That's always been my view. People hate it, but like I'm a markets person, Okay, the market's dominant. The markets tell investors what to do, right, So the markets will you kind of force their hands. And if the markets believe they need more liquidity, they will force the faces hand. If the market believes it needs more ray cuts, it will force the hand. Because

So I don't believe the FED is independent.

I believe they're trying to work in the best interests of Americans. Okay, I'm not saying they're dictated by the White House, but they are not independent of the markets. They're not independent of the funding requirements of the US government. Okay, So the Treasury and the FED will work together to do the best they can to solve those issues.

This is the Bloomberg Sevendics podcast, bringing you the best in markets, economics, an gio politics. You can watch the show live on Bloomberg TV weekday mornings from six am 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 Amp.