Hey, Kevin, can we get you to answer a couple?
Yes, look at all you scaredy cats in coats.
Yes, we're going to freeze you out here. You're brave.
Yes, yes, [Inaudible] it.
Can you just give us your initial reaction to the CPI print this morning?
Oh, sure.
Inflation's running hot. Is that Biden's fault? Does Trump have something that he's going to do about it?
The -- oh, yes, we've got a lot that we're going to do about it and the fact is that this is actually the closing the books on the Biden economy, right? And what we found out is that everything that they told us about the economy before the election is being revised for the worse by a lot. And so, as bad as you thought the Biden economy was back when people were voting for President Trump, right?
They voted for President Trump because they know this Biden economy is not so good and everybody in the media was saying, "Oh, the people don't understand. The economy is great." Well, actually they've revised the data down. It's a million fewer jobs and now we see that inflation top line is running about 4.5 percent.
That's the inflation that we're inheriting. So, we inherited stagflation from Joe Biden and we're not going to whine about it. We're going to fix it and we're fixing it already. We're fixing it by cutting spending, by working with Congress to have an incredible reconciliation package that has supply side tax cuts and by attacking micro problems like avian flu.
So, it turns out that the Biden administration was 100 percent asleep at the wheel on avian flu. Instead of addressing it with smart policies, they were just killing chickens, willy-nilly, and that's why there are no eggs and we're going to fix it. We're going to have a plan soon. We're waiting for Brooke to get confirmed, but we've already got a -- a plan completely fully formed to address even the avian flu.
So, we've got macroeconomic plans to reduce inflation and we've got micro-targeted things to reduce inflation and everything in between. And so, we'll get on top of this. But this bad news today is really not unexpected for us because we know that the Biden economy was way worse than you could see in the numbers and everything's revising at that direction.
And now we're going to inflect positively right away. And can I say finally that -- that you can already see in markets the positive response to what we're doing that over the last week, the ten year Treasury dropped about 40 basis points in response to the news that we're getting spending under control mostly.
And even after today, you know, most of that gain is still there like -- and that reduced interest payments for US taxpayers just over the last week from our policies by $40 billion, $40 billion.
With the tariffs on steel and aluminum at 25 percent, can you assure Americans that products that use steel and aluminum won't go up equivalently?
The -- the president made it clear last time, I remember talking with you about it a long time ago now, you don't look different. I feel I look a lot older, but -- but the fact is that it's a national security matter that we have reasonable enough capacity so that if there were war that we could have all the things you need to produce with steel and aluminum.
And when President Trump took office, then the capacity utilization rate for steel makers in the US was 74 percent, which is too low for them to survive over time. And after the steel tariffs, it went up to 81 percent, but then what happened after that is there were a bunch of waivers for this, waivers for that, hundreds of thousands of waivers in the end.
And capacity utilization right now, the steel industry is -- do you want to guess, 74 percent.
OK.
So, all the progress that was made before is gone because of all those waivers. And -- and so, if you think that we were right back then to get up to 81 percent, 82 percent in order to make sure that our country would be safe in case of war, then you should be concerned about the 74 percent. And we are, and that's why we're doing this.
More tariffs coming today, reciprocal tariffs today and tomorrow --
Reciprocal tariffs are -- are absolutely a -- a high priority for the president and have been forever. You know, our trading partners charge us way more in tariff than we charge them and it's something he talked about before and there's going to be a lot more action on it today. We even started to have negotiations with other countries.
Early this morning, I was doing that.
What are all the federal workforce cuts going to mean for jobs numbers over the coming months? And where do you expect all those workers to go?
Government workers historically are really, really talented people. Very often, incredibly well-educated, used to coming to work at least pre-COVID. Used to coming to work and great employees. And there have been some academic studies that show that when government workers leave government work that on average it creates another job.
So, it creates two jobs: one for them and one for someone else because you get a competent talented government worker and you actually give them something productive to do instead of pushing papers around or you know, not even going to work is what the Biden people seem to have been doing. And so, I have a high regard for the macroeconomic effects of having government workers turn into productive workers.
And that's what we're going to see.
Kevin, you said that you were negotiating with countries this morning on tariffs. Are they seeking to be exempted or what were you --
No, we were talking about just laying the groundwork for discussions over reciprocal trade. The person leading those discussions today was Howard Lutnick, of course, but -- but I was on those calls too.
Can I ask you about President Trump sending the Treasury Secretary Bessent to meet with Ukraine's President and Trump talking about wanting a slice of Ukraine's rare earth minerals, as well? What -- what that looks like? Why is he sending [Inaudible]?
There -- there are ongoing discussions right now with the Treasury secretary and I shouldn't comment on them while they're going on.
Can you say which countries, Kevin?
No, I can't.
And then you mentioned that this -- these numbers reflected the Biden action. So, is it safe to say that from here on out everything in DC will -- we can attribute their credit to Trump?
No -- no, if -- if you look at time series macro-econometrics, what happens is that there is memory in time series data. And so, what happens is that if you wanted to predict what is going to be next month, then very often it's a mathematical function usually in log differences of the last few months and that that -- so, when you change things, they don't change overnight.
And so, the thing to start thinking about is that we're at 4.6. A three month moving average is a nice way that you know, guesstimate the macro-econometrics I was just talking about. And -- and so, that should start to head down, but -- but it doesn't happen overnight.
A lot of folks are saying that the Trump trade on Wall Street is coming off in the sense that there's a lot of expectation about the, you know, business optimism, that business deregulation agenda would help. But now there's some concern about the impact of tariffs and government inserting itself in all sorts of business decisions that -- what do you think the future of the Trump trade is?
Well, I think that the future of trades that involve the value of things should be that they're going to go up because we're going to have a really positive trade policy, tax policy. We're going to stop wasting people's money. We're going to deregulate. We're going to address the avian flu. We're going to make America great again, frankly.
And -- and if America is great again, then obviously that means that the value of things should go up.
And the price of eggs is coming down?
Yes, we're working -- we'll -- we'll have a lot to talk about with eggs and -- and a policy for that that's way smarter than anything the Biden guys did as soon as Brooke Rollins is confirmed.
On reciprocal tariffs, have you determined whether you're going to take, say, taking a country, average out all the products and apply a tariff that way or are you going to go product-by-product?
That's -- that's a work in progress. Everybody's talking about it right now and actually the conversations with other countries began this morning, really early.
Sounds like we're not going to see an announcement from the president today or tomorrow?
Well, you might see an announcement about progress or also guidelines of the things that he's thinking after having some, you know, exchanges of views with foreign people today and yesterday.
[Inaudible] the foreign leaders about this then?
It's -- it's more been Howard Lutnick. Yes, I got to run. I got a 10:30 guys, so apologies. Yes.
Thanks for stopping. Stay warm.
Oh, yes, no, I'm fine. I'm from New England. Are you kidding?
One quick question, on the emphasis on the ten-year Treasury yields, largely -- largely under [Inaudible] control [Inaudible].
Well, it really is [Inaudible] control because if -- if the administration has [Inaudible]. So yes, there are [Inaudible]. So, what's happening right now is Joe Biden spent [Inaudible].