Speaker 1: And hello, Welcome, Welcome, Welcome to the Big Podcast on
this Wednesday. Today is the thirteenth day of May, Year
of Our Lord, twenty twenty sixth. My name is Tom Sullivan,
and we got the President in China. But we've got
some other things that we want to start with today.
First of all, we've got the I Love Financial and
so we have our second day of inflation. Yesterday we
had the consumer Price Index CPI that was at three
point eight percent. That's been just edging higher and higher
and higher, and it's way over almost double the target
that the Fed ones of two percent. We're at three
point eight. But today we got the wholesale inflation rate,
the producer price index, it is six percent. If the wholesalers,
if the business community is having their prices go up
six percent, what do you think they're going to do.
They're probably going to raise their prices by a substantial,
if not all, of that six percent. So it's the
biggest we've seen since back in March of twenty twenty two.
That's when inflation was on its way up to nine percent.
That was the Biden inflation craziness. Well, we're at six
on a wholesale inflation, so we're not that far behind
the core inflation rate five point two. But this was
this was this is the April producer price index, very hot.
Surprised everybody. Most economists did not call for this. It's
almost almost triple the rate that was expected by a
consensus of economists. So what this does is it it
says to the Fed, there's no way they're going to
cut interest rates, not when you got inflation building. And oh,
by the way, regarding the Fed, yesterday Kevin Walsh received
the confirmation vote from the Senate and today that to
be a member of the Federal Reserve Board. And today
they had the vote on making him the chairman and
he passed. It was almost almost down the line party line,
but one Democrat caved and voted as well as John Fetterman.
So I mean, that's not a prize that he voted yes.
So the chairman vote today and Kevin Walsh is now
the new Chairman of the Federal Reserve Board starting I
think Saturday, because J. Powell, Jerome Powell, the current chairman.
His term as chairman expires on Friday the fifteenth, so
I'm guessing Saturday the sixteenth, is Kevin Walsh is the
new chairman. The next meeting of the FED isn't for
another month. It's June sixteenth and seventeenth, so this will
give Kevin Walsh a month to basically get in there
and find out where the coffee pot and the restrooms are,
and from there he will well, he's been on the
FED before, but the pressure you know, was on him
from the President to lower infrastrates and there's no way.
First of all, he's only one of twelve votes. I
can't see anybody on the FED voting to lower interest
rates while inflation is going higher. The goal is two percent,
and we're sitting there with three point eight on the
consumer inflation climbing every month, and now six percent on
wholesale prices. They'll stand by for wholesale prices to pass
through the consumer prices that probably already underway. So that's
what's going on with the FED and I'm glad to
see Kevin Warsh is in there. And no, Jay Powell
said he's not going to leave. He doesn't have to.
His term goes until I think May of next year,
and so he won't be chairman, but he'll be one
of the members of the Federal Open Market Committee. So
now he doesn't want to leave because of the fact
that even though the DOJ has said they're going to
back off on prosecuting him. Janine Piro, the US attorney
for Washington, said, not so fast. I may be going
after him. I'm I'm not going to close that file yet.
So she's kept it open, which is causing some questions.
But Congress did go ahead and put worsh in after
all of the drama regarding the chairmanship. What else have
we got for you today? Oil gas prices they are
it looks like they're starting to top off, but don't
count your chickens yet. Four dollars fifty one cents is
the national average. That is up a penny from yesterday.
It's down two cents from where we were a week ago.
Diesel farmers and truckers. Five dollars and sixty six cents
is the average diesel across the country. That's up two
cents from yesterday and down two cents from a week ago.
But what's interesting, they have a refinery problem in the
Great Lakes area, So Michigan, Illinois, Indiana, and Ohio their
diesel is all over six dollars six dollars thirteen cents
in Michigan, Illinois, and Indiana and Ohio. You're at six
oh six for diesel there. So oh and when I
look around the States, it's been a west coast thing
about the five dollars plus gas. Washington, Oregon, Nevada, Alaska,
and Hawaii are all over five dollars. California is over
six dollars six point fifteen. But add Illinois to the list. Yep,
Illinois is now at five oh three. So oil prices
bounced over one hundred dollars. We'll get the closing number
here in a little bit, but we've got gasoline prices
are probably not going down. They seem to have tapered
off here, but I would suspect that things are going
to be going higher because the cost of a barrel
of oil kit continues to go higher. So we've got inflation,
We've got China. So today, Tomorrow, Friday, we're going to
be talking a lot about China and all kinds of
analysts that are looking at this whole thing and seeing
what's going on. As far as let's get some of
these people in here. Peter Bergen, who I've known for
a very long time, very very smart guy about the
Middle East. He is taking a look at what's going
on with the trip to China and how China versus
the US is going to come out of this meeting.
So here's Peter Bergen.
Speaker 2: Well, I mean China, thank you, sir. It does have
considerable leverage over Iran in the sense that almost all
of Iran's oil expotts go to China. That said, I
don't think she is in any hurry to kind of
get Trump out of this spot. And I think Chinese
military analysts are looking at are the United States inability
to open up the Strait of Hormus with some interest,
because although they are not exactly analogous, there's twenty miles
where the strait is the narrowest, and there's one hundred
miles between China and Taiwan. But the fact that the
United States Navy has not been able to open up
the straight, or won't take the risks involved to open
up the straight is surely playing into the calculus of
she whose longtime goal is to blockade or invade the island.
And that's something that he said he has told his
army to be ready for by twenty twenty seven, which
is obviously pretty soon.
Speaker 1: So all these experts have different views about who has
the upper hand. But the topics that they're going to
be discussing AI Iran, trade, Taiwan, nookes, rare earth exports, Russia,
and oil and natural gas, and those are the topics
at hand. The President was asked about is Ron going
to be the top of the list, and the President said, actually.
Speaker 3: No, I have a great relationship with President She and
I think it's going to remain that way.
Speaker 1: Maybe we have a lot of things to discuss.
Speaker 4: I wouldn't say Iran is one of them, to be
honest with you, because we have a ran very much
under control. We're either going to make a deal or
they're going to be decimated. No one way or the other,
we win. But we're going to be talking about We're
going to be talking with President She about a lot
of different things.
Speaker 1: I would say, more than anything else will be Yeah,
So the focus is not going to be on Iran.
It's going to be more on trade than and Ai.
And those are the sorts of things that they'll be
talking about. As far as David Sanger from The New
York Times, he thinks Donald Trump is going in with
a weaker hand, but so is President she.
Speaker 5: You know, I think that President Trump comes to this
a bit weaker because of the inability to deal with
the Iran situation than he imagined at first when he
was hearing twenty seventeen. As president, I think he was
probably in a stronger position. That's said, Jijen King's not
in a super strong position either, given the troubles that
the Chinese economy has run into in recent times, So
he'd doesn't quite have a latitude, particularly on the economic
issues that I think he may have as well. An
odd moment where both major economic and technological superpowers are
feeling a bit vulnerable and weak.
Speaker 1: So one of the people that was there at the
previous meeting back in twenty seventeen, this guy by the
name of Dennis Wilder. He's a National Security Council guy,
and he says, well, the reason why twenty seventeen is interesting,
but you can't compare it. Both countries have changed dramatically
in the last nine years.
Speaker 6: Well, historically, it can be a good thing. Chairman Mao
thought he had the high hand with Richard Nixon. Nixon
thought he had the high hand with Mao. Because Mao
was under pressure from the Soviet Union, and it turned
out that they could find complimentary reasons to move the
relationship forward. And you're in Beijing today as a result
of what they did in nineteen seventy two. So even
though both of them have their own calculations, these are
two very confident leaders. These are two leaders that know
they run the most important nations in the world. They
know that they have the ability to shape history. They're
very aware of that. And so this is a fascinating meeting.
Well for President Trump, he said it it is trade.
We have still a two hundred billion dollar trade deficit
with the Chinese. What he hopes is that China will
open its markets more. As he talks about it's not
about free trade, it's about fair trade. And right now,
the Chinese wholed American companies out of key sectors. One
of the people on this trip, for example, is in
the medical area, and American medical science has a lot
of opportunities in China. Obviously, you talked earlier about Boeing aircraft.
There may be a deal for five hundred Boeings beef soybeans,
but there are a lot of other things that Americans
can sell to China if it opens its markets. But
at this point it keeps some American products out because
they don't want them competing with lesser quality local products.
Speaker 1: So, speaking of keeping products out, one of the things
that is fascinating. I've got a clipping here from one
of the experts talking about the fact that we don't
allow Chinese cars into the United States. And I've seen
if you go online you look at their websites, some
of these Chinese made cars are beautiful, They're very luxurious,
they appear to be well made. Who knows, but they
are wildly successful in Canada, Mexico, and Europe. But we
will not let them in here. And the comment, which
we'll get to, is that if we let them in here,
the American automobile market, the manufacturers in the US would
be toast. And I'm old enough to remember it was
about nineteen seventy when the Japanese started bringing their cars,
the Toyotas and the Hondas and Nissans called Dotson in
those days, to the United States. Because the American automobile
manufacturers in those days it was simply Ford, Chrysler and
General Motors. They were making terrible cars. They were falling apart. Mechanically,
they were terrible. They've got it was something like nine
miles to the gallon. There were gas hogs. They were terrible,
and the American automobile buyer was looking for something else,
and we didn't put any sort of blockade on the
Japanese automakers. But they came with their little, tiny cars
that got great gas mileage. Yeah, they were much smaller,
but people bought them in large numbers. And what it
did was it forced Ford, Chrysler and General Motors to
wake up and start making much better cars. It took
them a while, and the Japanese got a foothold into
this market that they've never lost. So they're still making
economic cars. They're still making cars that get great gas mileage.
But so are the US automakers now because of the competition.
I'm for competition. I get the problem with letting Chinese
cars into this country, but it feels wrong to me.
It feels like, wait a minute, competition, Detroit. It needs competition.
The problem with China and I don't know, I don't remember,
I don't know if I ever knew the answer to this,
But I don't think the Japanese government subsidized the Japanese automakers,
but China, the government is subsidizing their car makers. And
like I said, they're making a car that's an electric
car that is absolutely gorgeous, and it sells for eleven
thousand dollars eleven thousand. It's a Tesla like top Along Tesla,
but for eleven thousand dollars. And in fact, when you
look at the interior of it, it looks nicer than
a Tesla, so it would sell like hotcakes. But at
the same time it's it's a very It's one of
those arguments I'm torn on because I want competition, I
want free trade, but I get the fact that China
has a history of dumping their products into a country's
market and then driving out the competition. Then they raise
their prices, which is, you know, a classic case of monopolies.
That's how they get started. So anyway, we're still they
won't there. We're wriping at China about you won't let
our products in to all all of our products into
your country, and yet we're doing the exact same thing.
Let's see who else do we have, Oh, Admiralstrevidas, he's
always interesting. Let's listen to him. What he's reacting to
is a New York Times story that said that Iran
still has a huge percentage of their missiles, ballistic missiles
and launchers still available to them, that we did not
take out that much of their military hardware.
Speaker 7: Here's the admiral, very unwelcome news in the White House. First,
good job CIA for finding this out. If these reports
are accurate, this is what you want your intelligence agecies
to know. This deliver unwelcome news if it's the truth.
So point to be made there for the CIA. In
terms of the tactics of the moment, Let's face it,
the opening of the Straight of Hormuz is becoming the
critical path in this and if Iran does in fact
have considerable, particularly short range, tactical and strategicallistic missiles, that's
a real problem. It could initially, but if we're going
to keep it open with Iran pushing back, we really
want to get the Europeans involved, and they have the capability.
They have excellent mind sweepers, they have guided missile frigates, destroyers, cruisers,
they have intelligence networks and by the way, both France
and the United Kingdom have indicated willingness to do this,
and they're putting their ships where their mouth is in
that the Red Sea today has Charles de Gaulle, the
big French nuclear aircraft carrier, and the British are deploying
one of their very formidable type forty five destroyers, HMS Dragon,
so they're moving toward this strait.
Speaker 1: So this report in the New York Times comes from
the CIA supposedly that Iran still has a huge percentage
of their missiles. Was that a surprise to the admiral?
It does?
Speaker 7: I would have guessed we had degraded them by at
least sixty seventy percent given the level of Shakunawe. But
Admiral Brad Cooper, the commander of the mission, he hears
these reports, he rebuilds his target sets, and he's continuing
to give the president options. But yes, it's disappointing news.
Speaker 1: So Best Center is a former National security advisor. She
was asked about the fact that there's been massive changes,
major changes in China since the last time President Trump
was over.
Speaker 8: There is a totally different place, and I think that
this is one of the things that actually affected President
Trump when he first started in this term with this
big trade war is that he made some assumptions based
on what it was like back then when we had
a lot more cards, as he likes to say, and
this time China, because they've been working on self sufficiency
for so long and they've been growing their economy, they
played a card they had never played before, which was
restricting where Earth's and critical mineral exports, and that kind
of shut everything down and led to the truth that
we have now. But it's interesting because Secretary haig Seth
and Secretary Rubio have never been to China before, and
so I think this is a great I'm glad that
they're going. I'm glad they're bringing so many people because
we need to have dialogue and we need stability, and
I think both sides are on that page. I think
one thing to really put straight is this. I've heard
people say in different news broadcasts, not on CNN, that
Iran is a very close ally of China. That is
not how I think of it at all. China is
very very transactional. And also they have valued their relationship
with the Gulf States much more than Iran, and so
Iran has always been kind of disappointed but more dependent.
So China has some leverage here, you know, but how
much are they going to play? If you were China
and you were looking at this conundrum, yes, they wanted
the straight open. They wanted it open yesterday because they
are an export driven economy. But on the other hand,
why would they want to get entangled in this mess?
And why would they want to put presidentc out there
in a way that maybe it would look like he
wasn't effective. You know, the Foreign Minister was just there.
He knows where the Iranians stand, and so maybe he
would be like, this isn't very close to settlement. I'd
be glad to host, you know, a signing ceremony, but
I'm not going to wade into this well, not quagmire,
but this conundrum right now.
Speaker 1: Miss you don't need to be an expert on Iran
or foreign policy expert to take a look at Iran
in China, and they are so dramatically different. Iran is
living in the medieval days. They are going back to
hundreds of, if not thousands of years ago. They are backward,
and China is doing everything in their power to become
a power, the number one power.
Speaker 9: Of the world.
Speaker 1: They are more Western than they've ever been, and Iran
is absolutely not. So when it comes to what's important
on this trip, Doug Bergham, who knows oil, says that's
the number one topic as far as he's concerned.
Speaker 10: Yeah, buys eighty percent of Iran's oil. And China is
the most energy depended country in the world. China importing
eleven and a half million barrels of oil a day
just to keep their economy going, and they're strategic stockpile
is dwindling, and there their economy is faltering. President Trump
is going in to, you know, with We've got energy
security and food security in America. China has neither of
those things. He's in a great position in these negotiations.
Speaker 1: So Berghams all optimistic, but Stephen Broach, he was the
They had a title form us like CEO of Morgan Stanley,
the big Wall Street firm for Asia. He has lived
in Asia for probably forty years, and he's a little
bit more leary about this meeting.
Speaker 11: I hate to throw cold water on what Amon just said,
but you know, I would say downhold your breath for
a spectacular result. I think both sides want stability, whatever
that means. They don't want to rock the boat. And
you know, this idea of a board of Trade I
think is interesting but highlymature. I think, you know, they
certainly want to defer any subsequent actions on tariffs. But
you know, keep in mind, these two leaders have a
terrible track record in the summits of the past. In
twenty seventeen, they both met, you know, once in mar
A Lago, once in Beijing, and you know, they had
a great romance and declared their undying friendship for one another.
And the next year the US launched tariffs, and you know,
a trade war that is still with us today. So
using this meeting as a predictive tool for the future,
especially with somebody as volatile as President Trump, is endeavor.
Speaker 1: All right. So mister Roach is a financial guy, and
the question that one of the topics that's going to
be discussed is about tariffs and what kind of impact
tariffs have had on our trade relations.
Speaker 11: Our trade deficit last year hit a new record because
we need deficits from lots of countries in order to
keep growing because we have gigantic budget deficits and inadequate
private savings. So they've and of course they've added somewhat
but not dramatically to underlying inflation. But you know, declare
victory on tariffs is like you know, declaring victory in Iran.
Speaker 1: So we'll see what happens. But it's one of one
of the topics that apparently is going to be discussed
between the President and President she. When it comes to cybersecurity,
we seem to have problems with China on that. Chris Krabs,
who ran the cyber security for the Trump administration one
point zero, weighs in on that.
Speaker 12: Look, I think you just nailed the ballgame here. It's
going to be about chips, memory, and phones. I mean,
you've got Tim Cook there, You've got Micron, You've got Qualcom.
I think this is a trade mission. I'm not really
expecting much out on the AI side, in part because
here domestically, I don't think we really know what we're
going to do just yet. I think we're five weeks
into this post Methos era. We're still trying to figure
out domestic policy. So it's a timing issue more than anything.
I think it's premature. Best if we have a concept
of a plan, so to speak, of future dialogue, I
think that's the win probably to expect out of this session, but.
Speaker 1: The pressure comes from China. They're trying to do everything
they can. Typically they try and steal, but they're trying
to figure out how to catch up with us on AI.
And that's right up Chris Cribb's wheelhouse.
Speaker 11: Yeah.
Speaker 12: Look, I think it's part of it is the conflation
of the AI conversation. AI is a stack, right, I
mean you've got all sorts of aspects here from R
and D, from chips, from design, e DA. We've already
seen that come up in the last year relaxing on
export controls on e DA tools like ASML and Tokyo.
So you know there's gonna be bits and pieces along
the AI conversation where they will be trades. I think
we'll see Cattle probably come back the battery manufacturer that
is taking the ire of the Chinese committee in this
in the Congress as well as the Pentagon. So there
are gonna be bits and pieces that open up. I
think you have to look at who's on the delegation
and again with Jensen joining in Alaska, with Micron, with Qualcomm,
with Elon being there and for Elon, is it is
it batteries or is it cars. I can't imagine that
we're going to open up the US market the by
D and shall me and those Chinese manufacturers.
Speaker 1: If so, we're toast there. It is he doesn't want
to open up the US market to Chinese automobiles, or
we are toast, and yet I understand why, and I agree,
but it does irritate me that we're not doing free
trade like we did back in the night in around
nineteen seventy when the Japanese automakers came in, they made
US automakers better. Speaking of Ai, John Waldron, he's the
CEO over Goldman Sachs, and well he's a Wall Street guy.
And oh a, Chris Crebs mentioned too that Jensen Wong
was on the trip. I told you yesterday Jensen Wong
wasn't on the trip. Well, apparently the publicity of that.
The President heard about it and personally called Jensen Wong,
the head of Nvidia, and said would you like to
come along? And he said yes, but I'm apparently he
was out on the West coast and so they said,
well meet us when we stopped for fuel in Anchorage.
So Jensen Wong flew to Anchorage and jumped on Air
Force one for the trip into Beijing, so Wong is there.
I don't know if anything's going to come of it,
but it was interesting that they actually picked up a
passager while they were getting gas and anchorage. But back
to Wall Street, John waldron and AI. This is his view.
Speaker 13: I often describe Goldman Sachs as a human assembly line.
So we think about what's happened in manufacturing in the world.
It's become much more robotic, it's become much more automated.
The banks really haven't been on that journey to the
same extent because we're kind of information companies and it's
been harder. We don't have we can't put robots in
our so called manufacturing facilities. We don't have that. But
we now have tooling with generalor of AI that I
think is giving us the ability to automate our processes.
So our human assembly lines will become more digitized. Digital
agents will be our robots.
Speaker 1: So are you ready for that, investors, that you call
your financial person and instead you get a robot, the
head of Morgan Stanley said, So obviously they're trying to
figure out how to plug AI into what, like he said,
is basically an information business. There was a big stink.
I can't believe how the media really spent a lot
of time focusing in on what the President said. Yesterday,
he was leaving the White House on his way to
catch the Air Force one in China, but before he
left the White House, he did the usual thing in
the driveway with reporters, and a reporter asked him a
question in which he answered he was basically talking about
his focus on this trip is going to be he said, Iran.
But then later he said, no, it's going to be
on trade. But in this particular answer, he said that
essentially he's not paying attention to American's financial problems. And oh, man,
did the media have a field day with this. I'll
play it for you.
Speaker 9: We start negotiating with that's your president.
Speaker 1: What extent for our American sin, anti tech nation? Motivating?
Speaker 3: Not even a little bit. The only thing that matters
when I'm talking about Iran, they can't have a duke
new weapons. I don't think about americans financial situation. I
don't think about anyone. I think about one pace.
Speaker 1: You did not Okay, you heard him say I'm not
thinking about American's financial situation. Man, did the media criticize
him up one side and down the other. But Ron Brownstein,
who is well, he was with the Los Angeles Times
for a very long time. He's a lefty. But even
he said, wait a minute, you know what he was saying.
Speaker 9: You get what he was trying to say. It's clear
what he was trying to say, that preventing Iran from
having a nuclear weapon is a pre eminent goal, more
important than anything else. It's not clear at all by
the way that this war is advancing that goal, which
is which is really part of the problem he's had.
Speaker 1: So we went on about the problems with the war
and everything else, but it's clear what he was saying,
that his focus is laser on Iran not getting a
nuclear weapon and forget everything else. But boyd did they
jumped all over him because of that. I also need
to update you on a story that I I did
this This is when I was still doing live radio
every day, and I said, the Murdoch I don't even
know what his first name is, the Murdoch guy out
of South Carolina. He's a big lawyer in South Carolina,
and he was charged with killing his wife and one
of his sons, murder both of them. Plus he was
also charged with all kinds of financial crimes. He was
stealing money from clients and everybody else, and he was
found guilty on all of that. Well, the Supreme Court
in South Carolina today overthrew the conviction because there was
a clerk of the court who was talking, who was
in charge of the jury taking care of them, and
she kept giving them all kinds of comments about her
opinion on the guilt of mister Murdoch. So the Supreme
Court threw it out. And what I'm laughing about is
so I said at the time, I said, I don't
know anything about this guy. He's some lawyer in some
town in South Carolina. I've never heard of him. I've
never heard of his town. I don't care. Sorry, it's
another sad case and a twisted case about a twisted guy.
I had a lady call who was so mad at me.
She says, you don't care. What's the matter with you?
What do you care about? So I'm playing this because, well,
I still don't care. But this is Joey Jackson, a
great defense lawyer here in New York City, who explained
what why the case was overturned.
Speaker 14: Yeah, it was pretty significant.
Speaker 11: Now.
Speaker 14: The county clerk, remember, is a person who pretty much
oversees the jury. Whenever there's a jury trial, you have
a jury clerk which you call or will call you. Hey,
we're starting late today. You know, what are the lunch
orders going to be? They pretty much oversee. And the
reason I mentioned that bars is because they develop, you know,
somewhat of a rapport and they certainly have credibility because
they're the extension of the judge. And when you have
a person of that magnitude who's connected to the judge
making rulings talking about watch his body language. He's lying
to you. You know he's misrepresenting. This is not going
to take long when you go and deliberate, and in
terms of the juris deliberating and finding him guilty and
making other comments like that which are clear in your
suggestion that he is guilty. You shouldn't believe a word
he says. It's all in his demeanor. That's not good.
And so the issue when you have a clerk like
this or any court personnel in this instance it was
the clerk, Miss Hill. When you have a person doing
that and introducing information to the jury, obviously it has
an impact, and in the event that it doesn't have
an impact, it's still problematic. But the court essentially found
as follows that directly goes against the right to a
fair trial. We hold that as sacrisanct in this country,
you have a right to a fair trial, and you
can't have a right to a fair trial when you
have the very clerk in the court in which the
case is being held and heard saying things like this,
and so that's the essence of what she said. And
as a result of that, the court said, hey, it
impaired the jury. There's a presumption that what you said
to the jury was prejudicial affected the outcome of the case,
and we've got to do this again.
Speaker 1: Yeah, So they kept him in jail because of the
financial crimes. He's still guilty of all that, and now
the prosecutor has to decide whether or not to try
him again on the murder of his wife and one
of his sons. It's just a weird, twisted story. I
guess that's what fascinated people. But then it was such
a big story. The name's Alex Murdoch, and I just
remember that he was so mad at me about all that.
So Wall Street. Today turned out to be another mixed day.
The Dow Jones Industrials fell sixty seven down to forty
nine thousand and six ninety three. The SMP went up
forty three points, the NASDAC went up three hundred and
fourteen points, the price of gold climbed ten dollars to
four thousand and six ninety seven, and Oil West Texas
Intermediate fell a little more than a dollar, finishing exactly
at one hundred dollars for a barrel of oil. So
that's it for today. Thank you for coming by. We
will be back again tomorrow and I hope to see
you then