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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. We said, good morning

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Speaker 1: across the country. It is an April First ritual. And

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Speaker 1: I do this because you should see my new Filson

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Speaker 1: Fishing guide vest Twitter eighty nine dollars. Wow, it's very good.

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Speaker 1: It's designed for anglers to organize gear for a full

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Speaker 1: day out on the tundra as well. On April First.

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Speaker 1: We always speak with Ellen Zettner because they said to

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Speaker 1: Lisa Shallatt, I'm sorry, I gotta do fly fishing here.

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Speaker 1: There's the pre runoff window.

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Speaker 2: Yeah, like the winter waters.

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Speaker 1: Yeah, the streams are like what clearer.

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Speaker 3: Is The fish have been starving all winter and you

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Speaker 3: get them before the runoff, and so they're pretty excited

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Speaker 3: about that. And you don't get a lot of pressure.

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Speaker 3: You don't see a lot of other anglers out there.

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Speaker 3: And actually some of the best fly fishing is going

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Speaker 3: out for Mother's Day, which is actually just before the runoff,

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Speaker 3: but won't make you very popular with mom.

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Speaker 1: Okay, is this the Arkansas and South Platte? Is it

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Speaker 1: the yellows the jelly stone in Missouri rivers? Where does

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Speaker 1: Ellen Zenner go?

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Speaker 3: Well, Tom, you're really you're really struggling with this this morning.

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Speaker 1: Yeah, well, you know it's I think this is important.

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Speaker 1: Like where is your chosen April river in America?

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Speaker 3: Well, look, we don't ever give away the rivers that

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Speaker 3: we like to fish.

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Speaker 2: You don't do that.

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Speaker 3: But Montana is still a big favorite, a big favorite

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Speaker 3: of ours.

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Speaker 1: Driving so much at Morgan Stanley, Ellen Zander with us today.

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Speaker 1: How is the American consumer? This is how you and

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Speaker 1: I first met.

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Speaker 3: I know, do you know talking about Apple's fiftieth anniversary.

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Speaker 3: There's a big anniversary for us. Tom is twenty three

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Speaker 3: years ago that I was first on radio with you

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Speaker 3: very twenty three years ago.

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Speaker 2: You were three years old. Exactly, Yes, nice, exactly.

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Speaker 1: Well seriously, this is she was sixteen years old out

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Speaker 1: of some high school in Texas. That's what I read.

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Speaker 2: It was you and Ken Pruitt and I in the studio.

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Speaker 1: It was the only reason you got on was you

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Speaker 1: and Ken talk and fly fishing.

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Speaker 4: Paul Sweety with old zenator Ellen, what do you What

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Speaker 4: are the conversations you're having with your clients as you

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Speaker 4: do travel around the US talking to your US clients here,

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Speaker 4: do they want you to really help them think about

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Speaker 4: on the other side.

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Speaker 1: Of this war?

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Speaker 4: What do we do here?

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Speaker 1: Is that?

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Speaker 4: What are the conversations you're having these days?

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Speaker 3: I tell you what, There's so much volatility and so

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Speaker 3: much uncertainty out there that it has made the conversations

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Speaker 3: all that much more interesting because they're they're much more

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Speaker 3: longer term focused, so not necessarily when are we going

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Speaker 3: to get beyond this? But it's more of what does

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Speaker 3: this mean in the bigger picture of long term national

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Speaker 3: security and resource nationalism and resource scarcity and defense spending

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Speaker 3: and all of those things. And so it makes those

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Speaker 3: topics really top of mind for clients because you can't

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Speaker 3: It really gets exhausting trying to figure out when is

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Speaker 3: this thing going to end? Am I supposed to time it?

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Speaker 3: What should I do here? And so it just opens

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Speaker 3: the door to some really interesting conversations. I don't think

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Speaker 3: anyone knows when we're going to be out of this

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Speaker 3: and what does out of this even mean?

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Speaker 4: And I think we're seeing that maybe an oil marketing.

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Speaker 4: We're seeing stocks rebound, Okay, that's fine, maybe goes to

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Speaker 4: the growth issue, but you know, oil still holding very

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Speaker 4: high levels. That suggests maybe the market saying I'm not

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Speaker 4: sure this straight up where moose things ever going to

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Speaker 4: clear up in the near term.

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Speaker 3: Yeah, well, even if I mean, what does it mean

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Speaker 3: to open the straight tomorrow?

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Speaker 2: I mean, let's just assume that's a thing, and that

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Speaker 2: that could happen.

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Speaker 3: You've still got all of these price effects and shortages

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Speaker 3: in the pipeline, and businesses have to absorb that, households

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Speaker 3: have to absorb that, and some countries are going to

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Speaker 3: be able to absorb it better than others. There are

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Speaker 3: countries that will step in with food subsidies and other

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Speaker 3: assistance like that, but there will be pain. Now does

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Speaker 3: that mean recession? Not necessarily, but I think the probability

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Speaker 3: of recession here is higher than people think, and I

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Speaker 3: would put it around forty percent, which is meaningful.

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Speaker 1: It's uncomfortable, right, helping her again with the consumer, and

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Speaker 1: you know, the modern statement is a case shape. You

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Speaker 1: literally invented this as a cottage industry at unit credit.

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Speaker 1: I think it was years ago. I mean, help us

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Speaker 1: here with a fifteen hundred dollars disposable income lift and

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Speaker 1: cost due to a gallon of gas, it crushes how

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Speaker 1: much of America?

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Speaker 2: Yeah, so it always falls more heavily.

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Speaker 3: It's very regressive, so it falls more heavily on lower

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Speaker 3: income households. They also have to commute and drive to work,

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Speaker 3: especially in the big driving states. You'll see the bigger

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Speaker 3: impacts and you'll see them change their behavior, but it

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Speaker 3: takes time.

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Speaker 1: Wait, wait a minute, Morgan Stanley, where everybody grew up

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Speaker 1: in three zip codes and your country girl fishing and

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Speaker 1: all that, we don't understand those driving times.

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Speaker 2: Those are big driving states.

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Speaker 1: Yeah, you know, children from the East just don't get it.

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Speaker 4: No, I spent half my life on the New Jersey Transit,

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Speaker 4: so that's.

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Speaker 3: Not kind of so you don't understand. But many of

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Speaker 3: your listeners will know the obsession that you have Florida, Texas, California,

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Speaker 3: these big driving states. It is a family obsession talking

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Speaker 3: about gas prices around the dinner table. You pass by

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Speaker 3: a gas station, you look at every single sign to

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Speaker 3: see what the gas price is. You comment on how

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Speaker 3: it's gone up, when was the last time you saw

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Speaker 3: that price, like.

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Speaker 2: It's a pastime.

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Speaker 3: Just like for New Yorkers talking about the weather, it's

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Speaker 3: talking about gas prices for much of the rest of

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Speaker 3: the country, and so this is meaningful. You can first,

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Speaker 3: if you weren't buying the cheapest unleaded gasoline, you'll switch

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Speaker 3: to the cheapest. Then after time maybe you start to commute.

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Speaker 3: We did this in two thousand and eight. We started,

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Speaker 3: we started car pooling together. We started changing our altering

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Speaker 3: our behavior on the types of vehicles we were buying.

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Speaker 3: You've seen all the reports of people now inquiring about evs,

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Speaker 3: for instance, but it takes time to change those behaviors,

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Speaker 3: and so you have to suck it up and pay

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Speaker 3: it at the pump until you can cut costs elsewhere.

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Speaker 4: That being said, what's your view on a consumer, because

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Speaker 4: it seems like the consumers more than hanging in there.

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Speaker 2: I guess well, I.

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Speaker 3: Mean this has been like how many years in a

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Speaker 3: row we've been talking about this. The low income consumer

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Speaker 3: has been in and out of recession. The first recession

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Speaker 3: they went to was when they worked through the excess

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Speaker 3: savings that had been built up during COVID from the

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Speaker 3: stimulus and just not being able to spend income. So

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Speaker 3: they've been in and out of recession. Luckily, wage growth

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Speaker 3: has at least for a time been outpacing inflation. But

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Speaker 3: the wealthy consumer. We don't need the wealthy consumer to

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Speaker 3: just stop spending spending, And of course, if you've already

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Speaker 3: met a lot of pent up demand. You've been out

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Speaker 3: there spending for years now with this amazing run up

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Speaker 3: in financial assets, you're sitting on a lot of equity

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Speaker 3: in your home, but you're not seeing further gains. It

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Speaker 3: can cause you to pull back on spending. And that's

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Speaker 3: all all it takes.

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Speaker 1: Let me get this in quickly. What's investment looked like?

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Speaker 1: We never talk about the eye of C plus, I

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Speaker 1: plus and acseccent. What's investment looked like forward?

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Speaker 3: So business investment had been very tech tech and infrastructure

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Speaker 3: related AI related last year. The big optimism around this

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Speaker 3: year has been with the One Big Beautiful Bill Act.

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Speaker 3: As we turned the corner into this year, there were

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Speaker 3: nascent signs of business investments starting to broaden out. Because

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Speaker 3: it's really hard to not want to take advantage of that.

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Speaker 3: We've done one hundred percent bonus appreciation, but sorry, fifty

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Speaker 3: percent before we've not done one hundred percent, and it's

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Speaker 3: on infrastructure as well. It's really hard to not take

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Speaker 3: advantage of that.

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Speaker 2: But is this a false start?

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Speaker 3: Because now you have the conflict in Iran, You've got

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Speaker 3: energy prices, food or input prices for businesses and they're

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Speaker 3: going to have to eat a good chunk of that.

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Speaker 3: Does that negate some of your decisions that you are

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Speaker 3: going to make to invest I think they will still

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Speaker 3: take advantage of the One Big Beautiful Bill Act.

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Speaker 2: But this is what as soon as we're able to.

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Speaker 3: Look beyond the conflict and the Strait of Hormuz, here's

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Speaker 3: what the next concern is. The cliff that we will

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Speaker 3: fall off from having pulled forward all of the demand

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Speaker 3: and tax breaks and everything else from the One Big

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Speaker 3: Beautiful Bill Act.

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Speaker 1: We have to run. Ellen Zettner, thank you so much.

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Speaker 1: I learned so much today about trout fishing. In the

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Speaker 1: pre runoff, she is with Morgan Stanley