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This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. Jim Caron joins us right now. Cross Asset Solutions, Morgan Stanley Investment Management. How many times did you rip up your mid-year report?

Many times. I mean, you all work from home because you couldn't stand each other by the time you were done. What is your mid-year report? So I think one of the big questions that we have or really thoughts is that we're going to start to see more clarity in the second half of the year as opposed to some of the uncertainty. Now, the reality is that going into the first half of the year, we had tariff policy. We didn't know exactly what that was going to be, how the economic data was going to shape out, and what the market reaction would be.

now a lot of that is going to be behind us in the second half of the year for better or for worse you're going to know what the tariff policy is for better or for worse you're going to know what the fed is thinking and what they're going to do in response to that so that reduction in uncertainty does add some visibility to the future in earnings and cash flows and once the budget bill passes this is the last nugget of uncertainty once that passes i think then corporations will have

more visibility into the future. And then from there, you just adjust your prices, you adjust and you adapt like markets do, and you move on. It seems like if you look at the S&P 500 had that 20% sell off.

We've retraced all that, up 5% on the year here. Has the market already done that? It seems perhaps the market's already done that for us. So I'm in the camp that I have a little bit more optimism to the upside. And the reason I say that is because when we saw the upside surprise in earnings in the first quarter, typically what analysts would do is they would increase their full year earnings run rates and their earnings forecast.

they didn't they actually took it down because the tariff uncertainty so even right now there's still a lot of uncertainty relative to the pricing in earnings going forward we think that earnings are underestimated by about by about ten to twelve dollars another way of saying that is that if we didn't have this tariff uncertainty

The earnings estimates today would be $10 to $12 higher. So if you were to put a multiple on that of 21 or 22, you could start to envision 65, 68, even 6,800. Now, that's not my forecast. What I'm saying is that the ups, that's the upside risk that I believe is underappreciated by markets. I looked at Karen at the moment, and of course, the cliche is clipping coupons.

versus a total return. I'm absolutely thunderstruck at the recovery of the Bloomberg Total Return Corporate Index from the collapse that we had, COVID and all that. Do you just assume we get back to trend, price up, and with the yield coming in to assist that we get back to normal fixed income?

I don't think that we get to the long-term normal of fixed income. The long-term normal of fixed income really existed in a downward trending interest rate cycle. I think the interest rate cycle at best is moving sideways.

So you have two components of return in bonds. You have the price return, right, which is what we call the duration return. And the coupon. And then you've got the coupon, so you've got the carry. I think what you can really get out of bonds, if interest rates move sideways, is effectively just the coupon component. So that's going to reduce the long-term expected return in fixed income because you don't get the additional tailwind of the price return. You just get the coupon.

Credit risk-- are you taking credit risk in this market here? We are. Look, I mean, it's treacherous. I will say that the spreads are tight. They're near historical tights. Default rates are around average levels.

The way that we think about this, based on our view for no recession, we think that default risks will stay relatively low. High yield yields in the 7% area. It's not the most exciting, but it does represent a decent return if we avoid a recession, which we do think we will in the second half of the year. I can get potentially, just based on the coupon, about another 3% return

added to the portfolio by taking some higher yielding credit risk, less obviously if we do investment grade. How about the US versus Europe for the first time in a long time?

Europe's outperforming the US. And I'm wondering, is that a short-term trade coming from the volatility in the US markets over New Year? Or is it something more? So this has been a big trade in our portfolios. It's probably the number one theme that we ran. In the start of the year, fourth quarter of last year, we started to get overweight Europe versus the US. And people thought we were nuts.

This trade worked very, very well. And I think that Europe is in a secular changing position where they are doing more fiscal spending. They want to develop business. They want to grow.

Now, I think just for this year, for the next six months, I would say that the accelerated returns in Europe are likely to slow relative to the U.S. But I think the long-term trend for Europe is still good. More tactically over the next six months, I want to reverse that and go more overweight U.S. versus Europe. Interesting. Jim Caron, we'll continue here a bit more with Morgan Stanley. Yesterday, Francine Lacroix with a

spectacular panel at Cintra, including with Christine Lagarde. Lagarde's made a cottage industry of saying Europe needs a real bond market. For our American audience, what's the likelihood that they become capitalist in the format we are? I don't see it. There's culture involved here. This is a great question, a great topic. So one of the big pushes for Europe is to really create a securitized asset-backed securities market.

Europe has about $33 trillion in savings. We know that there's been a lot of fiscal stimulus that's come through about a trillion euro or so. The goal is to basically leverage that by having what we used to have in the global financial crisis, which is these public-private partnerships. Basically, mobilizing that 33 trillion euro in savings, creating an asset-backed securities market where

Private citizens can invest alongside the government to rebuild infrastructure and industry and everything else in Europe. That is the big play. That's what Lagarde is talking about. This is what Draghi spoke about, too, in the Draghi report last year. Thank you. This is all really, really big stuff. Is it doable? Exactly. Cut to the chase. Exactly. Cut to the chase. I am skeptical. And the reason I'm skeptical over that is that European investors, and I know them very well,

They don't really like securitized markets. So there would have to be a regulatory change that maybe entices or maybe forces pension funds, insurance companies to actually start to do this. But I think on an individual basis, people may not as much. Paul, I talked to Lagarde. I can't remember, Jackson Hole, Maven, Marrakesh. And I said, you got a name at the baguette.

I mean, you know, if you have a securities market, it's got to be, you know, in honor of Lagarde. It's got to be. Absolutely. Jim Caron, thank you so much. Morgan Stanley with us today. Too short a visit. Come back again. You're based in New York, right? Are you? Yeah, yeah, New York. Are you in New York or are you in Maine?

A little bit of both, but mostly New York, yes. Jim Caron, thank you. Every business has an ambition. PayPal Open is the platform designed to help you grow into yours with business loans so you can expand and access to hundreds of millions of PayPal customers worldwide. And your customers can pay all the ways they want with PayPal, Venmo, Pay Later, and all major cards so you can focus on scaling up.

When it's time to get growing, there's one platform for all business. PayPal Open. Grow today at paypalopen.com. Loans subject to approval in available locations. At GSK, our focus is on doing the right thing for patients. We believe they should be free to focus on doing what they love, especially when they're living with a disease like cancer. That's why we focus where we can make the biggest difference matching the right treatment with the right patient.

At GSK, we're pioneering advanced technologies like antibody drug conjugates that precisely target and attack cancer cells. By uniting science, technology, and talent, we work tirelessly to stay ahead of cancer together. Visit gsk.com to discover more.

In business, timelines shift, opportunities pop up fast, and your brand has to show up strong. That's why smart teams trust 4imprint. Whether you're planning ahead or responding to a last-minute need, 4imprint makes it simple to get the right promotional products fast, done right, and without stress. With thousands of options, including apparel, drinkware, tech, and trade show essentials, you'll find the right fit for your brand and timeline. Many available with a 24-hour turnaround.

Not sure where to start? 4imprint offers free product samples, expert guidance, and free logo assistance so your order turns out exactly as planned. And every order is backed by 4imprint's 360-degree guarantee, so it will arrive on time, on budget, and printed perfectly. That's what it means to be 4imprint certain.

Explore solutions at 4imprint.com and get your brand where it needs to be quickly, confidently, and without compromise. 4imprint, for certain. You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from 7 to 10 a.m. Eastern. Listen on CarPlay and Android Auto with the Bloomberg Business Podcast.

For those of you on radio today, you're lucky you're on radio today. Joining us now, an eyesore, Dan Ives on Wedbush. Is this the holiday attire we're going with this year? It's a little pre-July 4th. We're going to be doing a little bit of a holiday attire.

What happened July 4th? The jacket you're styling, this is not Balenciaga. Is it snow something? Yeah, snow milk. And they made it for me, so this is a little unique. I was thinking maybe I'd bring one in for Keenan Sweeney, but I don't know. I'm getting worried about our friend Dan Ives here. I mean, he's going over the edge here. Tesla, the numbers were down. The stock is up.

I guess just start with why. Well, these were, in terms of whisper numbers, the street thought it would be about $365K. So it's about $20,000 ahead of where the street thought. So even though in theory it's just in line with the quote-unquote consensus, this is much better than I think the street was fearing. It's trading at November 2021 levels. It's a long range bound.

You've been an optimist. What will drive this dog higher? Yeah. Look, I think it all comes down to autonomous. I mean, it's my view when it comes to physical AI, Tesla and NVIDIA are the two best physicals.

physical AI plays out there. Look, in deliveries, clearly, and some of the Musk-Trump stuff, which has been a major overhang on Tesla. But I think we're now going into what I view as going to be a golden age for Tesla. And we think it's a trillion dollars incremental valuation, just in autonomous alone. Talk to us about that business. Talk to us about the autonomous play first.

Where are we now with Tesla and kind of what's the timeline that you're looking for? Yeah. So look in Austin, our team was there and we saw the robot taxis front and center. The goal is that in a year from now, 2025 cities is where you'll have these. Now they could be geofence in different cities in terms of areas, but going forward, that's one where I believe 20, 25% of ride sharing over the next few years is going to be autonomous. I mean, that's, that's the vision, right? And,

And again, I think it's one where Wemo has had the first mover advantage, but still five cities and cars that are 8x more than Teslas. So scale and scope, I believe they're going to own the autonomous market in the U.S. I'm with Aaron Pressman in the Boston Globe. Folks, all you got to know, if you've never experienced this, rotaries are a unique New England thing, sort of like Narragansett lager beer.

How is a Waymo going to handle the Fresh Pond Rotary in Boston? Look, that's... The rotary at the Bourne Bridge? Look, and that's going to be, when you think about where you're going to see these over the next three to four years, you won't necessarily see them in small towns, in Cape Cod. It's going to be really more city-based, where you're going to ultimately see, I believe, cybercabs and at one point Waymos. Are you a proof of concept now? Like, can you say this works?

Or is there still evidence to go? I mean, our team was in Austin. We saw it front and center. And I believe they'll expand the geofence area. There's going to be some speed bumps. But I believe the path to level four autonomous is here. What's level four? Well, it's essentially no steering wheel. In other words, you get in. Keen gets into a fancy cyber cab. Gets into the back. And then that's it. Okay, so...

Talk to us about Elon Musk. He is presumably back at the company. What can you tell us about Elon Musk and Tesla and his commitment? What do we know? Look, I do believe he is a recommitted CEO. And because he also understands that the future when it comes to AI is ultimately right now ahead of them.

But as we saw yesterday, the political theater is not helping. Yeah, we got to break news. We got to get off Elon Musk and get to a real company. Microsoft to cut 9,000 workers in second wave of major layoffs. Based on your context, Dan Ives of Wedbush.

Are they laying off 9,000 or are they really repositioning 9,000 over to something new like AI? They're essentially repositioning. I mean, the point is we call layoffs and it sounds like they're cutting. The reality is that they're also looking to significantly higher in AI, in software development. This is essentially out with the old technology.

in with the new. That's essentially what's happened with-- - I've seen a couple studies in the last couple days of the implementation of AI and it's jaw-dropping. The speed with which this is going. Is the sell side behind how fast this is moving? - They are so behind. Look, it speaks to, you know, we've been here for a decade talking about like, especially the last three, four years, this is just the beginning.

of trillions that are going to be spent over the next three years and i think you're going to continue to see them catch up to estimates and the bears you know whether sell side or buy side they're in their caves and hibernation mood they can't find ai in the spreadsheets dan one of the bigger tech pieces of news that i saw happened this week apple says it's effectively going to outsource its ai

I mean, to me, that is seismic. It's seismic. I'm not sure if it's good or bad for Apple. I believe it's the best news that we've heard when it comes to... The stock is lifted. In your defense, it's lifted. Because, look, Tom, we've talked about it, and you've hit on it so much as well, is that the reality is you have the best install base in the world. You got 2.4 billion devices, 1.5 billion iPhones. You cannot...

Watch AI from the outside looking in when everyone else is going 100 miles an hour in a Ferrari in the left lane. Perplexity, anthropic, that's what they're going to need to do. I'm going to ask you a question, folks, and I'm completely making this up as an amateur. Dan Ives of Wedbush with us for a lengthy conversation on Tesla popping this morning. Microsoft cuts 9,000 workers, according to Bloomberg. Dan Ives, they did the search agreement with Google.

I'm using Google Gemini. How close are we to a bombshell where Apple picks up some form of exclusive with Google Gemini because they've got the touchy-feely history with the search engine? Why don't they just overlay that over to Google AI like they did with Google Search? Well, I mean, but obviously you have the DOJ and you have some of the antitrust. So you have to structure it for your...

That's exactly it. Have you seen careful policy walk through where they do structure it for authorities? I believe that's the future. Because the future, when you think about Gemini and you think about the view that that's a relationship that's going to actually go...

essentially fall apart. It's the opposite. Those two are going to join forces more and more. Explain to Culture and Cupertino where they say, why are we going to redo ChatGPT or redo Gemini? Just do an agreement with them that's within the realm of regulation. And they also, look, WWDC, and you talk about with Gurman, I'm sure...

It was a yawner because the reality is they had black eye from what happened a year ago when they over-promised and under-delivered. Now they've recognized it's something that they're not going to be able to do internally. They're going to have to do it externally. And also it speaks like the New York City cab driver is bearish on Apple right now. So the bar is extremely low from AI to units to everything. So for Apple here, one of the big issues just out there in tech is some of the

the regulatory overhang for this group. The big issue for Apple, or one of the issues for Apple, is just kind of its deal with Google and search, right? Where are we on that issue for both of those companies? And Google has the trial where Apple can testify on their behalf. So that's part of the issue right now is that Google's going through their own trial. And obviously, the worry is that that's going to impact the Apple relationship. Look,

they'll restructure it in a way that that continues to happen. That's going to continue to be just a massive cash flow for Apple. So you don't think that cash flow to Apple is at risk? No. Now, is that one where it could restructure? Yes. But I don't believe it's at risk. And I just think it's one where...

There's so many good things that could happen from here for Apple, but none of it's priced into the stock. That's why it's underperformed, but especially on AI, given the treadmill approach. What were you thinking in April when we were cratering? Go through the mindset. Your biggest criticism is your permable. Once again, you nailed it by having the courage to stay with the market. What was your mindset for people who didn't?

The first week of April. The mindset was, and we talked about it at that time, like Armageddon, if you go through it, the mindset was that cooler heads were going to prevail. And eventually they recognized in the Trump administration that they would be cutting tech off at the knees and

And the reality is for the first time in 30 years, the US is ahead of China when it comes to tech because of the AI revolution. So it's just one where if you're able to kind of see through it, that's ultimately how you're able to navigate these markets. And those are the best opportunities when everyone's like sort of going, you know, yelling fire in a crowded theater. Those are the opportunities. Are you going to yell fire in a crowded room in our two-hour special tomorrow?

well they're getting that july 4th gene munster and dan ives together tomorrow well i think it's july 4th yeah and gene and i do that you know every six months and i think for everyone it's a real deep dive for the going into tech ai revolution winners and you know g and i love doing it together on these because it really works because you're both different

I mean, people don't understand that. Analysts are different. And we're good friends, but we see things from a different angle. But we're both ones. We don't get caught up in the near term. We see forest through the trees. So the special on July 4th, look for that 5 a.m. running all through the day. Ives and Munster as well. One final question. Use of cash Apple. I would suggest they're going to drop a bombshell here.

Over the next earnings or weeks after that. I believe before. I believe this is something from an accelerated buyback, something that I could see them doing over the next call, two, three months. Because the reality is that they, from a board and Cook's perspective, they understand that the market is not appreciating any of that in the stock. $100 billion of free cash flow, Tom.

It's unbelievable. The slope of their free cash flow build versus the other MAG7, even on a log basis, is just unreal. Monica wants to know, where's your damn hat from? So this is from Arnold Palmer tournament. Big Arnold Palmer fan. So this is an Arnold Palmer one. Great course, great tournament, great champion, Arnold Palmer.

Great drink, too. I'm just having the silence seep in for his jacket. I know. There's a lot going on. You violate so many principles. Dan, I thank you. And again, a special on July 4th. Must listen. This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple Podcasts.

carplay and android auto with the bloomberg business app you can also listen live on amazon alexa from our flagship new york station just say alexa play bloomberg 11 30. this is our conversation of the day maya mcginnis joins us president of the committee for a responsible federal budget maya we could go two hours you and i could sit on a stage in washington and just go go go let me cut to the chase is the long-term price of this folly

that our Social Security check somewhere out there is at risk.

That's one of the many tremendous risks of this. I mean, the list is so long, it would take us two hours to go through it. But let's start there. So this is a bill that is actually, when we have just been told by the trustees two weeks ago that both Social Security and Medicare face insolvency in eight years, this is a bill that would hasten that insolvency for Social Security by probably a full year. So...

- How, when you have a president who is not alone in pandering to seniors and making all sorts of ridiculously responsible promises, "I will not fix social security when what we need to do is fix it," this bill would actually jeopardize people who depend on that program even more than they are already vulnerable. - If, and I'm gonna editorialize here in honor of Paul Tsongas. Good morning, 92.9 FM in Boston. Maya, from Peterson and Tsongas and Sam Nunn out to where we are now,

The litmus paper is our interest payments are a moonshot. This embeds that moonshot ever further, doesn't it?

You know, I was just talking about Paul Tsongas at dinner last night and how much I really appreciated the people who people want like dynamism and huge sizzle in their political candidates. And I love boring and just the facts. And Paul Tsongas was so great at that. And there have been others who have, too. Yeah. Interest payments, which.

which may be boring to some, but actually is one of the things that people care about the most when they worry about fiscal policy. Interest payments are squeezing out every other element of the budget. And they are doing so at perhaps the most important time for us to be thinking about how do we reposition ourself geopolitically? What does this AI race mean? What are the disruptions that are going to happen to the workforce? And how do we make sure that we use technology productively and help with those disruptions?

All of these things are where you should be having the private sector and the public sector thinking through these strategically for the long term. Interest payments are undermining our ability to do exactly that. They are the second largest item of the budget. They are the single fastest growing item of the budget. And it is all about paying for our borrowing from the past, which is keeping us from focusing on the priorities of the future.

Maya, what do you say to those folks who say, hey, as long as people keep coming up to the Fed window and buying our treasuries, we have nothing to worry about this deficit thing? Yeah, I understand that argument. It's the same thing that we made by somebody who wants to walk all the way up to a cliff and then over it before they decide to slow down. It is nonsensical to wait until there is a loss of confidence in our treasuries. We have so many benefits

being the reserve currency, being the safe haven where people want to buy our debt domestically and foreign. And that has helped keep interest rates down. But we've also had to rely on the Fed to keep rates down. We've seen real concerns and interest in diversifying away from the dollar and concerns about those treasury markets. We are having to manipulate the markets now in multiple ways to create higher demand for treasuries.

At a time when we know that the supply is going to be growing. And it's as though instead of saying, hey, let's slow down on our supply of treasuries, we're trying to think of new fake ways to artificially create or require demand for them. Let's structurally rebalance the budget so that we're not so dependent on borrowing from everybody around the world.

A generous brief this morning. We continue with Maya McGinnis. Thrilled that she's with us with the Committee for a Responsible Federal Budget. Good morning on your commute across the nation. For the second half of the year, I'm going to be emphasizing YouTube, our new technology in your office at home. YouTube, subscribe to Bloomberg Podcasts.

Okay, Maya, you're a hitter. I know, like, you're in the St. Regis bar. It's another Marriott. It's another Capuano. We were talking, Maya, about the gritty hotel in Oprah there for the Bezos wedding in Venice. Let's move to where Maya hangs out. In the St. Regis bar, Maya, in Washington, Republicans are doing Republican politics of another time and place.

Isn't their modern constituency more conservative and more genuinely worried about our deficit? Do the Republicans get that linkage?

You know, I think you can't even say the Republicans and mean one thing at this point. There's so many different factions to the Republican Party. It's true for the Democrats as well, but the spotlight is on them and their differences right now. It's been really interesting to watch the development of this reconciliation package because you have the old Republicans, those who believed in lowering tax rates and believed that that would funnel enough growth to offset significant amounts of this.

You have the MAGA Republicans who are really much more populist and are worried about these changes to entitlement benefits. Remember, Republicans used to acknowledge we needed to fix entitlements. Now they're running away from Social Security and Medicare, which are the two we need to focus on. And there's disagreements about how far we should go with food stamps or Medicaid.

And there is just a huge disagreement within the party. Are they the tech leaders? Are they the populists? Have they taken many from the Democrats who want entirely different things? And I think that the tough thing with fiscal policy is nobody really wants the policies that we have

to contend with in order to fix our debt and deficit, which is getting more revenues, controlling our spending and fixing our entitlements. Nobody wants to tell voters the truth about those. Paul Sweeney wants to get eight questions in here. Maya, let me get one more question in before Paul Sweeney. Is there any evidence that you can grow your way out of a debt in a deficit back to George Washington?

You know what is stunning? So one of the biggest fights, because this bill that they're on the edge of passing is so fiscally reckless, one of the arguments has been, don't worry, we're going to grow our way out of it. We've heard that argument time and time again. Yeah, we heard it from the president an hour ago.

Exactly. It's a steady drumbeat of we're going to have astronomical growth. Never mind that no credible projections believe that. Last time around, they say, oh, we had much more growth than that was expected after the last tax cut. That came from inflation and that came from recovering from a pandemic. Actually, the people who are estimating this were pretty close to correct. The dangerous thing now is that our debt is so high.

that the growth we will have from tax cuts is likely to be counterbalanced by the negative effects from the higher debt levels. And in fact, if you use dynamic scoring, which is something I would argue, the Committee for Responsible Federal Budget would argue we should look at, those dynamic scores show that this bill will slow growth, that the effects will be...

more damaging because the debt effects will be so damaging to them of themselves. - Paul, the Red Sox use dynamic scoring, just so you understand. Get one more in here. - Maya, real quickly, how do we get the electorate to care about the national debt and deficits? I've been on Global Wall since '86. We've been talking about it forever. Nobody cares.

- Yeah, that is the absolute most important question because what you hear from members of Congress all the time is, "I know we need to make changes, but nobody cares about this issue. I don't hear from everybody." And I will say that my response to that is, "To your job. Tell them why it matters." Like, you can't expect voters

from the bottom up to create huge marches about this issue and say, "Please raise my taxes, cut my spending." There's no way that that is gonna ripple up from the bottom. But if you have trusted resources, and the problem is there's so little trust these days, but if you have politicians leveling with voters, listen, social security will be insolvent in eight years. There are ways to fix it.

but we need to start immediately. Listen, we have debts that are near record level, and if we don't make changes, it weakens both our economy and our national security. If voters heard that from the top down, I think they'd start to believe this. You hear Secretary Besant talking about, hey, we need to bring our deficits down to 3% of GDP. You hear Ray Dalio saying the same thing. Those are the exact right goals. We need to stop moving in the wrong direction. Pick

a fiscal goal like that idea let's get the deficit to 30 percent of gdp and evaluate every piece of legislation relative to whether it accomplishes getting closer to that or not miami guinness thank you so much every business has an ambition paypal open is the platform designed to help you grow into yours

with business loans so you can expand, and access to hundreds of millions of PayPal customers worldwide. And your customers can pay all the ways they want, with PayPal, Venmo, Pay Later, and all major cards, so you can focus on scaling up. When it's time to get growing, there's one platform for all business. PayPal Open. Grow today at paypalopen.com. Loans subject to approval in available locations.

At GSK, our focus is on doing the right thing for patients. We believe they should be free to focus on doing what they love, especially when they're living with a disease like cancer. That's why we focus where we can make the biggest difference matching the right treatment with the right patient.

At GSK, we're pioneering advanced technologies like antibody drug conjugates that precisely target and attack cancer cells. By uniting science, technology, and talent, we work tirelessly to stay ahead of cancer together. Visit gsk.com to discover more.

In business, timelines shift, opportunities pop up fast, and your brand has to show up strong. That's why smart teams trust 4imprint. Whether you're planning ahead or responding to a last-minute need, 4imprint makes it simple to get the right promotional products fast, done right, and without stress. With thousands of options, including apparel, drinkware, tech, and trade show essentials, you'll find the right fit for your brand and timeline. Many available with a 24-hour turnaround.

Not sure where to start? 4imprint offers free product samples, expert guidance, and free logo assistance so your order turns out exactly as planned. And every order is backed by 4imprint's 360-degree guarantee, so it will arrive on time, on budget, and printed perfectly. That's what it means to be 4imprint certain.

Explore solutions at 4imprint.com and get your brand where it needs to be quickly, confidently, and without compromise.

This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal. John Gimigliano is with KPMG.

He's absolutely definitive on tax policy in Washington. And, you know, just the audit of the number of mint juleps he's had at the Round Robin bar at the Willard, it's uncountable. So he joins us this morning on the back and forth lobbying in Washington. As you say in your note, John, this House vote is not a slam dunk, is it?

It is not. Mike Johnson has got at least four factions he's got to navigate here. He's got the moderates who are concerned about some of the Medicaid and other spending cuts in the Senate. He's got the fiscal hawks who are concerned about, you know, the Senate bill not going far enough in cutting spending. He's got the group concerned about the energy credits that the Senate is pushing back on. And by the way, that group goes in both directions. Some think the Senate went too far. Some think the Senate did not go far enough. And then finally, of course, we've got the SALT caucus, who, for one,

seems to be pretty happy for now about the Senate bill. But what you're great at, John, is the balancing of their interests in cigar-filled, smoky rooms. And the answer is the president feels this is going to go through because of the net benefit to business and capitalism. I mean, basically, that's what's driving this thing forward, right?

First of all, you make Washington sound way more fun than it is. Tulips and cigars and all that. Really, I spend most of my time having coffee on Capitol Hill. But fair enough point. The president truly believes that putting aside the individual tax cuts, right, those are politically important, you know, from a policy point of view. Some bipartisan support for those. But the business side is something that both Capitol Hill and the White House really want to get through to drive economic activity in 2025 and 2026, of course, before those all-important midterms in 2026.

Is this bill, as it's currently written, John, is this pro-growth? I think so. I mean, you can point to several provisions in here that are pro-growth, probably none more than the ability for companies to write off their capex. If you go out and build a factory, you buy equipment, that sort of thing, you get to write off 100% of that in day one. And I think that economists of all stripes have said over the years repeatedly that that is a pro-growth policy.

This bill adds to annual deficits, the total national debt. Should anybody care? Well, first of all, it adds only as much as you want to believe it adds because we're dealing with multiple versions of math on this bill. But I don't think there's any debate that it will definitely add to the debt.

And it's just a question of how much. And again, this is one of the needles that Mike Johnson is going to have to thread to get this through the House, because the Senate accounting on this is, let's call it novel. And he's got to convince his deficit hawks in the House that that accounting is reasonable. So we'll see. You hear people talking about it, but will they actually stand in the way of this bill? I'm not sure. The president has as much influence as any president recently, I think.

across the board including the house of representatives there's no i i can't see a scenario where this thing doesn't pass simply because president trump wants it to pass it is my view that this bill will pass the only real question for me is when of course the president desperately wants to get this done by fourth of july what a moment for him of course to get his signature legislative achievement in this term there's no doubt about that um

done by the 4th of July. However, it's going to be challenging to get this through the House on this super compressed timeline. Remember, the House was supposed to be out. There were flying members back from all over the country. We don't even know how many members are going to show up on the floor of the House of Representatives for this vote. So it's going to get done. I do think it will get done. Will it be exactly this bill, and will it be this week? I don't know. John, have you ever seen tax cuts increase growth?

I mean, CBOs at a conservative GDP look forward 10 years. Can growthiness click in here? Do you see any history of that going back to your time at House Ways and Means? I think you can look further in the Tax Cuts and Jobs Act, right, that Trump's 1.0 signature achievement. There definitely was some growth around the policies there. I think the harder question, though, is...

Will that growth be offset? Does it offset the increase in the deficit? That is a very hotly debated question that, again, they'll argue about forever. But will it grow the economy? Yeah, I don't think that's a super controversial thing. Not all provisions are created equally, by the way. Some are better at that than others. The real question is, what is its net effect on the deficit?

John, thank you so much. See you at the Ron Robin Bar of the Willow. John G. Migliano, principal, head of federal legislative and regulatory services. This at KPMG. This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple Podcasts.

You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa, play Bloomberg 1130. Let's get to the newspapers. Lisa Mateo's never been on a bus in her life. Joining us this morning.

Good morning. All right. I want to start with the Wall Street Journal. This is a new trend in food packaging. We're talking about lower priced, smaller packages. Oh, they've been doing that for years. Come on. Well, here's the thing. OK, food court. But now like Jesus in the food court. Yeah, they're getting smaller and smaller. I know it's an outrage. But here's the reason why you got people like me whose grocery bill is like this and you're trying to get it smaller.

You're trying to shrink the grocery bill. So companies, they want you to keep buying. They've got to boost their volume, so they want to offer these smaller packages. And it also tends to have higher profit margins for them if they do that. So, for example, you have Pepsi selling Lay's potato chips in like a dozen different sizes. So that's an example. Campbell's has these little tiny like Pepperidge Farm ones.

or little cookies. They make more on the little tiny? They make, yeah, yeah, yeah, yeah. So that's it. And even, here's the kicker, Costco going for the smaller packages. So like they have these muffins that are like two packs, like six and six. So now they have one pack that's like nine. And they're saying it actually helped increase their muffin sales. Really? By them doing that. All right, here's my question. In restaurants, why do they give you so much food?

I know. It's a lot. It's a lot. You can have some for lunch tomorrow. It's really, it's an embarrassing American thing. It's crazy. Now, the country boy breakfast at Cracker Barrel, I understand, overload me. But I mean, everywhere else, it's just like, there's no way I'm eating this. It's true. Like, I went to the Bahamas on vacation, and we went to a buffet, and they served us, and they were like...

They said, these are American portions. Yes. And I was like, yeah, we do eat a lot. Side note. Next. Next one. Okay. Are we part of the cool crowd? What do you guys think? Right? Yes, most definitely. Come on, right? Nope.

okay well there's this new york times article that has um a list of things that talks about what makes you part of the it crowd okay so it's a new study it talks about there are six traits that cool people have in common are you ready for them okay cool people are largely perceived to be extroverted hedonistic powerful adventurous open and autonomous

Those are interesting words because like past research, you know, cool means like, you know, friendly, trendy, attractive. So this is like a little bit different. I just think like the whole like high school reunion or college reunion dynamic is fascinating. To me it's just whoever comes back with the most money, you know, that's how it goes. Bam. That's how you show it at the end.

All right. Big movie weekend, right? Today, Jurassic World Rebirth comes out. The seventh installment. All right. Really? It's the seventh installment? It's the seventh installment of this series. Okay. And it's getting an extra jump. So it's starting today. So it has that five days, right? But Variety is saying, you know what?

it might not make enough as as the past ones because the reviews have been you know a little bit mixed but if you look at the top you know the past ones jurassic world jurassic world fallen kingdom jurassic world dominion they surpassed like a billion dollars but what's interesting is that variety is saying you know what universal is not focused so much on that they're focused more on

if it's going to spark a new trilogy. So this one can bring three more to it. Who's in it? Do we know? Scarlett Johansson. She's the big name behind it. Oh, cool. There you go. All right. There you go. I'm in. Scarlett Johansson. Yes, you'll see starring in it. But I mean-- She's worse than me. Yes. But then you have, you know, F1 in there. So I don't know.

Lisa Mateo. This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, 7 to 10 a.m. Eastern, on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal. ♪

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