Trump Backs Off Greenland Tariffs, Citing ‘Framework’ Deal

Summary

Bloomberg Businessweek Podcast Summary

Episode: Trump Backs Off Greenland Tariffs, Citing ‘Framework’ Deal
Date: January 21, 2026
Hosts: Carol Massar & Tim Stenovec

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Overview

This episode covers several major topics shaping the global business and economic landscape on the day, with a particular focus on President Trump's unexpected decision to refrain from imposing tariffs on Europe over the Greenland dispute, the economic and geopolitical ramifications of this decision, US housing policy shifts, and an in-depth look at Netflix’s business challenges. The episode incorporates expert insights from Bloomberg reporters and invited guests, including Nick Wadhams (Bloomberg News), Alicia Reese (Wedbush Securities), Jonathan Reckford (Habitat for Humanity), and Gregory Peters (PGIM Fixed Income).

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Main Segments & Key Insights

1. Trump Backs Off Greenland Tariffs (01:19–09:10)

Theme: President Trump’s negotiation tactics regarding Greenland and the potential impact of the so-called "framework" deal on tariffs and US relations with Europe and NATO.

Key Points:

• Trump has paused on imposing tariffs on European nations in exchange for a vague “framework” agreement involving Greenland.
• This move follows a pattern of escalating hostilities only to de-escalate at the last minute, creating recurring market volatility and policy uncertainty.
• The details behind the “framework” are murky, but appear to involve the US enhancing its military presence in Greenland, possibly installing the controversial “Golden Dome” missile interceptor.
• The implications for NATO are significant; an attempted forceful takeover of Greenland could have triggered Article 5, NATO’s collective defense clause, a scenario described as potentially catastrophic.

Notable Quotes:

• “It’s one of those things that's a little bit shocking, but not entirely surprising. We've definitely been through this before where the Trump administration, the President himself, ratchets up pressure...and then backs down right at the last minute.”
  — Nick Wadhams (02:56)
• “He wants Greenland as US territory. So what, the backdown is going to be there, but also what happens in the future, because we've been in this cycle so many times..."
  — Nick Wadhams (03:15)
• “You would have essentially had to have had NATO Invoking Article 5 against one of its own members. And then you would have essentially seen the total dissolution of NATO.”
  — Nick Wadhams (08:33)
• “Investors certainly like that and probably like even more that we're not going to see more tariffs coming down.”
  — Carol Massar (08:59)

Timestamps:

• Introduction to the news and context: 01:19–02:54
• Analysis with Nick Wadhams: 02:56–08:59

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2. Netflix Earnings and Warner Bros. Deal (12:05–21:17)

Theme: The challenges and opportunities facing Netflix, with particular focus on earnings, advertising strategy, and its enormous bid for Warner Brothers Discovery.

Key Points:

• Netflix’s shares dropped after disappointing earnings guidance, despite increased activity in content and advertising.
• The shift away from relying solely on subscribers to boosting ad revenue is emerging as Netflix’s biggest growth opportunity.
• Netflix’s $82.7 billion deal to acquire Warner Brothers Discovery is expected to encounter significant regulatory hurdles.
• Even without the deal, ad revenue growth is projected to offer substantial upside, but content acquisition costs remain a concern.

Notable Quotes:

• “There's still a significant growth opportunity for Netflix in advertising...the hurdle so far has been just that they haven't had the data stack and the attribution available for advertisers.”
  — Alicia Reese (13:20)
• “The $3 billion mark they set for themselves, they can easily surpass that if they get all of the pieces in place.”
  — Alicia Reese (14:44)
• “My price target does not include Warner Brothers at this time...should that deal go through, that will, you know, significantly improve Netflix's ability to leverage its ad stack...”
  — Alicia Reese (17:21)
• “The whole idea is to have content that will appeal to every one of their subscriber households and keep everyone engaged and however they need to do that is what they're going to do.”
  — Alicia Reese (20:53)

Timestamps:

• Market reaction and earnings analysis: 12:05–15:24
• Warner Brothers deal impact: 15:24–19:04
• Future strategies and content opportunities: 19:04–21:17

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3. US Housing Policy & Affordability Crisis (24:19–30:09)

Theme: Analysis of President Trump’s executive order banning institutional investors from buying single-family homes, and broader issues of US housing affordability.

Key Points:

• Trump's executive order aims to ban institutional investors from purchasing single-family homes to address the national housing affordability crisis.
• Jonathan Reckford, CEO of Habitat for Humanity, says the real issue lies in supply, particularly the lack of affordable starter homes, not just institutional ownership.
• Solutions require a mix of incentives, requirements for mixed-income development, streamlined local regulation, and federal incentives linked to affordable housing builds.
• Political will is needed at the local level to overcome "Not In My Backyard" (NIMBY) resistance and push through zoning reform.

Notable Quotes:

• "What we really have is a supply problem. We have a massive shortage, particularly at the low end of the market, starter homes."
  — Jonathan Reckford (25:38)
• "The best model anywhere in the world is mixed income, mixed use...but we haven’t planned that way."
  — Jonathan Reckford (27:27)
• "Governors now would say housing is the top of the list. You see conservative governors trying to reduce local zoning because they can't get enough workers."
  — Jonathan Reckford (29:36)

Timestamps:

• Introduction, Trump’s rationale: 24:19–24:54
• Reckford’s perspective and solutions: 25:29–30:09

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4. Treasury Markets, US Credibility & The Fed (33:14–45:56)

Theme: Market and policy implications of US fiscal trajectory, changing global investor sentiment, and Federal Reserve independence.

Key Points:

• President Trump’s Greenland comments, the fiscal stimulus trajectory, and global investor concerns are influencing the US Treasury market.
• Gregory Peters expects a steepening yield curve and less foreign enthusiasm for Treasuries over time due to structural fiscal trends.
• Immigration is highlighted as a key variable in the US’s economic sustainability.
• The Fed’s independence remains crucial; recent events have put scrutiny on the selection process for Fed Chair, but the institution’s credibility appears intact.
• Inflation management remains paramount for Fed credibility and market confidence.

Notable Quotes:

• "Over time you'll see less enthusiasm to invest in U.S. treasuries...just less likely."
  — Gregory Peters (34:31)
• "The US curve is poised to steepen...the risk out there is above average."
  — Gregory Peters (36:09)
• "Independence isn't a binary function. Right. It's a continuum."
  — Gregory Peters (42:44)
• "Credibility is tied to inflation. One begets the other. To ignore it is, you know, ignoring at your own peril."
  — Gregory Peters (45:48)

Timestamps:

• Treasury market ramifications: 33:14–36:49
• Discussion on fiscal, policy, and global investment: 36:49–41:57
• Fed independence and inflation risks: 42:05–45:56

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Memorable Moments

• "Wait, what?" moment on Trump's Greenland retreat — signaling market relief but also ongoing unpredictability (01:19–02:00).
• The hypothetical scenario of NATO’s Article 5 being triggered if the US had attacked Greenland (08:00–08:59), highlighting how close international security came to a crisis.
• Alicia Reese’s analysis on Netflix moving from "never advertising" to making it its biggest growth play (19:04–21:17).

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Conclusion

This episode combines incisive reporting and expert analysis on fast-evolving stories impacting markets and policy: From the strange resolution of a high-stakes Greenland brinkmanship, to the shifting business models of Hollywood giants, and the urgent crises in housing and fiscal governance. The tone is measured but candid, balancing real-time news with longer-term considerations for investors, policymakers, and the business community.

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Quick Reference by Topic

| Segment | Description | Key Contributors | Approx. Start Time | |---------|-------------|------------------|--------------------| | Trump-Greenland | Tariff retreat, "framework" outline, NATO & market impact | Nick Wadhams | 01:19 | | Netflix | Earnings, ad revenue, Warner Bros. deal prospects | Alicia Reese | 12:05 | | Housing | Ban on institutional home-buying, US affordability crisis | Jonathan Reckford | 24:19 | | Treasuries & Fed | Global investment in US debt, curve steepening, Fed's role | Gregory Peters | 33:14 |

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Transcript

[Carol Massar]

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[Carol Massar]

50% off regular price for new customers. Upfront payment required $45 for three months, $90 for six months or $180 for a 12 month plan. Taxes and fees extra speeds may slow after 50 gigabytes per month when network is busy. See terms Bloomberg Audio Studios Podcasts Radio News this is Bloomberg businessweek Daily reporting from the magazine that helps global leaders stay ahead with insight on the people, companies and trends shaping today's complex economy. Plus global business, finance and tech news as it happens. The Bloomberg Business Week Daily Podcast with Carol Massar and Tim Stenbeck on Bloomberg Radio. All right everybody. We begin this hour though with the most read story on the Bloomberg in the past 60 minutes, President Trump said he would refrain from imposing tariffs on goods from European nations, opposing his effort to take possession of Greenland, citing a framework for a future deal. I put quotations because those are his words. He was reached regarding the island. So we're talking about the island, of course, of Greenland. So it was kind of like a wait, what moment for a bunch of us, because the president has been for days leading up to Davos talking about acquiring that island. So maybe he found an off ramp. So let's see what Nick Wadhams has to say. Bloomberg News National Security Team leader Nick Wadhams is in the Bloomberg D.C. news Bureau. It was Nick. It felt like a little bit like a wait, what moment? Although we did have some market observers yesterday saying that, you know, the president's going to figure out a way out of this. How do you read. What's your read on this?

[Tim Stenbeck]

Right.

[Nick Wadhams]

I mean, it's. It's one of those things that's a little bit shocking, but not entirely surprising. We've definitely been through this before where the Trump administration, the President himself, ratchets up pressure, says he's going to impose tariffs, and then backs down right at the last minute. The big question is going to be what this framework agreement will be, what it will entail, what will happen to Greenland? Because the President was quite explicit in his comments today that he wants Greenland as U.S. territory. So what, the backdown is going to be there, but also then, of course, what happens in the future, because we've been in this cycle so many times where he escalates tensions, backs down, and then escalates attention tensions again. And it's a sort of rinse and repeat situation. So markets are certainly happy, but I don't think there's any indication, at least, that I'm seeing that we're anywhere near out of the woods. And you won't see the president just ratchet pressure up once again as a negotiating tool if this framework deal, once the details become more specific, aren't really to his liking.

[Jonathan Reckford]

Well, he did make a comment earlier today in his speech at Davos, Nick, that he wouldn't use force. And, and I'm wondering if. Which is great, as you know, we don't want. I just want to say, like, we don't want conflict here. I think I can say that. But is there another way to do this if somebody who is not selling something says they're not interested in selling that thing to you? Like, I don't understand how to thread that needle.

[Tim Stenbeck]

Right.

[Nick Wadhams]

I mean, to me, the most likely scenario is that you would see the US Put more military assets in Greenland. Of course, that's something that the US has been allowed to do for many decades. In fact, over the decades, the US has drastically scaled back its military presence in Greenland. And Greenland and Denmark have absolutely no objection to the US Bolstering military assets at bases all up and down the island and putting essentially as much as they want there. What you heard from the President today as well was this mention of Golden Dome, which is his so far unproven, essentially missile interceptor system that he wants to put in place at a Cost of many, many billions of dollars. So it's possible that what happened here is that Greenland, NATO and Denmark all sort of said, ok, we're going to be willing for you to station Golden Dome there. And that was enough to mollify him. But, you know, as usual with these things, it's not clear how much the president knows about the history of us basing on Greenland, what he's allowed to do and what he's not allowed to do. So it's entirely possible, for example, that they presented to him this thing that might be seen as a big concession, but was something he could already do in the first place. So, needless to say, we're trying to sort all that out right now.

[Carol Massar]

Yeah, it's. My brain hurts a little bit, Nick, because I do feel like. Are you laughing at me? He's laughing at me, Nick. No, but it just feels like I'm.

[Jonathan Reckford]

Just sad that your brain hurts.

[Carol Massar]

Where did we, what did we get? What did we achieve as a nation? And I just think about some serious situations that are still going on around the world. Some Americans would say we still dealing with a war between Russia and Ukraine. Ukraine an ally. Right. Or, you know, we still have stuff going on in the Middle East. We still have stuff going on in Minneapolis, Minnesota, our home front. I'm just trying to understand the amount of time and, you know, spent on something like this. And I'm not quite sure what we got as a nation out of that and as an American, what we got out of that.

[Nick Wadhams]

Right.

[Tim Stenbeck]

I mean.

[Nick Wadhams]

Well, I think on the one hand you have the president's view, which is he sees this pressure dialing up, ratcheting up the pressure as a legitimate and successful strategy. I mean, you look at NATO itself, and he has. One of the foreign policy achievements he has had, according to the administration at least, is this idea of getting other NATO countries to commit to spending 5% of GDP on defense. And that's not something they would have done, certainly not at this pace, unless he had done that. So, you know, he may see this as something where the US Gets an increased presence on Greenland, has the ability to install Golden Dome, bolster its military presence and get, you know, portray this essentially as a win under the knowledge that a lot of people, certainly his base are not going to look back and say, well, hey, you guys could have done that anyway and you could have done it without all of this chaos and drama and Right. Brinksmanship with an ally. But, you know, you can be sure that he is going to portray this as a win. And the result may likely be that the US Will have an increased military presence in Greenland, which is something that folks on both sides of the aisle, there are certainly voices who would advocate that that's an important thing to do.

[Carol Massar]

Yeah. And maybe all the cards are being laid out on the table. It may not, it may feel kind of messy, but there's certainly a lot that's out there at this point. Tim.

[Jonathan Reckford]

Hey, Nick, before we let you go, Article 5, the collective defense clause for NATO, just, just remind everybody when it has been invoked and who benefited from that.

[Tim Stenbeck]

Right.

[Nick Wadhams]

Well, I mean, so the president has said repeatedly that the US gets nothing from NATO. Obviously, the time that Article 5 was invoked was after the September 11 attack and a lot of NATO countries came to the US aid and you saw participation by NATO forces in Afghanistan. So that was really the big one. Of course, it would have been an extraordinary and chaotic situation if the US had decided to attack Greenland. And you would have essentially had to have had NATO Invoking Article 5 against one of its own members. And then you would have essentially seen the total dissolution of NATO. So at least for today, January, late January 2026, we are not going to see the dissolution of NATO, but who knows what the president is going to say in the next day or two.

[Carol Massar]

Well, investors certainly like that and probably like even more that we're not going to see more tariffs coming down. Nick Wadhams, thank you so much, Nick. Of course, Bloomberg News national security team leader out there in our D.C. bureau.

[Tim Stenbeck]

Stay with us.

[Jonathan Reckford]

More from Bloomberg Businessweek Daily coming up after this.

[Carol Massar]

Business challenges and opportunities are never one dimensional. At Marsh, we believe that to thrive you need perspective. That's why our individual businesses have come together as one company, a newmarsh where each layer of our organization works even more closely together to provide you with a stronger, more panoramic perspective. We're now one firm solving the world's most complex challenges and unlocking opportunities for you across risk, reinsurance and capital, people and investments and management consulting. As business continues to evolve, Marsh will always be here to help you overcome new challenges, answer new questions and take advantage of new opportunities. We're better positioned than ever to provide the perspective you need to fuel progress forward. See [e-mail] podcast support for the show.

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[Jonathan Reckford]

Netflix shares tumbled earlier in the session by as much as 6% off their lows now as we see some buying across risk assets late into the trading day. Netflix shares down about 2.9% right now, the stock taking a hit after the company issued a disappointing forecast for earnings in the months ahead as it spends more on programming and works to close its $82.7 billion deal with Warner Brothers Discovery. For more, let's bring in Alicia Reese, senior vice president of equity research. She covers media and entertainment at Wedbush securities. More than $5 billion in assets under management. She joins us from Lake Oswego, Oregon. Alicia, welcome back to the program. You know we were talking yesterday before the call about the idea of content spend sending shares lower and it's like a story that we could have told about Netflix a dozen years ago because this is always, you know, apart from members and we don't get that number anymore. That's what in the past has moved the company's stock. Is that what happened this time or is it something different?

[Alicia Reese]

There are a few different elements here going on. So, you know, Netflix does give the engagement numbers now and, you know, after not giving subscriber numbers for most of the year, they did give their subscriber numbers, but the subscriber numbers were really where we expected them to be. There was no surprise there. I think, you know, there was some disappointment in how much advertising revenue that Netflix was able to squeeze out of quarter as big as Q4. When you had, you know, all those live events, including NFL games on Christmas, some boxing matches, and of course, stranger things, and you had a lot of, you know, people coming onto the service and a lot more engagement around those events. Netflix should have been able to get some pretty significant advertising revenue. They did get decent amount advertising revenue, did grow two and a half times year over year. And they do expect another doubling in 26 to about $3 billion. And that's satisfactory, but it's not, you know, exciting just yet. You know, there's, there's still a significant growth opportunity for, for Netflix in advertising. And I think the hurdle so far has been just that they haven't had the data stack and the attribution available for advertisers significant enough for them to really, you know, do all of the campaigns that they would like to do. They have great alternatives right now across social media and other connected TV items. But Netflix is really catching up on this and I do think that they'll be to exploit that opportunity in the coming year and year or two.

[Carol Massar]

So advertising being the big surge, Alicia, when it comes to boosting the top line, the revenue line, yeah, I think.

[Alicia Reese]

That'S their biggest opportunity in the coming years. 26 is the first year where that's really meaningful. It's a meaningful contributor to its growth opportunity. And you know, the $3 billion mark that they set for themselves, they can easily surpass that if they get all of the pieces in place. And that excessive content spend or what might look excessive content spend relative to the engagement will look a lot more reasonable if a lot of that engagement is on the ad tier. Now, they said that they're planning to do some price increases in the year, and I think that's going to be mainly on the premium tiers. Trying to urge more of its users over to the advertising tier, which is significantly cheaper if they get a lot of that engagement on the ad tier and a lot more advertisers in front of them that results in profitability.

[Jonathan Reckford]

The $82.7 billion deal for Warner Brothers Discovery. Predict. Predict this for us. Does Netflix get these assets?

[Alicia Reese]

The regulatory process is going to be long, drawn out and very difficult.

[Jonathan Reckford]

Why do you think that in this. In this?

[Alicia Reese]

Well, yeah, well, there's, there's two different sides of it. On the one side, there's the consumer side. It's going to be hard for Netflix to argue that, you know, the likes of YouTube, the, you know, billions on YouTube are real competitors. You know, you do have some subscribers, but it's a significantly lower portion promotion. Not all media is going to be considered a competitor if you only have real competitors in there. Netflix does have significant market share and have quite a bit when they have hbo. On the other side, it's content. As a content buyer, it's going to consolidate power pretty significantly for, you know, against producers of content. And so it'll give Netflix almost too much, you know, collective power against those producers and how much they'll spend on content. So it does diminish some of some power in Hollywood potentially. And, you know, the prosecutors will be able to argue that.

[Carol Massar]

Alicia, you've got an outperform. You've had an outperform for a while. I think you've moved around the target price. Right now you're looking for about 115A share on, on Netflix. So that's some room to the upside. I mean, the stock right now trading just under $85 a share. Is it, though we just talked about, you stressed that the re is certainly going to be a big opportunity for this company. Ad revenue growth, is that what gets it to the target? Or there are other things. Is, is it also the completion of the deal? And if that deal doesn't happen, then what, what does the story, the growth story look like for Netflix going forward? Is ad revenue enough or do they need that deal to help with that growth in the ad revenue?

[Alicia Reese]

So my price target does not include Warner Brothers at this time, and it won't until the deal closes. Right now I'm, you know, my, my assumption is that they're going to just continue operating as Netflix, at least for the next, you know, year plus during the regulatory process. So my $115 price target is one year out, includes only Netflix and its own internal opportunity with ad revenue growth. And so, you know, should that deal go through, that will, you know, significantly improve Netflix's ability to leverage its ad stack, which by then should be, you know, absolutely booming. So I do Think there is a lot of upside, opportunity with or without Warner Brothers at this point.

[Jonathan Reckford]

Okay, what happens though, if a competitor gets it? You said there's still a lot of upside. Even if. Yeah, even if content gets more expensive.

[Alicia Reese]

Okay, yeah, yeah, that is, that is the issue. You know, Netflix has been making a lot of partnerships and content. You know, they made their one with Sony recently. Of course, they have their, you know, content deal with Warner Brothers. And they've seen how successful that content library is for Netflix on Netflix. And so owning the content makes a lot of sense. It'll save them a lot of money on those content costs. If somebody else gets the content, it could potentially be more expensive. But Netflix buys that content, plenty of content from Paramount already. So, you know, it's just a matter of will Netflix continue to spend this much on, you know, procuring content through licensing deals and then producing its own content and a combination of that and a combination of international content as well? It certainly can. You know, it just would be a little bit more profitable, especially if they're able to leverage that content against a global base that, that utilizes advertising.

[Jonathan Reckford]

Okay, so years ago, Netflix said all we're doing, you know, is, is sending DVDs to people and that's our business. Then they, you know, quickster and the whole spinoff and that didn't end up happening. But then they're like, okay, now all we're doing is focusing on on demand streaming. We're never going to do sports. We're never gonna do anything live. They threw all that out the window. They're, they're doing everything right now. They're doing advertising. They used to say we'd never do advertising. What is left for Netflix to do, at least from a content perspective? If they're doing games, if they're doing sports, if they're doing these live one off events, if they're doing the live, not one off events and getting actually rights to broadcast sports, if they're, if they're doing podcasts, what's left?

[Alicia Reese]

Yeah, I mean, there's a lot left in terms of gaming, cloud gaming. They have a really big opportunity. There is. Cloud gaming becomes more pervasive on connected TVs. They have a good opportunity. Just given their global base and the number of gamers out there. They can do a lot with that. I think they could become a really important platform for gaming, you know, similar to, you know, some of the consoles. They can operate as such, you know, licensing in a lot of really quality, you know, high quality gaming content and then leveraging their own IP as they see fit. You know, there are a lot of other opportunities in sports. To your point, they don't have to, you know, they can do one off events. They can do, you know, wwe, which has been really successful for them. They're going to do, you know, the baseball in Japan. I think that's a really important step for them. And it doesn't have to be global. It can be localized. They can also leverage their global base to bring sports that are not big in certain regions to those regions and, you know, create a larger fan base around the world. You know, take Gaelic football to the U.S. for instance. You know, that could work. There are a lot of different opportunities within those, I think podcasts, you know, the whole idea is to have content that will appeal to every one of their subscriber households and keep everyone engaged and however they need to do that is what they're going to do.

[Jonathan Reckford]

Alicia Reese, senior Vice President of Equity Research covering media entertainment at Wedbush Securities Stay with us. More from Bloomberg Businessweek Daily Coming up after this.

[Janice Torres]

Support for the show comes from Public, the investing platform for those who take it seriously. On Public, you can build a multi asset portfolio of stocks, bonds, options, crypto and now generated assets which allow you to turn any idea into an investable index with AI. It all starts with your prompt. From renewable energy companies with high free cash flow to semiconductor suppliers growing revenue over 20% year over year, you can literally type any prompt and put the AI to work. It screens thousands of stocks, builds a one of a kind index and lets you back test it against the S&P 500. Then you can invest in a few clicks. Generated assets are like EFTs with infinite possibilities, completely customizable and based on your thesis, not someone else's. Go to public.com podcast and earn an uncapped 1% bonus when you transfer your portfolio. That's public.com podcast paid for by Public Investing Brokerage Services by Open to the Public Investing Inc. Member FIA Advisory Services by Public Advisors llc. SEC Registered Advisor Generated Assets is an interactive analysis tool. Output is for informational purposes only and is not investment recommendation or advice. Complete Disclosures available at public.comDisclosures when you.

[Carol Massar]

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[Carol Massar]

You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Jonathan Reckford]

Well, also on the president's radar is his move to ban institutional investors from buying single family homes. The latest proposal from the administration to address housing affordability ahead of this year's midterm elections. He actually signed an executive order on this yesterday. The president addressed housing affordability in his speech in Davos earlier today.

[Tim Stenbeck]

Every time you make it more and more and more affordable for somebody to buy a house cheaply, you're actually hurting the value of those houses. Now, if I want to really crush the housing market, I could do that so fast and people could buy houses. But you would destroy a lot of people that already have houses.

[Jonathan Reckford]

That's President Trump earlier today. Jonathan Reckford knows what it takes to build affordable housing. CEO of Habitat for Humanity. He joins us from the World Economic Forum in Davos, Switzerland. Jonathan, good to have you on the program. It is. You know, we spoke a lot last week about institutional investors owning single family homes in the US and the data are out there. It's actually a small percentage of the homes in the US Are owned by institutional investors. In your view, would Banning these folks from owning single family homes ease the housing crisis in the US well, first.

[H]

We'Re just pleased the administration is talking about housing. And I think the housing crisis is such a huge issue in the US and globally. And I'm glad it's on the agenda here in Davos as well. And we would say that now that middle class families, children, cannot afford housing, the more invisible housing crisis has become visible. You know, we need, we haven't taken a stance on the issue that you've just raised. We still want to look at the details. There are certain markets nationally, it's a very small percent. There's small, certain markets like Atlanta, Charlotte, a few others where it's a meaningful percentage. But that's only one small piece of the broader housing issue. And what we really have is a supply problem. We have a massive shortage, particularly at the low end of the market, starter homes. And so our view is creating a lot more supply on the starter home side would not actually damage home values in the middle and upper ends because we have such a shortage right now. In fact, if we work more on the demand side without increasing supply, we'll drive house costs up further and it won't really solve the housing crisis. So we need really a little bit of everything. We do need demand side solutions, but the most important thing is to increase the supply of houses at the low end of the market.

[Carol Massar]

You know, I have to, I don't always understand, I mean, I understand giving developers breaks and tax breaks to build in certain areas that maybe need some juice and some help, right, to get it kind of back and bring back a community, bring back a city, bring back a town. But I'm amazed at like tax break abatements that still get given in areas where things are good without any maybe provisions to make sure that there is housing for everybody in the community, not just the wealthier folks. So how do we really fix this? I mean, I just don't understand what's the incentive to developers or builders to really help out here? And is that what it needs to be?

[H]

I do think it requires incentives, but also requirements. And the best model anywhere in the world is mixed income, mixed use, where families can be close to where they need to go to work and where they have economic opportunity. But we haven't planned that way. And I think there's no magic bullet. But there are a whole series of things that can help. And I agree with you. If there are incentives that should come with expectations of mixed income or that they're. Because the math is tough Covid was kind of a perfect storm on affordability. So the gap between what it cost to build a unit of housing for Habitat or for a private developer and what a family can afford is the widest in history. So we do have a real math problem and I think there are different ways to solve it. We've seen at the local and state level. First you can make it faster and easier to build. That doesn't cost cities a lot of money, but can make a big difference for builders and developers. You can address zoning at the local level. Get rid of parking minimums, increase density, get rid of minimum lot sizes. A lot of 1980s strategies that aren't relevant today. That would increase supply. You can do accessory dwelling units at the federal level. I think incentives, but incentives tied to building at the starter home level and increasing the supply. So discounted financing. As the Senate has a good bill, we support it on the road to housing. The House has a strong bill as well. I think there is bipartisan support for doing something on housing. So we're enthusiastic the administration wants to support it. We know it's one of the the biggest drivers right now. One in three families in the world lives in inadequate or substandard housing. One in six families in America is spending over half their income on housing right now. So the level of cost burden families is the highest it's ever been in. A lot of historically affordable markets have more than doubled over the last six years.

[Jonathan Reckford]

I think one of the challenges that you raise is the local level. And if this stuff is left in the control of voters, you oftentimes see pushback against zoning. This so called NIMBY is not in my backyard. We only have 30 seconds left. But how do you get local officials to push through this stuff that isn't doesn't end up being very popular with people already?

[H]

You know, I think you have to make the moral and the economic argument what we're seeing is employers can't hire workers because they can't afford housing. That starts to turn the pressure. If you ask almost any mayor in America now, for the last three years, housing has been at the top of the list of their issues. Governors now would say housing is the top of the list. You see conservative governors trying to reduce local zoning because they can't get enough workers for their new factories or newly recruited jobs. So I think it does take getting hearts and minds and thinking about it. It doesn't have to be housing everywhere, but we need density, more density around transit and thoughtful density. And I think we have good models for that.

[Carol Massar]

Jonathan, Safe travels and please come back soon. We'd love to continue this with us. Jonathan Reckford, CEO of Habitat for Humanity. This is Bloomberg.

[Jonathan Reckford]

Stay with us. More from Bloomberg Businessweek Daily Coming up after this.

[Janice Torres]

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[Carol Massar]

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[Carol Massar]

You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Jonathan Reckford]

TikTok.

[Carol Massar]

Yeah. 18 minutes to go. Just under 18 minutes. I kind of have lost track today. It's been a weird hour and a half or so, if you will, in terms of we've obviously been focusing a lot out of Davos, the president speaking. And then we did see some comments when it comes to Greenland and we did see equities certainly moving higher. So some enthusiasm coming back into the markets. But it's been a lot again in a 24 hour news cycle.

[Jonathan Reckford]

I want to bring in Gregory Peters, co chief investment officer of PJM Fixed Income. The Firm has about 1 1/2 trillion dollars in AUM, more than a trillion at PGM Fixed Income. He joins us here in the Bloomberg Interactive Broker studio. I had to kind of rip up the intro that we were going to do for you because a lot has happened just in the last half hour. I want to start with the Greenland comments because it moved Treasuries long and took another leg higher in late trading. President Trump said he reached the framework deal on a green on Greenland after speaking with NATO Secretary General Mark Ruda at Davos. The view of US Treasuries right now, did it change for you at all this week with the pushback from some Europeans who say the US Is not worth investing in right now? It's not credit worthy. The president's changing dialogue about Greenland. Is it noise or is it meaningful?

[Gregory Peters]

I think it's both. So just because there hasn't been a sustained reaction today doesn't mean there's not medium to longer term implications. You know, I do believe that over time you'll see less enthusiasm to invest in U.S. treasuries. Will that happen right now? No. You see it in the tic data. You see it in other data. The flows are stolen pretty sizable into Treasuries but what we're seeing and what we're hearing, particularly outside the US is just less enthusiasm and this quote unquote passive allocation away from Treasuries. So you're just less likely.

[Jonathan Reckford]

Why less enthusiasm? What are the reasons given?

[Gregory Peters]

Well, it manifests itself through this notion of risk term premium right on the back end. And if you kind of look at the US versus other jurisdictions, it's still pretty flat. Japan's a classic example where there's been a massive repricing all sequel that takes money out of treasuries into JGBs as well. And so what we're seeing and hearing from Japanese investors is that finally, after a very, very long time, it's more advantageous for them to remain in their local market instead of going outside. So that's one factor. But you know, these things just take time and everyone wants this immediacy, this snap reaction. And I don't think the market works that way. It's too large of a market and it's too well entrenched. But it's over time we'll get a better sense.

[Carol Massar]

So what does that mean then for the US yield curve over time?

[Gregory Peters]

Well, I think the curve is poised to steepen. If you look at the US curve as an example, it's still not even at the average steep levels. And it seems to me the risk out there is above average. You look at other places, globally curves are steeper. You look at the fiscal trajectory, that points to a steeper curve. You look at inflation dynamics being just more robust than what we saw the previous 10 years. So I think all these things point to a steeper curve. And that's kind of my view and.

[Carol Massar]

The bias there, what gets us there and how quickly do we get there in terms.

[Gregory Peters]

Well, I knew exactly that. But these things do take time. Right. So it's not going to be immediate impact. So my thought, my view, our view is that over the course of this year you'll just see a continued steepness. So even though the markets responded a lot this week, there's a lot of informational content in the price action. So you mentioned the markets have rallied in the face of kind of the latest news, but it still hasn't completely retraced. Right. So what you're seeing is these more negative moves, more pronounced than the positive, and it's not being offset. One for one. I think there's value in seeing that and I think that tells you a lot about the trend is this, if.

[Carol Massar]

It was a different administration, different policies, would we see this Trade would we see this conversation? And I guess I'm going back to Greg, thinking about how much of this has to do with the fiscal, fiscal situation of the United States government. It's not other countries have similar problems or some problems. But I keep thinking about the U.S. u.S. Situation.

[Alicia Reese]

Yeah.

[Carol Massar]

So is it, is it something again, specific to policies that we are seeing in this White House, or is it. No, it's something that's been building in the US Government fiscal house.

[Gregory Peters]

It's both. Right. I mean, you look at you, you look at the US Fiscal situation, it is just, you know, continuing to worsen. All right. And so there was a step function higher during the pandemic. That's a global phenomena, as you mentioned. So fiscal is a problem everywhere, which somewhat perversely helps out the U.S. in a way. But I do think the latest fiscal stimulus coming through comes at a cost. And then I do think just how policy is being conducted has an impact on foreign investment, investors. And you put it all together and I think that's what matters. So it's not a single event, it's a bunch of things put together.

[Jonathan Reckford]

Well, we're here, we're sort of hearing this rhetoric come out of folks at Davos. We've got a great story that does a roundup of this on the Bloomberg terminal. One of those people, Geeta Gopinath, formerly of the imf, said it's clear that investors no longer consider the US the secure borrower that it once was. Is she right?

[Gregory Peters]

I think that's a little melodramatic and I don't think that's right. But at the end of the day, the more debt to GDP you have, the worse your fiscal finances are, the closer you are to that tipping point. One of the scary aspects about this type of environment is that there is no magical number. Things just markets move, investors lose faith and you can't pinpoint exactly the precise time around it. But if we learned anything, what happened in France, uk, even now in Japan is the tie of having kind of heightened debt to GDP with just called administrative political instability has a tendency of wreaking havoc on the bond market.

[Carol Massar]

I do just think about, especially in the US situation, we talk about the birth rate going down and aging population tapping into more safety nets, if you will. We've seen this picture before, right? You think about Japan and some other nations. It just feels like a lot of nations are moving towards our pushback against immigration. And I just, I'm curious at a time where certainly more Americans are relying on the financial Markets for retirement and things like. It just feels a little messy and a little ugly here of how this all kind of ultimately plays out.

[Gregory Peters]

Yeah, I mean, it's always, you know, feeling darkest or worse when you're going through it. But, you know, there's a lot of positives going on as well. There's lots of focus on AI as an example. And what does that mean for productivity? If you just think about productivity through the lens of debt sustainability, if you get 50 basis points of uplift and productivity, that actually changes the whole fiscal trajectory. You go from kind of a baseline of 170% of GDP down to about 117%.

[Carol Massar]

Right.

[Gregory Peters]

So there are some real positives here as well. But you know, on the immigration side, you're quite right. We've seen this story elsewhere. We saw it in Japan, we're definitely going to see it in China, we see it across Europe. And what has been a saving grace for the US from an economic standpoint, this is not a political statement. From an economic. Economic standpoint has been actually immigration.

[Jonathan Reckford]

Yeah, you just have to look at the numbers. I mean, it's not, it's not a political statement at all. We talk about this, this all the time. So absent that, what happens?

[Gregory Peters]

Well, then we're, we're, you know, very similar to, you know, these European countries.

[Carol Massar]

Got to ask you about the Fed. It seems like the President did make some comments and saying, I'm down to three, I'm down to two, I'm down to one. But he hasn't mentioned it's been, I know we've heard this for the last month or so. What's your comfort in feeling that whoever, whomever gets this job, it will be still an independent Fed. And we keep reminding everybody it's one vote, but it's a Fed chair vote and their ability to maybe sway other members of the Federal Reserve. Do you have confidence it still remains an independent Fed?

[Gregory Peters]

I think what we saw last week was crucial. The pushback from Powell, the pushback from policymakers across the aisle, business leaders and alike, I think had this perversely positive effect on keeping the independence. But I think it's also important to remind ourselves that independence isn't a binary function. Right. It's a continuum. So one person chair in and of itself will not dramatically shift the Fed. But credibility is key there. And if you have a more credible Fed chair to pull individuals along, then that's helpful. The Mirren example is a good one where he has been an outlier at each meeting and his ability to kind of coalesce and pull people with him just hasn't been there. Right. I think that is quite telling.

[Jonathan Reckford]

The short list, does that include people who are independent in your view or could be or will be independent?

[Gregory Peters]

I don't know. I do have faith in institution, but the way this whole polar game has been conducted, it has to be called into question. But ultimately I think it does hold. And, you know, you're a Fed chair, you know, you worry about your legacy, you know, and I think just being a puppet for the administration is something that I don't think anyone wants as part of their legacy. So Hope Springs will turn around this one.

[Carol Massar]

The one thing I would say, though important that we do because we think about the mandate and inflation, because it does feel like we're going to see inflationary pressures persistent. And that is something that we have to ensure that we've got a Fed that, you know, wants to deal with that and keep it in check.

[Gregory Peters]

And that's absolutely essential. So one of the risk factors that we have for this year is this overheating scenario. There's a lot of stimulus coming through the system. You know, as we mentioned, if you have easier financial conditions, that pushes it through, you have rates lowered, that pushes it through. And the tendency will be for inflation to move higher. It's already above the 2% target. And if there's a perception by the market that the Fed is ignoring inflation, then they're basically waging war against their own credibility. And that'll manifest itself in the marketplace through steeper curves, higher term premium and five year, five year break even is a really important measure. And it hasn't moved to be fair because to me, that's the ultimate Fed credibility measure. If you look at that measure, it's unmoved.

[Carol Massar]

Right. Without it though, you would see a lot of nervousness and volatility, no doubt about it.

[Gregory Peters]

Yeah, because credibility is tied to inflation, right?

[Carol Massar]

Exactly.

[Gregory Peters]

One begets the other. And so, so to ignore it is, you know, ignoring at your own peril.

[Alicia Reese]

Super.

[Carol Massar]

Appreciate it. Thank you so much.

[Gregory Peters]

Thank you for having me.

[Carol Massar]

Gregory Peters, co chief investment officer of PJM Fixed Income, joining us right here in studio. This is the Bloomberg businessweek daily podcast, available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg, 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.

[Tim Stenbeck]

Janice Torres here and I'm Austin Hankwitz.

[Janice Torres]

We host the podcast Mind the Business Small Business Success Stories, produced by Ruby.

[Tim Stenbeck]

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[Carol Massar]

We're back for season four to talk to some incredible small business owners.

[Tim Stenbeck]

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[Janice Torres]

So listen on the iHeartRadio app, Apple.

[Tim Stenbeck]

Podcasts, or wherever you get your podcasts.

[Carol Massar]

Sometimes all we want is more of the same. Like another round of golf played from a channel with 247 coverage, another look at the garden and the deer as they pick their way through it, another Taco Tuesday followed by a Whatever's in the Fridge Wednesday. And to get more of the same, all we need is a little help with adaptable care plans from qualified, compassionate caregivers matched to your family's needs. Home Instead can help you and your passions stay home no matter what's on your horizon. Visit home instead online for a better what's next?

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