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This is the Bloomberg Surveillance Podcast. I'm Jonathan Farrow, along with Lisa Abramowitz and Anne-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 6 to 9 a.m. 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.
Max Kentner of HSBC is sticking with this. We remain tactically risk-off and stick to our underweight stance on the US, but buying opportunities should come soon enough. Max Kentner of HSBC joins us now for more. Max, welcome to the program, sir. You put out a note in the last week, why washing machines matter. Let's start there. Why do washing machines matter, Max?
Yeah, I mean, number one, it was obviously a bit of clickbaiting. So I'm pleased to see that it worked with you, John. That's very good. But number two, it actually was there was there was some truth to that, actually, and some some sort of underlying reason why we looked at it. Because when we looked at the washing machine tariffs in 2016 and 2018, in fact, we've seen quite a bit of sort of textbook like behavior, what we would expect with tariffs, you
In 2016, when we had the anti-dumping order on China, for example, the overall imports of washing machines to the US didn't really change. It was only the imports from China that dipped, but worldwide imports actually, you know, they were pretty stable. So we saw the
classic substitution effect, there was also no effect on prices. That only came in 2018 when we saw the global tariffs on washing machines slapped on. And what you saw in advance for that, a couple months before that activity went up, we saw this classic sort of front-loading that people are also talking about right now. So people really rushing to buy those washing machines, and then imports really nosedived into those worldwide tariffs. And the same happened with laundry-equipped
So with prices on washing machines, they've actually went up by 10.5% straight after those tariffs were slapped on in February 2018. So the parallel that we were drawing really is I think people are a little bit too relaxed now in saying, well, you know what, the next couple of quarters, maybe consumers are going to dial back spending a bit and maybe we're going to feel a little bit on spending and on capex.
Whereas I do really fear that in the next month or two, so in May and June, we're already going to start to see some really, really disappointing hard data. And because the narrative at the moment is so entrenched in the sense that it's only a slowdown, it's not a recession, don't worry, it's just to soften the survey data. Because of that really, really widespread narrative, in fact, I really do fear that a couple...
of hard data points are already a couple of disappointing hard data points are already enough to really drive us a leg lower in risk assets. Well, Max, we're expecting to see it this morning at 8:30 Eastern time in GDP, but that's just the math of GDP. We front-loaded imports. You're going to see that show up. You might get a negative print. Max, when you say it will show up in hard data, which hard data, when and why?
Look, that's exactly the point. Two months ago, I could have argued, well, it's mostly consumer sentiment, right? It's only the soft data and the consumer sentiment side. So let's watch that kind of data. But now you've got labor market conditions down, right? So some of the surveys pointing to lower, maybe even negative payroll prints in the next couple of months. You've got CEO confidence down, CapEx intentions down. Whether you look at regional Fed surveys, you look at PMIs, you look at small business sentiment.
So, in fact, at the moment, I think it is way too widespread to say, well, let's just dismiss it as soft data weakness. In fact, now it's so broad based that I'm looking at the heart data. I'm like, I don't really care. I'm not looking only at consumer spending now. It could come from anywhere. It could be ADP today. It could be GDP today as well. Let's face it, John, today, the GDP data, even if it is positive, even if that is the case,
Consent is the same. Consumer spending is going to go down from 4% in Q4 to 1.2% in Q1 in a quarter, where most likely consumers have actually front-loaded activity. And still, consumer spending is expected to be only a touch above 1%. That's not good at all. So to me, it's not just consumer spending. It could come from the consumer side. It could be on the labor market side. It could be jobless claims during the summer, right? Some sort of residual seasonality that we've seen also pan out
in 2023 and last year. Remember the Sarm rule then in August, but the market played that already in June and July, the sort of the cracks in the labor market. So we could genuinely see it from actually a broad range of hard data, not just what I'm looking at retail sales. And if they don't disappoint, then my view is wrong. No, it's much, much more widespread now.
Max, I'm just struck by the fact that three months ago you were talking Goldilocks and steroids and U.S. exceptionalism, nirvana, and that was basically the story and you weren't going to fight it. And all of a sudden you're max underweight, the United States, and you're looking at China as a place to really overweight in a significant way. How much of a decline would you need to see before those buying opportunities start to emerge?
Yeah, so some of our fundamental models, the gap between those fundamentals, what we're seeing, what's being priced in, in terms of growth expectations, top-down growth expectations, and what's priced into the equity market, think globally, cyclicals over defensives, that gap is around 9 percentage points. So that really needs to be closed. I don't think it is enough.
if we're seeing things like Microsoft or Amazon or some of the Mag7 disappointing and that then driving the equity market down. No, it is in fact really, particularly the cyclicals globally that are holding up too well and particularly also in the US. So I think, you know, you look at the US, things like consumer cyclicals, but also the Russell, things like small caps really are a pretty, pretty, pretty decent levels to go underweight and to sell again at this point now.
I'm struck that at the end of last year, people were saying that the U.S. would be able to weather tariffs much more effectively than any other economy around the world. And all of a sudden, 100 days into Trump's administration, and that story has been turned on its head. You're basically talking about overweighting everything else except for the United States. Why has that narrative shifted to such a degree that the pain will be maximally felt to the United States and U.S. assets rather than Europe, rather than Asia? Mm-hmm.
It's a great question. It is very, very different from what we expected perhaps three months ago. Remember three months ago, we had the first tariff round with Canada and with Mexico. And, you know, the narrative, or I think the broad consensus was this is mostly negotiation tactic. And remember, this was all solved within 24 hours. We kind of freaked out. FX freaked out, right? We had the Mexican peso sell off, the Canadian dollar sell off. So most of the tariff effects were really absorbed in FX.
But then it was resolved within 24 hours. So we all thought, okay, let's move on. This isn't really something to take seriously. This is mostly noise. No need to price that. If anything, it's going to hurt the others more than the U.S. because it's just that noise. I think what we've all underestimated, including myself, is the kind of confidence and sentiment shock and the kind of broad-based confidence and sentiment shock
that we've really seen in the US economy. Again, I think the only reason why we're talking about the ins and outs of daily tweets or you guys were just talking about the autos and the kind of nitty-gritty around those auto tariffs, the only reason why we can still afford to talk about that is because the soft data versus hard data narrative is still holding up, because we are not seeing yet
the weakness in this hard data. And I think that's really what I'm scared about in May and in June, where we could be seeing the first cracks in jobless claims, the first cracks in the hard data. And because of that widespread narrative of it's just a slowdown, it's not a recession, it's just the soft data that is weakening. Because of that widespread narrative, I don't need to see the whites of the eyes of recession. I think it's totally enough for a bearish view like ourselves
to see two, three hard data points disappointing. And already that narrative, I think, will be in shatters. Max, I just want to pick up on one trade in particular, just to close this conversation out. You've increased your overweight into EM local debt. There's two assumptions you're making here, that if the US economy gets into trouble, the rest of the world won't as much. And you're also making a call on the FX market as well, because typically when you see a global economy go into a downturn, the dollar strengthens, it doesn't weaken. Where do these assumptions come from?
I think that's totally right, John. I think most of that really is something or is the assumption that is mostly a U.S. centric risk off, that it's a U.S. centric slowdown. Let's face it, in the last two months, we've also seen several sort of several puts from the U.S. administration. So several sort of U-turns from the U.S. administration.
I don't expect this time to be any different. I don't expect that if the hard data really turns, if a view like ours is correct, that really the U.S. administration will press on regardless. I do think there will be some sort of concessions to the market and some sort of U-turns.
where then is exactly precisely those kind of buying opportunities that you were alluding to in the very beginning. I think that's what we're going to see in the next two, three months. And that, of course, means it is not an environment where you want to go long the dollar and where you say, oh, that's the ultimate safe haven. It's mostly really a U.S. risk-off where the dollar sells off and where, weirdly and oddly enough, this divergence between emerging market local rates and broader risk assets
think US equities, think global equities, that broader divergence we've seen in the last two months, that will still hold. And where a lot of emerging market, particularly high beta countries, think places like even Indonesia and Asia, but like South Africa, think Mexico, for example, a lot of those high beta names have a really, really attractive risk premium here. Max, appreciate the call today. Max Kenner of HSBC.
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I'm joined with, of course, Ryan Peterson, the CEO of Flexport, a friend of the show. We're so happy to have him in person in D.C. You're in the thick of this trade story, representing all these companies that are trying to figure out where these tariff rates are going. We're going to get GDP numbers today that are going to show a tremendous amount of front-loading. Where are we right now when it comes to shipping, especially in China?
Yeah, so Flexport's one of the largest logistics companies in the United States and the world, really. And what we've seen since the tariffs, since April 9th, is a 60% decline in bookings. That's not a Flexport number. That's industry-wide for ocean freight. Now, a booking is, you place a booking about three weeks before the container leaves China.
And then it arrives, of course, in the U.S. about a month after that. So this all started about three weeks ago. You're going to start to see arrivals at the port of Long Beach drop from China by 60% in the next few weeks. And then weeks after that for East Coast ports, Gulf Coast ports. So it's going to be a massive impact on consumers, prices,
And obviously, you know, the bigger impact here is companies and therefore jobs if they can continue to employ as many people. And we've seen companies reach out to the White House. Last week you had Walmart, Target, those executives in the Oval Office explaining this picture you're describing right now. And then yesterday we had really this dramatic episode with Amazon. Amazon was going to potentially carve out the tariff price on their website and the administration called that a hostile political act.
Do you tell your businesses how they should maybe deal with this White House when it comes to trade policy? - Well, you know, our businesses, Flexport customers are kind of mostly small business, small, medium-sized business. We do work with a few large enterprises. I feel like they're able to handle relations with government on their own, but the small business really doesn't have a voice in all this. So it's kind of like been, to some extent, my role, our company's role is helping to tell that story, showing this data, making it clear, like, the impact is disproportionate on small business. Larger companies tend to have more resources,
to be able to multi-source the same product. They can buy it in Vietnam, buy it in other countries. So as China starts to become non-competitive, they just shift manufacturing. Small business doesn't have that luxury. They can't have multiple factories. They barely convince one factory to produce their item and they're kind of last in line. When it comes to Amazon though, and this entire debacle that played out yesterday, what we saw is Amazon come out almost immediately in blank.
and say we were just doing this under discussion we're actually not going to go forward with this and this was of course after the president as well called jeff bezos was that the right reaction from jeff bezos in corporate america but you know i'm not going to tell the amazon team how to do their job they're pretty good at life but i i thought if it was me i would be like yeah putting you know the tariffs on there to make it clear that chinese products are not competitive you should buy american products look no duty on the american listings
And it could have positioned that as a win really easily. I don't know why they just backed off right away. But Amazon, as you said, they're one of the bigger players. They'll be fine. What happens with these small businesses? Do we see businesses go bankrupt? Yeah, definitely. I mean, if they don't change this policy, and Trump has hinted that they will, it's sort of clear that this all escalated very quickly in a tit-for-tat cycle. If they don't bring the tariffs way back down on China, like, yeah.
Like thousands, maybe millions of small businesses will go out of business. I mean, so many companies buy from, it's $440 billion worth of goods we buy from China every year. The Treasury Secretary told me a few weeks ago, 145%, these levels are unsustainable. What would be your advice then to the administration at what level they should set? Where it still potentially is a carrot and stick approach with some businesses to move manufacturing elsewhere, but it doesn't actually put people out of work.
Yeah, you know, like, you don't want to ask me my advice. I'm like a free trader. I go, like, 0%. Let's go. Let's, you know, open this up and let people buy from whoever they want to buy from. I don't think that's, like... What advice would you tell them then on a timeline? How quickly do they need to bring these levels down? I think the timeline is really important. I think every day that goes by, more damage gets done. You have the 60% decline in bookings.
25% of ocean sailings, so container ships, have now been canceled. The sailings from China to the US, a lot of those have been diverted. It's not a permanent move, but it takes a long time to reposition these ships back. So they're now sailing from Vietnam, they're going to Europe, they're just rerouting the container ships.
So when they turn this back on, if they do, when and if they do lower the tariffs, you're going to see there's not enough ships and containers to move the cargo and you're going to see prices spike because of that. So like, you know, the economies are very complex systems. They're not meant to be centrally planned at the White House. And we've somehow forgot that lesson that made America so successful the last 200 years. Ryan, thank you so much for your time this morning. John, that was Ryan Peterson, the CEO of Flexport, of course, really in the thick of it.
of this trade war and he's in Washington, D.C. today offering up a little advice for the administration.
Earnings just around the corner as well. Meta set to report earnings after the closing balance. The industry faces continued regulatory pressure. Facebook co-founder Chris Hughes arguing the U.S. has a history of striking a balance between free markets and state capitalism. Writing, quote, we organize many of our markets for the common good, choosing to cultivate them rather than plan them outright. The work is a craft.
not unlike the work of a sculptor or painter. Chris is the author of the new book Market Crafters and he joins us now for more. Chris, good morning. Good to see you. Thanks for having me. Let's start big and then we can get to meta later. Let's do it. The secret source of the US economy. How would you describe it?
It's the dance between the private sector and the government. So I make the case that policymakers have often harnessed and guided markets toward public goals in order to make Americans richer, safer, their lives more economically stable. And there's a hidden history of us doing this from the 1930s all the way to the present. It's a Republican project as much as it's a Democratic project.
And we're going to have to pull out some of the lessons from that if we're going to rebuild on the other side of the chaos that's happening right now. Let's talk about the chaos. Are we doing a good job of it right now? Yeah, I mean, someone said this is more like market crashing than market crafting, and that seemed apt to me. No, I mean, this administration is...
at best impulsive and at worst completely disorganized. The way to do this in the right way would be to say we have a mission like bring back manufacturing jobs or even the auto industry. Then you'd create trade policy, tariffs, that would be
targeted not on avocados and cars but targeted you do it in collaboration with allies and you'd pair it with industrial policy investments to make sure that those plants can get online quickly and that they can do it cheaply and there is a recipe for crafting a particular market along those lines this is just
chaos, to use the word. You don't know where the tariffs are, whether they're on this week or last week, and people are trying to figure it out. Taking a step back, though, further, there is this feeling about what the engine of U.S. exceptionalism has been, and it's been in the worlds that you co-founded with respect to Facebook, which is big tech, and this idea that the technological expertise that has been cultivated in the United States has been superior and has been the reason why so many people have wanted to invest here. Do you see that
unable to continue in this certain sort of less predictable moment? Or do you see that as continuing to chug along in a healthy way that does lead to some sort of evolution?
It's certainly on shaky ground, that's for sure. I think the story of American technical leadership is also one where we see private sector innovation as a critical engine of growth paired with public sector decisions. So I'll give a crisp example. We've all been talking about semiconductors and chips for the last few years, and that's been incredibly important in bringing back advanced semiconductor manufacturing in the United States.
However, the real story of how to support the high-tech industry in the US starts more in the 1980s with Reagan-era industrial policy. At that point, Japan's share of global semiconductor production was increasing quickly and there was a man, Robert Noyce, the co-founder of Intel, who teamed up with other semiconductor producers to go to Washington and say, "Hey, we have a national security problem on our hands." The Department of Defense agreed, so did the White House and Congress,
And they came together to first do a structured trade policy on Japan to prevent them dumping in the market, and then secondly make a big public investment in semiconductor production. So at this moment when we could have lost that technical lead at an early important moment, we invested.
And it worked. A few years later, the United States retook its share of global semiconductor manufacturing. So what I'm trying to say is it's not just a coincidence that we have these high-tech companies now. And yes, it's partially because DARPA funded the internet and the satellites are powered by the
But it's actually something even more explicit, a product of market craft. And that should give us lessons for how we can do it in the future. You said that the U.S. is at risk of losing some of that tech dominance. What makes you feel that about the structure of current tech companies, in particular Meta, that makes you get the sense that maybe they're losing some of that innovation or some of that structure that allows them to lead?
It's less that I think the tech companies are losing innovation and more that you have to have public policy to be fundamentally stable to encourage companies all across the supply chain to invest. And I think that's truly what's at risk now. I mean, you've seen virtually all the measures of investor confidence go down, consumer sentiment goes down, inflation expectations are up, equity markets are down. I mean, all end...
there's a real fear that the Fed won't be able to lower if inflation stays high. So I think all of those storm clouds on the horizon are not just bad macroeconomically, but bad for our tech companies and our leaders. It certainly makes it a much more challenging environment for them to succeed in. If you were a sculptor, you'd be breaking meta up, right?
I wrote a piece six years ago arguing that Meta had abused its power and that it had illegally acquired WhatsApp and Instagram in order to
consolidate its power. The FTC under Trump filed suit on that same rationale several years ago. The Biden administration reorganized the case and continued to prosecute it. And as you know now, I mean, the case is ongoing in Washington with exactly these questions. What is it about it that you think is illegal?
The decision in now over a decade ago to say Instagram is challenging our monopoly, our power in the social media landscape, particularly with photos and WhatsApp later with messaging, and then to acquire those rivals and then do things like purposefully slow investment and development, as the Instagram co-founder testified just last week. That is against the law. To acquire competitors, either to shut them down or to consolidate a monopolistic relationship
position, it's quite clear. Now, the question is, what do you do now? That was a long time ago. And so, in my view, I think it's important that Facebook has to comply with the law despite making a decision years ago that was illegal. And then the question will come to what is the appropriate remedy in 2025. And we need to know more from the case to figure that out. Is it inconsequential?
to call some of the big tech companies in the U.S. national champions and to try to hope that they're successful while trying to break them up and change their business model with elimination of revenues from places like China? I understand why you say that. It seems on the surface like they might be in conflict, but actually what I chart in...
My research is a long story of saying, wait a second, we want leading industries in the United States. So we were talking a lot about tech, but you can do it in finance.
You can do it in energy. You can do it in a whole range of markets. And in order to do that, you need to use a few different tools simultaneously. One of them might be public investment, like in the IRA for climate or in the semiconductor example that we were talking about earlier. Another might be procurement. Another might be reserve buffering. And then another might be competition policy. So these things can work in concert as long as you have a clear mission. What is...
government trying to do. And if that's to spur in this moment AI research and development so that we can lead the world and take on China and be at the frontier, that could be a very, in fact I think that would be a very smart mission to pursue. But it has to be crisp and clear and then you can organize
the institutions of American democracy to pursue that. And sometimes that might mean public investment and competition policy at the same time. This overlaps with the idea of tariffs as well and the idea that it was a bipartisan effort to have specific tariffs on certain products going to China that were national security concerns or just outright bans.
of certain types of chips being sold to China. Do you think that that is the appropriate policy in terms of limiting the amount of information? Or do you think that as someone who's worked in the tech industry, the more cooperation and open transfer of information, the more innovation and the more people can kind of get ahead? I don't think it quite works that simply. I think we have to be clear about what the goal is. Is the goal bringing back...
jobs in particular manufacturing industries? Or is the goal onshoring semiconductor manufacturing for national security concerns? Or is it just a broader goal of technical innovation and leadership like with the investment in AI?
And depending on what the goal is, targeted tariffs can have a place. I mean, we saw this on, let's just use the example of climate policy. Bidenomics has gotten a bad rap, but obviously the IRA brought major investments in climate technology, not only from the public sector, but doubling the overall amount the private sector is investing.
as well and that kind of investment I think can transform that industry. So there are bipartisan moments where people agree more so on semiconductors than on climate, more so on tech oversight than some other things and I think those can be taken advantage of and you know I chart the hidden history of how to do this because we do fail a lot of time you know government
If it doesn't have a clear mission, if it doesn't have an institution charged with getting it done and the discretion to bring in the best minds, then it fails. But when those ingredients are there, it succeeds. And that's why I wrote the book in the first place. Chris, this was great. And hopefully we can do it again soon. Appreciate your opinion. Thank you, sir. Facebook co-founder Chris Hughes there.
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You'll love the presentations you can easily design with Canva. Your clients and coworkers will too. Love your work with Canva presentations at canva.com. Let's get to our next guest, the former Boston Fed President, Eric Rosengren joins us now for more. Eric, welcome back to the program, sir. There's the data, absent payrolls on Friday. How would you approach a FOMC meeting like the one we get next week? Well, first, as Mike highlighted, it's a pretty noisy number. Uh,
It's partly noisy because a lot of behavior changed to reflect the fact that the tariffs were telegraphed. So people didn't know the extent of the tariffs. They didn't know exactly the distribution around countries, but they did know that tariffs were coming and there were certain sectors that you would have expected to be tariffed. As a result, many people and many firms stockpiled ahead, tried to get ahead of the tariffs.
And that shows up in imports, that shows up in inventories, which is exactly what you're seeing in the data. So what it does reflect is enough concern that many people and many organizations tried to front run the tariffs.
Now, in terms of going forward, this doesn't include any of the information from the so-called Liberation Day. So people didn't know during the first quarter exactly what the tariff situation was going to be. And I think most people were surprised.
by how significant the tariffs were. So I think what we're seeing now is the positioning going into Liberation Day, and we're going to still need some additional data after the beginning of April to get a better sense of how much weaker the economy is going to be. But I would say the high frequency data that are coming in are highlighting that
But the Chinese tariffs in particular are basically acting like an embargo. And that means that it's very likely that they're going to be much higher prices and some shortages of goods that are primarily imported from China. Eric, what's the timeline that you've got in mind? So we've seen this show up in shipping and freight bookings. Now I'm starting to wonder when we actually see it show up in the shelves, when people walk into the store, when are they going to notice a difference?
I think you're going to really start seeing it towards the end of the summer. So most retailers, most stores stockpiled inventory. Again, it was highlighted by the president that he was planning on putting tariffs on. So it's not surprising that most stores tried to stock up on anything that was produced internationally that might be tariffed.
So they have some inventories to go through. It takes a while to ship goods from around the world. So the combination of lags getting into the economy and the fact that there were some inventories that are probably going to shelter some of the blow, I would expect the
bulk of the challenge to start being in towards middle to end of the summer. Given the lag in time before we actually see the ramifications and the hard data, how do you understand the soft data that some people say is incredibly and increasingly noisy and other people say is a prediction of what's to come? So things like some of the consumer surveys
have shown a very dramatic change. I would say that's noisy numbers, but it doesn't mean that it's data that you should completely ignore. So I think consumers are very concerned about what the price effects are going to be and are starting to worry about how much they're going to be affected.
I think a lot of people are also concerned about rising unemployment and the ADP report, as you highlighted, was relatively weak. So,
I think there's going to be growing concern as we get into the summer that we are likely to see a recession. A lot of economists are beginning to predict that, and I think there is a chance, unless the administration pulls back on its tariff policy, that we will see some pretty slow growth and continued
problems in the hard data as we get into the summer. We're in the quiet period for the Federal Reserve members ahead of the Fed meeting next week. There has been, though, a lot of communication about just what they see and how they perceive the potential risks going forward of both inflation or weaker growth or disinflation among some. Do you think that at a time like this, there should be more communication or less communication from the Fed members?
Well, what you need is clear communication. And I think it's very difficult at this time to be particularly clear.
First of all, we don't know if some of the policies are going to be reversed. It is possible that negotiations go well with some of the foreign trading partners and agreements are made quickly. Now, most trade agreements take years to actually negotiate, so my guess is it's going to be more of a letter of intent than it's going to be an actual agreement. But nonetheless, there's a lot of uncertainty about how long this policy sticks.
And then there's the question of how it starts affecting individual behavior. These tariffs are much, much larger than anything we've seen since the Great Depression. So our statistical models don't have this kind of foreign shock in the data. So I think they're going to--and the other issue is what you highlighted in the opening, which was it's a problem both for unemployment and inflation. And that makes it more difficult for the Fed.
The Fed is going to be concerned that the inflation numbers are already up and it's before the full impact of the tariffs. And if we start seeing inflation rates at three and a half or four percent, which given depending on where the tariffs end up, at least the reported data over the course of this year could get that high. That's going to make it difficult for the Fed to be reacting preemptively to any concerns they have about
growing recession concerns. So it's a very awkward position for the Fed to be in. And I think they're going to move relatively slowly until it's apparent exactly what the inflation employment shocks are. Eric, before you go, just one final question. The president went after the Fed chair again just yesterday. Does that complicate life for the FOMC in any way, shape or form next week and beyond?
I don't think it really complicates the FOMC. They're going to do what they think is right. But what it does complicate is if people are worried that the independence of the Fed is undermined, it's going to be much more difficult to finance our deficit. The relationship that you were talking about between the stock market and the bond market probably will be less correlated than in the past. And if we're not careful, we'll lose the safe haven between
behavior that we normally expect when an economy slows down. So it's going to limit the fiscal authority as well as the monetary authority. Eric, appreciate your mind as always and your thoughts. Eric Rosengren, the former Boston Fed president.
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