Speaker 1: Bloomberg Audio Studios, podcasts, radio news. We said, good morning
Speaker 1: across the country. It is an April First ritual. And
Speaker 1: I do this because you should see my new Filson
Speaker 1: Fishing guide vest Twitter eighty nine dollars. Wow, it's very good.
Speaker 1: It's designed for anglers to organize gear for a full
Speaker 1: day out on the tundra as well. On April First.
Speaker 1: We always speak with Ellen Zettner because they said to
Speaker 1: Lisa Shallatt, I'm sorry, I gotta do fly fishing here.
Speaker 1: There's the pre runoff window.
Speaker 2: Yeah, like the winter waters.
Speaker 1: Yeah, the streams are like what clearer.
Speaker 3: Is The fish have been starving all winter and you
Speaker 3: get them before the runoff, and so they're pretty excited
Speaker 3: about that. And you don't get a lot of pressure.
Speaker 3: You don't see a lot of other anglers out there.
Speaker 3: And actually some of the best fly fishing is going
Speaker 3: out for Mother's Day, which is actually just before the runoff,
Speaker 3: but won't make you very popular with mom.
Speaker 1: Okay, is this the Arkansas and South Platte? Is it
Speaker 1: the yellows the jelly stone in Missouri rivers? Where does
Speaker 1: Ellen Zenner go?
Speaker 3: Well, Tom, you're really you're really struggling with this this morning.
Speaker 1: Yeah, well, you know it's I think this is important.
Speaker 1: Like where is your chosen April river in America?
Speaker 3: Well, look, we don't ever give away the rivers that
Speaker 3: we like to fish.
Speaker 2: You don't do that.
Speaker 3: But Montana is still a big favorite, a big favorite
Speaker 3: of ours.
Speaker 1: Driving so much at Morgan Stanley, Ellen Zander with us today.
Speaker 1: How is the American consumer? This is how you and
Speaker 1: I first met.
Speaker 3: I know, do you know talking about Apple's fiftieth anniversary.
Speaker 3: There's a big anniversary for us. Tom is twenty three
Speaker 3: years ago that I was first on radio with you
Speaker 3: very twenty three years ago.
Speaker 2: You were three years old. Exactly, Yes, nice, exactly.
Speaker 1: Well seriously, this is she was sixteen years old out
Speaker 1: of some high school in Texas. That's what I read.
Speaker 2: It was you and Ken Pruitt and I in the studio.
Speaker 1: It was the only reason you got on was you
Speaker 1: and Ken talk and fly fishing.
Speaker 4: Paul Sweety with old zenator Ellen, what do you What
Speaker 4: are the conversations you're having with your clients as you
Speaker 4: do travel around the US talking to your US clients here,
Speaker 4: do they want you to really help them think about
Speaker 4: on the other side.
Speaker 1: Of this war?
Speaker 4: What do we do here?
Speaker 1: Is that?
Speaker 4: What are the conversations you're having these days?
Speaker 3: I tell you what, There's so much volatility and so
Speaker 3: much uncertainty out there that it has made the conversations
Speaker 3: all that much more interesting because they're they're much more
Speaker 3: longer term focused, so not necessarily when are we going
Speaker 3: to get beyond this? But it's more of what does
Speaker 3: this mean in the bigger picture of long term national
Speaker 3: security and resource nationalism and resource scarcity and defense spending
Speaker 3: and all of those things. And so it makes those
Speaker 3: topics really top of mind for clients because you can't
Speaker 3: It really gets exhausting trying to figure out when is
Speaker 3: this thing going to end? Am I supposed to time it?
Speaker 3: What should I do here? And so it just opens
Speaker 3: the door to some really interesting conversations. I don't think
Speaker 3: anyone knows when we're going to be out of this
Speaker 3: and what does out of this even mean?
Speaker 4: And I think we're seeing that maybe an oil marketing.
Speaker 4: We're seeing stocks rebound, Okay, that's fine, maybe goes to
Speaker 4: the growth issue, but you know, oil still holding very
Speaker 4: high levels. That suggests maybe the market saying I'm not
Speaker 4: sure this straight up where moose things ever going to
Speaker 4: clear up in the near term.
Speaker 3: Yeah, well, even if I mean, what does it mean
Speaker 3: to open the straight tomorrow?
Speaker 2: I mean, let's just assume that's a thing, and that
Speaker 2: that could happen.
Speaker 3: You've still got all of these price effects and shortages
Speaker 3: in the pipeline, and businesses have to absorb that, households
Speaker 3: have to absorb that, and some countries are going to
Speaker 3: be able to absorb it better than others. There are
Speaker 3: countries that will step in with food subsidies and other
Speaker 3: assistance like that, but there will be pain. Now does
Speaker 3: that mean recession? Not necessarily, but I think the probability
Speaker 3: of recession here is higher than people think, and I
Speaker 3: would put it around forty percent, which is meaningful.
Speaker 1: It's uncomfortable, right, helping her again with the consumer, and
Speaker 1: you know, the modern statement is a case shape. You
Speaker 1: literally invented this as a cottage industry at unit credit.
Speaker 1: I think it was years ago. I mean, help us
Speaker 1: here with a fifteen hundred dollars disposable income lift and
Speaker 1: cost due to a gallon of gas, it crushes how
Speaker 1: much of America?
Speaker 2: Yeah, so it always falls more heavily.
Speaker 3: It's very regressive, so it falls more heavily on lower
Speaker 3: income households. They also have to commute and drive to work,
Speaker 3: especially in the big driving states. You'll see the bigger
Speaker 3: impacts and you'll see them change their behavior, but it
Speaker 3: takes time.
Speaker 1: Wait, wait a minute, Morgan Stanley, where everybody grew up
Speaker 1: in three zip codes and your country girl fishing and
Speaker 1: all that, we don't understand those driving times.
Speaker 2: Those are big driving states.
Speaker 1: Yeah, you know, children from the East just don't get it.
Speaker 4: No, I spent half my life on the New Jersey Transit,
Speaker 4: so that's.
Speaker 3: Not kind of so you don't understand. But many of
Speaker 3: your listeners will know the obsession that you have Florida, Texas, California,
Speaker 3: these big driving states. It is a family obsession talking
Speaker 3: about gas prices around the dinner table. You pass by
Speaker 3: a gas station, you look at every single sign to
Speaker 3: see what the gas price is. You comment on how
Speaker 3: it's gone up, when was the last time you saw
Speaker 3: that price, like.
Speaker 2: It's a pastime.
Speaker 3: Just like for New Yorkers talking about the weather, it's
Speaker 3: talking about gas prices for much of the rest of
Speaker 3: the country, and so this is meaningful. You can first,
Speaker 3: if you weren't buying the cheapest unleaded gasoline, you'll switch
Speaker 3: to the cheapest. Then after time maybe you start to commute.
Speaker 3: We did this in two thousand and eight. We started,
Speaker 3: we started car pooling together. We started changing our altering
Speaker 3: our behavior on the types of vehicles we were buying.
Speaker 3: You've seen all the reports of people now inquiring about evs,
Speaker 3: for instance, but it takes time to change those behaviors,
Speaker 3: and so you have to suck it up and pay
Speaker 3: it at the pump until you can cut costs elsewhere.
Speaker 4: That being said, what's your view on a consumer, because
Speaker 4: it seems like the consumers more than hanging in there.
Speaker 2: I guess well, I.
Speaker 3: Mean this has been like how many years in a
Speaker 3: row we've been talking about this. The low income consumer
Speaker 3: has been in and out of recession. The first recession
Speaker 3: they went to was when they worked through the excess
Speaker 3: savings that had been built up during COVID from the
Speaker 3: stimulus and just not being able to spend income. So
Speaker 3: they've been in and out of recession. Luckily, wage growth
Speaker 3: has at least for a time been outpacing inflation. But
Speaker 3: the wealthy consumer. We don't need the wealthy consumer to
Speaker 3: just stop spending spending, And of course, if you've already
Speaker 3: met a lot of pent up demand. You've been out
Speaker 3: there spending for years now with this amazing run up
Speaker 3: in financial assets, you're sitting on a lot of equity
Speaker 3: in your home, but you're not seeing further gains. It
Speaker 3: can cause you to pull back on spending. And that's
Speaker 3: all all it takes.
Speaker 1: Let me get this in quickly. What's investment looked like?
Speaker 1: We never talk about the eye of C plus, I
Speaker 1: plus and acseccent. What's investment looked like forward?
Speaker 3: So business investment had been very tech tech and infrastructure
Speaker 3: related AI related last year. The big optimism around this
Speaker 3: year has been with the One Big Beautiful Bill Act.
Speaker 3: As we turned the corner into this year, there were
Speaker 3: nascent signs of business investments starting to broaden out. Because
Speaker 3: it's really hard to not want to take advantage of that.
Speaker 3: We've done one hundred percent bonus appreciation, but sorry, fifty
Speaker 3: percent before we've not done one hundred percent, and it's
Speaker 3: on infrastructure as well. It's really hard to not take
Speaker 3: advantage of that.
Speaker 2: But is this a false start?
Speaker 3: Because now you have the conflict in Iran, You've got
Speaker 3: energy prices, food or input prices for businesses and they're
Speaker 3: going to have to eat a good chunk of that.
Speaker 3: Does that negate some of your decisions that you are
Speaker 3: going to make to invest I think they will still
Speaker 3: take advantage of the One Big Beautiful Bill Act.
Speaker 2: But this is what as soon as we're able to.
Speaker 3: Look beyond the conflict and the Strait of Hormuz, here's
Speaker 3: what the next concern is. The cliff that we will
Speaker 3: fall off from having pulled forward all of the demand
Speaker 3: and tax breaks and everything else from the One Big
Speaker 3: Beautiful Bill Act.
Speaker 1: We have to run. Ellen Zettner, thank you so much.
Speaker 1: I learned so much today about trout fishing. In the
Speaker 1: pre runoff, she is with Morgan Stanley