Yeah, Welcome to the Bloomberg Surveillance Podcast. I'm Tom Keene Jay Ley. We bring you insight from the best in economics, finance, investment, and international relations. Find Bloomberg Surveillance on Apple Podcasts, SoundCloud, Bloomberg dot Com, and of course on the Bloomberg. If we can't break out of this regime, that that will feed into a more existential question of why not and whether we can ever move. Let's bring in my daughter show.
We MKM Partner's chief economist and chief market strategist Might. Good morning to you. Thanks for having me on what happened to the high Evold regime February. It really feels like a distant memory now, it does. It does, so it's dissipated for now. Obviously, markets care a lot about inflation concern and so we're getting strong job growth without wages picking up, and so that hasn't you know that that threat in terms of the Fed panicking uh is
not with us at the moment. And then the last CPI report, we had the core inflation rate a few months back running you know, up into the threes and headline into the fours on a three month annualized basis. And that's completely come off the boil with this, with this weak print. Now it is one month and if you look at the year over year data, we're still just above two percent on both headline and core cp I. So you know, maybe it's not a good idea to you know, to make too much of just one month.
You know, one month's uh, you know, cooling off. But the markets do seem to care about this a lot because ultimately, when we have discussions about how long is the FED going to tighten, will they invert the yield curve if they start to really get concerned about overheating, that's when you know, business cycles tend to end, you know, with with the FED tightening enough to kill the expansion. So it looks like that risk, at least in the very short term is you know, it's been stepped back
a bit, so we're back to goldilocks. In other words, Yeah, basically it's an uncomfortable place. So so so basically everyone should feel good to take lots of risk and and and keep on singing kumbay yah um. But I do want to get your sense. I mean, at what point do we have to start worrying? And do you expect treasure yields to go lower. I do think so. If we're thinking more broadly about two thousand, nineteen and two thousand and twenty, the key question is what kind of
nominal GDP growth backdrop are we going to have? You know, the main reason that the ten year yield ran up to about three percent or just over from what the one thirties and two thousand sixteen was that we had
a pre dramatic pickup in the business cycle. Right nominal GDP growth was running at just two and a half percent year to year in the middle of two thousand and sixteen, We're up at four point eight percent year over year, a nominal growth, so a pretty significant re acceleration and growth, and that came on the back of a huge narrowing and credit spreads right easing financial conditions.
If that's essentially behind us now. But what's in front of us is the impact of the accumulated fed tightening that we'll see this year, you know and last year, and nominal growth is slower as a result, you know, back down to the recovery averages or maybe a bit less so over the course of the next two years. The tenure yield in my view, will you know if
anything be a bit lower. So that's sort of an out of consensus call because most of the people I talked to in financial circuits circles are thinking, well, we're kind of on a moon shot to like four percent on the tenure. That could happen. But yes, yes, now that could happen. I could be wrong in my assessment. But if I'm wrong, I think it will simply be because the nominal growth rate not only fails too slow,
but continues to accelerate. If that's really the environment we're in, growth continuing at a strong pace, inflation, you know, continuing to move to move up this last month, notwithstanding, but the year over year rates, then you could see, you know, higher yields. But that's what it would need to be connected to what I don't see as a growth moderation, and then you know, rates aching up. That would be
a bit unusual. So think the base case view among economists surveyed by Bloomberg on the street right now, on Wolf Street, not the street street. It's for growth to peak this year, to roll over a little bit. Can you imagine to roll over a little bit next year, and to roll over a little bit more after that. That seems to be the consensus view amongst everybody that I've spoken to. We pick this year, we get close to three roll over towards two and a half roll
over towards two in the next two years. Is that your base case? Basically, it's not. I don't like running with the consensus, but you know, the consensus is actually usually right. They're just wrong at turning points, right, always
wrong at turning points, but otherwise generally correct. Uh So, so right now, we sort of have this you know, goldilox situation where the growth numbers have been good it wages and inflation have you know have you know, have not been alarming, and you know, the cases for a slowdown to not be violent, but but to you know, to be more modest because you're not in an environment
where saying, credit spreads are shooting up. At this point you mentioned the volatility tends to correlate pretty closely with with credit spreads and financial conditions. So that's where we are, So it would make sense that the consensus would hold their view. Makes me a little bit uncomfortable to be running with the consensus um, but you know, it does make sense based on you know, that the backdrop just described. Well, you you mentioned the absence of credit risk LEASA triple CS.
I mean, if we keep coming back to this triple ses, the junkiest part of junk is where the performance is beat well. And people will argue this is part because the energy sector was dominanting the Triple C sectuary, and you've got energy prices rebounding. Perhaps that's it, but there also hasn't been that much supply. People aren't Companies that are a risk here haven't been selling as much debt, with the exception of we Work and Uber and some
of these other UH questionable companies. I want to get your take, Mike on something that sort of is a little off topic, and that is geopolitical risk. Because you know, yes, every thing seems great, as John was saying, we're back to goldilocks stands. Everyone's happy, and yet there's a war UH that is at risk of breaking out between Assyria and UH and and Israel with Iran getting involved. The
US just exited the Iranian nuclear deal. You have issues with North Korea, you have China and US trade wars. When do we when do we have to care? Yeah, it's it's an interesting question. Because you know, markets seem like they just overlooked this stuff, and typically they do unless you have a geopolitical event that actually threatens to disrupt commerce and profits. You know, it sounds like a cold statement, right, markets don't care about dead bodies, You
care about commerce, And it is a cold statement. But historically it stands up if you look at the Yeah, it stands up if you look at the data. So it does seem like the world just got a little bit more dangerous in the last forty eight hours. But in terms of of markets, you know, we need to see a series of events that actually threatens commerce on a you know, on a broad scale and uh and then you know markets will it will react to that is trite that issue. I think trade is that issue.
I mean, at this point, you know, we've seen a lot of bluster. We'll see what happens with policy follow through our lack thereof. I think the administration has a bit of a challenge in terms of getting on the same page. I know you've done some interviews with some key administration officials, and depending on who you have on and what you at, you get a different answer. You know,
even asking the same questions as confused as I am. So, so, you know, the President seems to you know, his issue seems to be the trade deficit, right, I mean that's if you when he's asked what is the goal with you know, with the China trade negotiations, it's the trade deficit. Well, you know, if you're running up the fiscal deficit at exactly the wrong time in the business cycle, you do a two year spending blowout, you know, and and then as tax cut, the trade deficit is going to go higher,
all other things equal. So I mean, potentially you could shift it from China somewhere else, but protectionist policy is not going to succeed in reducing the trade deficit unless you actually we're able to do something that blew up the U. S economy in the process. So if investment in spending collapse relative to the level of savings, then you could run trade surpluses. That's what we did during the nineteen thirties. Probably not a policy path that anyone
is knowingly advocating. Marke Donda has been great to see you. Thank you very much for joining us this morning. So M Campound is chief economist and Chafe market strategist. President Trump welcomed home three American prisoners from North Korea. We also found out yesterday Singapore is the designated location for the June twelfth, the meeting between President Trump and North Korean leader Kim Jong What are we expecting to hear
out of these meetings? Uh? Joining us now? Nick Wadam's Bloomberg State Department reporter, Nick, what do you think is the most likely outcome of the historic summit between Trump and Kim Jong un? Well, that's that's really the big question, because they haven't done a lot of the sort of nitty gritty groundwork, uh to pin down, um, you know,
real sort of deliverables from this meeting. So I think what you're likely to see the strategy being is a sort of hoping to start the momentum going so that um, when those negotiations do get tough on the on the details of how North Korea would be nuclearize. Uh, They're hoping that basically the momentum created by that handshake would push those negotiations through, so sort of a very symbolic opening um, opening shot that would then push the negotiations through.
Who is coming into these meetings with the upper hand, President Trump or North Korean leader Kim jonger Well, I think at this stage it's clearly Kim Jong. I mean, this is a huge risk for President Trump because if he cannot deliver a deal, uh, then he will look very bad and his his reputation and credibility will really be undermined. I mean for Kim Jong, and the meeting
itself is a huge victory. He gets to share the stage with the President of the United States, and so far he has not committed to doing anything that North Korea has not committed to in the past, only two reneg upon so so far, I think Kim John looks
like the queer winner here. Nick Waams. Great to have you with us on the program, of course, joining us over the next couple of weeks in the lead up to that amazing summits the set to happen between the President the two respective leaders of North Korea and the United States up Blomberg State Department reporter. What a place to say that with us here in New York is Stephen Cook, CFR, CFR Senior Fellow for the Middle East. Stephen, great to have you with us on a program. Pleasure
to be here. Let's talk about the Middle eights tensions really flaring, and earlier on I said to you, let's talk about your base case for the conflict. You said, which one? Um, So let's begin with one these writings and the Iranians. Tensions continuing to flare, some might say even an escalation of the last couple of weeks. Stephen, how do you see things evolving the Well, the Israelis are seeing the right things without not wanting an escalation.
But there is an existential issue at play for the Israelis. They do not and they are intent on preventing the Iranians establishing a permanent presence in Syria in which to arm his Ballah. They have vowed not to allow what happened in Lebanon, where his blow was able to acquire tens of thousands, hundreds of thousands of rockets and missiles.
They vowed to prevent that from happening in Syria. So I expect that not only will tensions continue to flare, but the kind of violence that we've seen over the last few weeks, most dramatically the other the other night, uh to continue. Does Israel field emboldened now the president has pulled out of the j c P A well, Let's let's be clear. Um, this tip for tat violence between the Israelities and the Iranon's has been happening before the President withdrew from the j c p o A.
But certainly the Israelis feel emboldened. This has been a goal of Israeli Prime Minister Netanya since the Iran nuclear agreement was being negotiated. UM. So they certainly feel as if the situation in the region, with their relations with the wider Arab world and support from the United States, is shifting in Israel's direction. So pretty much everyone who I've heard talk about this expects the conflict to escalate here.
What does the base case look like in your mind as to an escalated conflict and how why does it get Well, it strikes me that it's going to be their escalation is is certainly a likelihood here, but whether it widens to include other actors like the Russians or even the United States seems to be somewhat limited. Uh. The Russians. Um, every party to this conflict in Syria
has to go to the Russians for permission for a deal. Uh, and so UH it's unlikely that the Russians will get directly involved on behalf of the assad regime in the fight between Israeli's and Iranians. However, UH, it could escalate to the point where you do have a kind of open conflict, not just these air strikes and missile strikes. It is unbearable from the perspective of Israelis to have large numbers of Iranian Revolutionary Guard Corps members UH in Syria.
How did how did Russia end up being the powerbroker in all of this with Vladimir Putin kind of having his ring out and everybody coming to kiss it because the Russians intervened in UH and essentially saved the outside regime Asside is dependent upon him UH. The Iranians have become partners of sorts with the Russians UH, and the Israelis need Russian ascent essentially to operate with impunity the way that they have in the skies over Syria. And
what Putin does is he provides that permission. He saves the Asseid regime. He works with the Iranians, but he demonstrates that his interests are independent of Theirs. Thus he hasn't come to the defense of the Syrian regime when it comes to the Israelis taking matters into their own hands. Uh. This is a way of keeping each and every one of these parties. Coming back to Moscow. Uhnatia was just
there UH discussing these issues with with Putin. So how on earth do we get a broader deal that the president would like for Iran to come to the table, agree to everything they've already agreed to, and then agree to even more intervention in the region, ballistic missile testing. That broader deal that the President wants, and some people
might say, quite rightly wants, can he get it? Well, that's the logical flight in the president's decision to breach the j c p O A UH two, break the agreement and then demand a whole host of measures that were already included in the agreement. Plus, UH would if one was an Iranian decision maker, why would anybody take
that deal? And let's be clear, Steven, what we've heard in the last couple of days as well, is that this administration would like the inspectors to still go into Iran even though the unartist STATS has pulled out of the deal. I mean, this is some very very high expectations on the U S administration side for what might
happen here with Iran. It does seem that every time the administration makes a decision along these lines, they have failed to underestimate the likely reaction of their adversaries or interlocutors. Once again, if you look at it from the perspective of the Iranians, the United States is in breach of the agreement. There's no reason, there's no compelling reason for them to allow UH the United States to dictate terms now that the United States is out of the deal,
but the Europeans and other signatories remain in it. So I want to know sort of what you expect the consequences to be on the Iranian economy. Some people are saying that the people might uproot the current leadership and there might be regime change sort of de facto as a result of the U S decision here. Do you
think that that's likely. Well, it is no secret that there has been unrest in Iran over the course of the last months, and much of the unhappiness in Iran has to do with the fact that President Rohani UH said that after this agreement things would get better UH
for Iranians. But Iranians are upset about a whole host of things about Irani adventuresome adventure, an adventurous Iranian foreign policy around the Middle East, that that the focus has been taken off the Iranian people and on this kind of imperial policy on the part of of the Iranians. As far as the sanctions and what effect they will have, they certainly will have an effect on Iranian businesses and individuals who have been who have been sanctioned. But let's
be clear, bilateral sanctions are weaker than multilateral sanctions. And as long as the Europeans, the Indians, and the Russians, the Chinese are not playing along with the United States, the Iranians continue to have options to get around them, even with tough secondary sanctions that the Congress and the
administration are problems. And that's what it all comes down to, Stephen pulling down of the deal is only effective if US sanctions effectively, or international sanctions and secondary sanctions apply to European companies. That's exactly It was the multilateral sanctions that ultimately brought the Iranians to the table, that led to the negotiations that led to the j c p o A. I think it's unlikely that you're going to have that kind of international consensus to negotiate a bigger,
better deal. Stephen Cook, It's great to have you with us, and maybe we can switch for all day on this specific issue. So curious and so many questions as to what is happening in the Middle East at the moment. CF. Senior Fellow for the Middle East, Karen Well. Our next guest has gotten it right again and again when it comes to US stocks. So we are going to tap him and his crystal ball of a mind to find
out where things are going next. Jonathan Gollub joins US Credit sweet chief US Equity strategy in our eleven three Oh studios. Jonathan, before we get into sectors, particularly healthcare, ahead of this President Trump speech on drug prices, UM, where are we are you still as bullish as you have been on US equities and you still see gains ahead? I am pretty optimistic and mean. First of all, the
underlying fundamental is great. This earning season, UM earnings were up twenty five percent year over year, which is just an unheard of thing. UM. A chunk of that is from taxes. But even if you strip out the taxes, earnings growth which is great. A lot of investors are asking if can you get any better than this? And the answer is probably not, But that doesn't mean that
they won't be really good. And I think that investors are struggling with that whole idea that, um, the underlying trend is good, but it can't be as good as as what we've just achieved. So what the answer might be we were talking about this ahead of the segment, is to rotate towards sectors that you like best or think there might be opportunities, rather than just going in whole hog broadly, if you think that this is sort of as good as it gets with respect to earnings,
is that right? Yeah? And I think that's exactly how you have to think about it. I mean, so the first is if you start with tech, which has been the market leader. Um, I think that that will continue to be the market leader for for quite a while. Yeah. I mean, if you look at the returns that you've gotten in the tech sector, they've been driven by earnings,
not by the by stock multiple. So if something goes up by and it's earnings go by thirty, it didn't get more expensive, it got cheaper, right, So, Um, the tech sector has just been out delivering everything else, and I think that it's going to continue to be a winner. However, those areas like industrials or materials or mining companies that are to do really well when the economy is re accelerating are probably going to do a little bit less well.
I wouldn't necessarily want to sell them, but you probably want to move from there to other other areas. The problem this time around, which is something we haven't seen, is that the areas you want to rotate to, which would be like consumer staples or healthcare, have their own problems. And so it's a little bit more challenging this time than than it has been in the past. All Right,
so let's talk about them. Healthcare. Let's talk about the problems, because we've got the speech that we're expecting from President Trump at two pm Eastern time talking about bringing down pharmaceutical prices. Is that is that one of the big headwinds here. It is the big headwind and and and I don't think that's the President's speech. That's that's the issue. We've seen lack of pricing power in the last few years, um from from big big biotech and big farmer names,
and that's really eaten into the profits. I mean, these have been high growth areas. And if you look at the expected earnings growth rate for these big, bigger companies, not the more speculus small guys, Um, they've really come down to the low single digits. And that's a problem. Um. Does that mean that I think that that we should be targeting? Um? You know what, should the president be
targeting these companies? Probably not. It's a lot cheaper to give someone a pill that can keep them from getting a heart attack and you know, than taking care of them in the hospital. So there's places that you might want to ring costs out. I don't know if I would be attacking drug companies, but nonetheless, drug pricing has been a problem. So you're fairly neutral health we we we are neutral on healthcare. I would love to rotate there,
but but again there's a little problem. And then consumer staples that's other than next So Coca Cola, PNG, Uh,
what do you think? You know? You know, not not to comment on on specific names, but a couple of years ago we would agreed that those companies that are in Amazon sites are gonna get crushed and brick and mortar retail has gotten hurt, and we've been overweight consumer discretionary stocks, but it really has been short brick and mortar retail or underweight that and go along everything else in consumers discretionary. And that's been a really great call.
But now you have something else happening. The brands that are being sold in the supermarket, are they're being sold in your department stores, are coming under pressure because we're changing the way we're we're purchasing things because basically, you can't pay for shelf space at eye level and people buy it as much that that simple it is. It is pretty much that simple. And also, you know, there's been this huge premium that we've paid for consumer products
because of these brands that we're comfortable with. And now all you need is a certain number of likes on you know, Amazon or some other social media and and now you're going and buying a product which may be better for less money. Now does that mean everybody is changing their their buying behavior. No, But this earning season you've seen that the margin story has deteriorated in every
one of the subgroups within staples. So it's not a couple of names, it's really a change in in shopping behavior. So on one hand, I'd love to be rotating into these names because I think the economy is kind of not necessarily get becoming slow, but is becoming less fast. On the other hand, the earnings outlook for these stocks are are really more troubled. Okay, so let's shift to energy. Energy stocks in the SMP five hundred up almost seven percent on the year. Uh, certainly this comes as oil
prices surge. Are you seeing still some profits here or do you think that it's already been baked in. Yeah, we've we've been underweight energy for the last two years, and our read was that oil prices may be going up, but that ultimately these stocks were just way too expensive and there were other issues. And then about five or six weeks ago, we we switched direction and said, uh, now is the time to warm up to two energy companies.
So we moved from underweight to neutral. And as we're talking to larger institutions, hedge funds, mutual fund managers, we're finding it at just about the same time they're seeing the same thing. Oil prices are higher, the profits are are stronger, and the valuations on these energy companies looks more favorable. And then there's other dynamics around new technologies and fracking that that actually makes these stocks less volatile, so they're worth more um in the current environment. So
you're still neutral. Do you expect to go overweight? I don't know if we're gonna go overweight, But the case that we had against energy, which would really they've been a terrible performance for so long, I think doesn't make sense any worse anymore. So I think the real question is should you be neutral, should you be overweight? But to be underweight the energy sector, um, we just don't
think it's justified anymore. Okay, So given the fact that there are sort of idiostocratic opportunities depending on the sector, uh, and sort of a broad goldilocks backdrop here where earnings might have peaked, earnings growth might have peaked, but you still have that goldilocks scenario and a lot of central bank stimulus. Uh. How much do you expect the SMP five hundred to gain by the end of the year.
We're up about two and a half percent right now. Yeah, I think that we'll probably see low double digit numbers. We have a three thousand target. Really, so you think it's like percent. We started a year, we're stock multiples. The the pe on the SMP was eighteen two at the beginning of the year. We're at something like sixteen two right now. And that's a combination of the e got so much bigger. I mean, the earnings are just fantastic,
and the stock prices are up. You know, as of right now what a little bit less than two percent um. So our call was that we're going to see something like one percent a month throughout the course of the year. I think that we're going to catch up a little bit from what we lost, and I think we're gonna be surprised. The other thing that's happening, and it's a really big story, volatility spiked and it really beat up
on the market in February and March. That volatility, if you if you look on your Bloomberg screen is really is really really fallen, and I think it is not going to pop back up. I think that we'll see the VIX between twelve and fourteen throughout the year, maybe a little bit lower, and I think that that is going to be a real positive the market. That's underestimated. All right, So what's gonna be the best performing sector. I think tech would be the best performing sector again
this year. And you can see it um in a variety of in a variety of different areas. I'll just mentioned, you know, one theme, but it plays out across things. UM. How big is the is the potential market for online advertising compared to what we're spending today, And I don't know whether it's double from here over the next decade, but it's much much bigger if you look at the cloud computing and data centers. And by the way, you
can play this in all kinds of other groups reats. UM. There's there's data center reats that are just doing unbelievably well and making big capital commitments. UM. But some of these areas are growing really fast, and it's it's not a question of is this a good quarter. These are
multi multi year themes. They're gonna play out. Jonathan Call of Credit Suites, Chief US Equity Strategists, joining us here in our eleven three oh studios, I want to shift our focus now to technology and joining us now, I'm so pleased to say is Austin Goulsby. Some people say he is the funniest economist out there. I call him perhaps the most overqualified comedian. Austin Goolsby was the chair of the Council of Economic Advisors to President Barack Obama.
He has a storied history in the economics profession. He is currently University of Chicago's Booth School of Business Professor. Austin, thank you so much for being with us. I want to start with this meeting with some White House officials and representatives from Alphabet, Google, Facebook, Goldman, Sachs, Boeing, where the White House told them we are not going to bother you in your development of artificial intelligence. Go crazy, do what you need to do. We won't get in
your way. What's reaction to that, Well, it's probably healthy as an approach at the beginning, as you know, you know, AI and machine learning in all of the buzzwords are still in a very early stage, so we don't have any idea which which way they're headed. And for the most part, over time technologies what made us rich. So I wouldn't I wouldn't be too paranoid elon Musk style that the AI is going to turn us into the movie and the machines are going to take over the world,
you know, just yet. So it's it's probably not it's it's it's probably the healthy approach. Well, the reason why I think this is interesting is because it's coming at a time when people are wondering about Facebook's use of data uh and Google is coming under similar criticism in the European Union is implementing some data protection security and that's intimately connected to artificial intelligence. Now, it's how people use this data and creates systematic ways of analyzing it
and potentially in ways that the people could find creepy. Yes, I look, I don't disagree with your If the premise of that is should we be concerned about the the role of our personal data that the tech companies have and should we have better privacy protection? I totally agree with that. I think that's a little different than saying should we have Congress go down and regulate artificial intelligence, which it's pretty clear virtually no member of Congress has
any idea what it is or how it works. So I would just be a little let let's just be a little careful on that end, But that that's not an excuse to do nothing when there are actually things going wrong. The things going wrong on Facebook are not really about artificial intelligence. It's about their desire slash willingness to share are far more about us with third parties than we are comfortable with. All right, well, Austin Goolsby, maybe this is an appropriate time to then segue to
the Chinese government their push for AI dominance. They've already set goals for a tenfold increase in artificial intelligence output in order to keep up with the United States. UM, let's say, get your thoughts on the US Chinese trade confrontation, and do you believe that it will it will really become a trade war? God, I hope not. You know,
I don't know what you guys think about that. But my view is the economic relationship between the US and China is clearly the most important relationship in the world. And I've been a public critic of some aspects of the Chinese economic approach. Um. And the President Trump is not wrong when he puts focus on the violations of intellectual property them forcing our companies to make joint ventures and then the joint venture partner kind of steals all
the plans and comes out with a competitor. We should be pressing on that. Um. If we just knew what they're doing now and we're gonna go over and and yell at them about the size of the trade deficit and threaten a hundred billion dollars of terriffs and then they say, well, we'll put a hunter billion on you. And then oh, yeah, well you put a hunter billion on us, We'll put two on you. That doesn't sound very good. Now, I'm I'm open to be I don't
know proven wrong. I'm open to the idea that somebody in a strategic way and they're gonna that they're gonna only use this as as a kind of a threat to get some deal. Um. But if we actually into the trade ward, no way trade ward, there's no sense in which trade wards are good. I think for sure, Um, it would lead to a freak out and it might very well lead the US into a recession. How would you counsel the president if he asked you for your input?
Because US trade groups are saying that Ford Automobiles, naval oranges, Lemons, cherries from California, they're all sitting on docks as well as pork. It's sitting on docks in China because Chinese officials have in a sense adopted a go slow inspection policy and a lot of this stuff is just rotting. What would the United States do? What would you suggest to the president? Well, the thing to remember about that is I have heard those those reports that the Chinese
that customs are slow walking a bunch of American stuff. Um, they didn't randomly do that. They are doing that in bonds to US, threatening and imposing hundreds of billions of dollars of tariffs on them. So I guess my advice is that I'm not a massive expert about negotiating with the Chinese. I talked in my part of the world in the administration UH at the Strategic Economic Dialogue on
various issues with the Chinese. My my experience says, getting in a big public degradation ceremony in which you announced to the Chinese we're gonna shove your face in the dirt and you're going to have to stand up and publicly capitulate to us will never work. If you take that attitude, which so far we are kind of taking. Um, you, you basically can't negotiate with them because they publicly have to save faith and say no, we will oppose you
in every way. The the the advice that we give now is if you fire a shot acros us the bow. Then go in private, shut the door and have a negotiation and figure out what it is that you want is are you wanting the Chinese too to commit to certain standards on intellectual property? Are you trying to get them to open this, that or the other market? If you do that privately, after firing a shot across the value,
might be able to achieve it. But you don't want to simultaneously threaten all of our allies who could be helping us in that circumstance, threaten them with trade wars, which is what now, what we're doing to the Europeans on steel and aluminum, to the Canadians and the Mexicans
on NAFTA, and to the Japanese. That doesn't make any sense to me, And so I guess I would I would advise, I don't anticipate that the President is going to be calling me, but if he did, I would advise, you know, take one step back and just get a strategy together. University of Chicago's Booth School of Business professor, thank you so much for being with us. This is Bloomberg Surveillance. Thanks for listening to the Bloomberg Surveillance podcast.
Subscribe and listen to interviews on Apple Podcasts, SoundCloud, or whichever podcast platform you prefer. I'm on Twitter at Tom Keene before the podcast. You can always catch us worldwide. I'm Bloomberg Radio