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Speaker 2: I think the narrative in this market is, you know,
Speaker 2: we've got a new administration, We've got some new trade
Speaker 2: policy focusing on tariffs that's creating a certain amount of
Speaker 2: uncertainty in the market. Maybe immigration policy changes pending also
Speaker 2: in bringing in some uncertainty into this market. And we've
Speaker 2: been told since day one the market's stole on uncertainty.
Speaker 2: So net net, you've got the SMP kind of pulling
Speaker 2: back about seven eight percent from its recent peak. You've
Speaker 2: got the dollar a little bit weaker. But it's the
Speaker 2: end of the day. What does this really mean for
Speaker 2: the economy? I guess we have to wait and see.
Speaker 2: But Tiffany Wilding, we're gonna ask her that question. She's
Speaker 2: an economist in covering the North America for PIMPCO. I
Speaker 2: was with her colleague mister Clarida last evening up in Stanford, Connecticut,
Speaker 2: talking about these markets. So got the pimp COO view
Speaker 2: for mister Clarida Tiffany at the end of the day,
Speaker 2: when you plugged these things into your model, whether it's
Speaker 2: tariffs and we'll find out more, I guess April second,
Speaker 2: on tariffs, whether it's maybe some tweaks to the labor
Speaker 2: market in terms of less migrant additions to the labor market.
Speaker 2: How's it changed your economic outlook for twenty five.
Speaker 3: Yeah, I mean, I think the bottom line for US
Speaker 3: is is that, you know, although you could have you know,
Speaker 3: medium term better outcomes with more investment in the United States,
Speaker 3: as a result of these various policies, there's going to
Speaker 3: be some near term disruption. And that's simply because you know,
Speaker 3: tariffs raise costs, so they raise costs on investment as
Speaker 3: well as consumption. So if you're you know, trying to
Speaker 3: get more investment in the United States at the same
Speaker 3: time you're making it more costly, you know, that is
Speaker 3: potentially problematic. You know, But I think the bottom line
Speaker 3: for US is is that there is some adjustment period
Speaker 3: that that will happen.
Speaker 4: You know.
Speaker 3: The teariff policies that we've seen have been I think
Speaker 3: much more aggressive, you know than anybody has expected there
Speaker 3: will be some near term price level adjustments, some near
Speaker 3: term inflationary pressures from that, and we'll also see you know,
Speaker 3: growth and labor market outcomes, you know, really accelerate as
Speaker 3: a result.
Speaker 5: Tiffany, what did you make of the numbers we just got.
Speaker 3: Yeah, so so we'll have to obviously dig into the
Speaker 3: details on the income data, but I didn't want to.
Speaker 3: You know, I do think the spending data, you know,
Speaker 3: was a little bit weaker here. You know, we we
Speaker 3: got some of this from the retail sales report, which
Speaker 3: was incredibly strong. As I mentioned, consumers and so the
Speaker 3: fact that today's data, which includes everything not only good
Speaker 3: spending but services, today's data suggests that consumers are shifting
Speaker 3: away from services at this point and spending focused much
Speaker 3: more on on goods types of spending. And you know,
Speaker 3: we've we definitely think that is the result of their
Speaker 3: expectations that you will get higher tariffs, and so they're
Speaker 3: trying to front load ahead of that. And I think,
Speaker 3: you know, that kind of belies, you know, this kind
Speaker 3: of underlying weakness in the economy. You're getting a front
Speaker 3: loading behavior that's sort of propping up spending for now.
Speaker 3: But that's not going to last forever, you know, so
Speaker 3: the question is it win does.
Speaker 5: That wane and how much?
Speaker 3: You know, when we do think that the higher uncertainty
Speaker 3: you know, plus higher prices, you know, will result in consumers,
Speaker 3: you know, really taking a step down in terms of
Speaker 3: growth and the it's been the high income consumer that
Speaker 3: has really been driving consumption growth over the last couple
Speaker 3: of years, and we think they are poised to you know,
Speaker 3: just kind of take a step down here as as
Speaker 3: we have this higher uncertainty, lower equity prices, and we
Speaker 3: will see that moving forward.
Speaker 2: How long do you think, Tiffany, that the lag effect
Speaker 2: is when I don't know, tariffs go into effect and
Speaker 2: then the other countries slap tariffs on our goods, And
Speaker 2: how does this kind of play at in econyes? Is
Speaker 2: something that's a three, four, five, six month time type
Speaker 2: of process.
Speaker 3: Yeah, well, I think it's different for different variables. So
Speaker 3: I think for inflation. You know, what, what we've learned
Speaker 3: over you know, the pandemic, and I would say the
Speaker 3: last several years, you know, is that with the increased
Speaker 3: digitization of retail and commerce, you don't have these quote
Speaker 3: unquote menu costs anymore. So that was you know, kind
Speaker 3: of economist jargon for when you want to change a price,
Speaker 3: you literally have to print a new menu, and there's
Speaker 3: some cost to that, so you might not change as quickly.
Speaker 3: But now you don't have to do that. You can
Speaker 3: literally change in real time, you know, if you have
Speaker 3: a digital platform, and so that results in you getting
Speaker 3: much quicker passed through, potentially to higher prices. Now the
Speaker 3: you know, one of the things with us that the
Speaker 3: businesses will have to be optimizing for is that when
Speaker 3: you raise prices, you usually reduce volumes, and so they'll
Speaker 3: have to be you know, again optimizing for that. I
Speaker 3: think there's some question around the extent to which these
Speaker 3: tariffs can actually be passed through to consumers. You know,
Speaker 3: consumers are not as strong as they were several years
Speaker 3: ago when they had big fiscal you know, paychecks in
Speaker 3: their accounts that you know that helped fuel spending despite
Speaker 3: higher prices. So, you know, I think those are the
Speaker 3: kinds of things that we'll be looking for in terms
Speaker 3: of the labor market effects. You know, I think it's
Speaker 3: really a question of how businesses and how this impacts
Speaker 3: their bottom line, how much of that price passed through
Speaker 3: how much of the price increase can they pass through?
Speaker 3: You know, if there's you know, much more margin compression,
Speaker 3: then they might be looking towards you know, optimizing, you know,
Speaker 3: reducing you know, some of their labor inputs and so
Speaker 3: that you know, I think will take a little bit
Speaker 3: more time to play out as we see how this goes.
Speaker 3: But you know, we we think in the manufacturing sector
Speaker 3: in particular, you could see some you know, some furloughs
Speaker 3: and things like that, you know, as these things are
Speaker 3: sort of passed through, you know, through through the you know,
Speaker 3: through the hopper.
Speaker 5: All right, Tiffany, thanks a lot.
Speaker 6: We really appreciated Tiffany Wilding economists over at So let's
Speaker 6: just get a recap on these numbers. Right, you had
Speaker 6: personal income for February jumping eight tents of one percent,
Speaker 6: but the spending slowing a bit to four tenths of
Speaker 6: one percent versus expectations. Then you had the PCE index.
Speaker 6: So that is what the FED winds up looking at
Speaker 6: on a year on year basis, coming into two point
Speaker 6: five percent and the core so you're backing out the
Speaker 6: more volatile numbers that's coming up on a month on
Speaker 6: month basis to four tenths of one percent. So as
Speaker 6: we digest, want to get more on this with Stephanie Roth,
Speaker 6: chief economist at Wolf Research. All Right, Stephane, first, blush,
Speaker 6: what's your takeaway from these numbers? What stands out?
Speaker 7: Yeah, I'm going to give two things. One is on
Speaker 7: the price perspective. We're starting off at a fairly elevated
Speaker 7: place and this is before teriffs have a big impact.
Speaker 7: So we're in a tough situation. Just given the extent
Speaker 7: of the tariffs that are likely to put in place,
Speaker 7: they could have an impact of nearly a percentage point
Speaker 7: on price inflation.
Speaker 5: For the next year.
Speaker 7: Of course, Powell last week made it sound like they
Speaker 7: wanted to look through it, but at some point this
Speaker 7: could become a real challenge for the Fed. And then
Speaker 7: you are seeing a more sluggish consumer on the spending
Speaker 7: side as well. The income numbers are a little bit overstated.
Speaker 7: Some of that came from rental income and some other
Speaker 7: sort of one off stuff from government, So I would
Speaker 7: look at the income as slightly less than the numbers
Speaker 7: would suggest. But all in all, you're looking at a
Speaker 7: consumer that is pulling back a little bit and that's
Speaker 7: likely to continue even more so as the consumer becomes
Speaker 7: a little bit more concerned about the backdrop.
Speaker 2: Stephanie, how do you think the Federal Reserve will look
Speaker 2: at this data? Will that give them maybe a little
Speaker 2: bit more confidence to maybe just kind of sit on
Speaker 2: their hands for a while.
Speaker 7: Yeah, I think they're going to want to sit on
Speaker 7: their hands kind of either way. The policy backdrop is
Speaker 7: so complicated. There's two main things that they're likely to
Speaker 7: be looking at when we're thinking about what's going to
Speaker 7: happen in the next couple months. On the tariff side,
Speaker 7: of course, what gets implemented, and then how do inflation
Speaker 7: expectations react as a result. This is the primary transmission
Speaker 7: mechanism to which the Fed would initially become concerned. If
Speaker 7: you start to see consumers really become worried about the
Speaker 7: inflation outlook, which you miss, inflation expectations started to show
Speaker 7: a little bit of a flavor of that, that's going
Speaker 7: to make them want to become more hawkish than would
Speaker 7: otherwise be the case. And then they're also going to
Speaker 7: want to look on the immigration side, which people aren't
Speaker 7: talking about enough. But Trump this week ended the visa
Speaker 7: status for five hundred thousand people from Cuba, Haiti, Nicaragua,
Speaker 7: and Venezuela effectively overnight on April twenty fourth, and that's
Speaker 7: going to be felt both from a real labor market
Speaker 7: perspective but also in the non from perials data.
Speaker 6: So okay, to that point, though, what's the transmission mechanism
Speaker 6: in that we get the sentiment kind of rolls over?
Speaker 6: When does that actually feed into the hard data? Because
Speaker 6: if you take a look, like a lot of President
Speaker 6: Trump's polling is still really strong, So there is this
Speaker 6: like divergence in terms of maybe where individuals feel the
Speaker 6: country is headed and then.
Speaker 5: How they feel about their pocketbooks.
Speaker 7: Yeah, and there's been a big discrepancy between consumer confidence
Speaker 7: and spending for a number of years at this point,
Speaker 7: so it's not as if confidence is going to be
Speaker 7: predictive of but in this instance, I do think at
Speaker 7: least directionally, it's telling you that people are getting more concerned.
Speaker 7: When does it feed into the real data. That's probably
Speaker 7: when the price is actually take effect. So when things
Speaker 7: become legitimately more expensive. Based on our analysis, it looks
Speaker 7: like it takes about three to six months for prices
Speaker 7: from TERFF implementation in implementation to prices actually showing off
Speaker 7: at the stores. So I would imagine over the summer
Speaker 7: is when consumers may really start to feel the pain,
Speaker 7: and that's when you really could see people pulling back
Speaker 7: even more materially.
Speaker 2: Stephanie, is it I hate to go to labels, but
Speaker 2: is it fair to label this teriff price increase that
Speaker 2: may occur in this US economy as transitory or is
Speaker 2: it something more than that?
Speaker 7: I wouldn't use the word transitory, and to be fair,
Speaker 7: I'm surprised that POW will use it as well, just
Speaker 7: given the whole background with that word. I think it's
Speaker 7: right that it's a price level shock. The problem is
Speaker 7: similar to the last supply shock. Transitory was expected to
Speaker 7: be of a short term thing, called it less than
Speaker 7: a year, and we're likely to see the effects of
Speaker 7: this for for way more than a year, because if
Speaker 7: you start to see the supply chain and autos get
Speaker 7: get sort of snarled to some extent, then that feeds
Speaker 7: through into motor vehicle insurance. And we saw how long
Speaker 7: that took to feed its way into the inflation data.
Speaker 7: So I agree that it's a price level shock. It's
Speaker 7: not a sort of an ongoing inflationary spiral type of thing.
Speaker 7: But transitory kind of implies at this point that it's
Speaker 7: going to be very short lived, and that's that's perhaps
Speaker 7: a little bit too optimistic.
Speaker 6: But I feel like the distinction though, is like it's
Speaker 6: a one time price hike and then it stops versus
Speaker 6: keeps going up. And if it keeps going up, then
Speaker 6: that's obviously going to be more harbinger for the FED.
Speaker 6: If it's just a one time price increase, the economy
Speaker 6: is still growing, We're still in a good spot even
Speaker 6: if we go one point six one point seven percent.
Speaker 6: Can we handle it?
Speaker 7: Yeah, I think we can, and I think the ultimate ultimately,
Speaker 7: the Fed's gonna have to cut as a result, because
Speaker 7: we're going to see the economy weekend on the back
Speaker 7: of caraffs uncertainty. We're hearing, you know, capex is stalling
Speaker 7: starting to stall out pretty materially, So realistically this is
Speaker 7: likely to be a growth shock, in which case the
Speaker 7: FED can react uvishly, but they can't react until the
Speaker 7: data start to show that real weakness and we're several
Speaker 7: months away from that, which is just a challenge for
Speaker 7: markets at this point because the FED kind of has
Speaker 7: to sit on its hands for a little while until
Speaker 7: they can actually react and come out a bit more rubbishly.
Speaker 7: What it's proved that this is more like a price
Speaker 7: level shock and the impact on growth is notably softer.
Speaker 2: So, Stephanie, have you in the good folks over at
Speaker 2: Wolf have you materially changed maybe your GDP forecast, your
Speaker 2: inflation forecast to account for what appears to be pretty
Speaker 2: steady tariff policy here.
Speaker 4: Yeah, we have.
Speaker 7: So coming into the year we were a little bit
Speaker 7: above two percent. We were more optimistic on the growth
Speaker 7: once we realized that Trump was much more serious on
Speaker 7: doing tariff, certainly earlier in the year we were expecting
Speaker 7: it to be later once the DOS layoffs started to well,
Speaker 7: they didn't actually play out, but the headlines weren't great.
Speaker 7: Once the negative stuff started to happen, more so than
Speaker 7: anything positive that could potentially play out. We changed our
Speaker 7: outlook from two point two to one point six on GDP,
Speaker 7: it's inflation from two three to two seven. And realistically,
Speaker 7: the risks are that we might have to do a
Speaker 7: similar type of you know, move again if you start
Speaker 7: to just see more of an impact from it from
Speaker 7: a tariff perspective.
Speaker 5: I mean, yeah, it's not negative.
Speaker 2: I'm just saying, Oh, it's not negative.
Speaker 6: Okay, I'm trying I vacillate between like glass half full
Speaker 6: of glass half empty.
Speaker 5: So it's like has a good.
Speaker 2: Point, which is companies adjust, consumers adjust, market suggest you
Speaker 2: have to give everybody smart credit.
Speaker 5: Yeah, well, but I think that's right.
Speaker 7: I think the economy will adjust and we're not. I
Speaker 7: think we'll still grow, it's just a slower pace we were.
Speaker 7: We've been growing in an environment where growth has been
Speaker 7: three percent or above for the.
Speaker 5: Past couple of years. Yeah, and it just has to
Speaker 5: have a level shift down.
Speaker 6: It also just depends on what that transition period looks like,
Speaker 6: like is it a couple months, is it a year, like?
Speaker 5: Is it six months? Like that?
Speaker 6: Really then depends on how maybe you ask it allocate
Speaker 6: or like what that grow trajectory winds up looking like, Yeah, I.
Speaker 7: Think that's fair for through much of this year, I
Speaker 7: would be sort of concerned. From an equity perspective, I
Speaker 7: think we might see a lot more volatility. At some
Speaker 7: point it might be abundantly more clear that there's a
Speaker 7: lot of sort of risk price into the markets, and
Speaker 7: then it would make more sense to take a sort
Speaker 7: of a stab at it, right now it just doesn't
Speaker 7: feel like enough is in the price, just given the
Speaker 7: tariff news that's likely coming.
Speaker 2: Stephanie, thanks so much for joining us. Always appreciate getting
Speaker 2: your thoughts there. Stephanie Roth, chief economist at Wolf Research.
Speaker 2: She got a master's in statistics. You couldn't get pay me, literally,
Speaker 2: you could not pay me nil money to get a
Speaker 2: master's in statistics.
Speaker 1: Wow.
Speaker 2: I had one course at business school and statistics first quiz,
Speaker 2: I got a seven out of twenty. Why because I
Speaker 2: don't like statistics? And b I slept out the entire
Speaker 2: weekend of Cameron into Or Stadium to get season tickets
Speaker 2: to Duke basketball.
Speaker 6: Well, I mean, like this priority totally totally worth it.
Speaker 6: I think I took a statistics yep. And I say
Speaker 6: think because like I actually don't remember. I think it
Speaker 6: was my best friend and her boyfriend, and I think.
Speaker 5: That maybe he helped us. Yeah, but that's in the testing.
Speaker 2: You can't do that for a little bit, all right,
Speaker 2: joining us now in our studio, which is a treat
Speaker 2: a larn Goodwin, chief market strategist that New York Life
Speaker 2: Investment Management. So we got some inflation data today kind
Speaker 2: of came in line with expectations. Anything on the economic
Speaker 2: data recently that's jumping out of you and maybe changing
Speaker 2: the way you're thinking about these markets.
Speaker 8: It's really difficult to take the today economic data and
Speaker 8: tell us much about the markets moving forward because we're
Speaker 8: in a really interesting and awkward in between spot. We
Speaker 8: know that policy uncertainty is changing the way that businesses
Speaker 8: can and consumers think, we don't know the extent to
Speaker 8: which that will impact the hard data, and so as
Speaker 8: we think about asset allocation, we're thinking about a couple
Speaker 8: of different themes in relation to data like this. One
Speaker 8: is how do you build resilience in the near term
Speaker 8: to what we expect to be a RelA relatively meager
Speaker 8: equity market backdrop? And the second is what do we
Speaker 8: see happening that we can really anchor on long term?
Speaker 8: And as we approach Liberation Day as it's being called,
Speaker 8: I think investors could be forgiven for not feeling particularly liberated.
Speaker 5: But as we approach liberation.
Speaker 8: Day, even if tariffs disappeared from the policy framework, there
Speaker 8: are mega trends in place related to supply chains and
Speaker 8: AI that are on their way. These are things that
Speaker 8: we believe we can allocate around regardless of the near
Speaker 8: term volatility.
Speaker 6: See, I feel like Lauren was someone who definitely had
Speaker 6: did well in statistics.
Speaker 9: I did, I did, I did really well in statistical Yeah,
Speaker 9: this in no way surprises me. When when when you
Speaker 9: got into like the seventh eighth order, like apply to conumetrics,
Speaker 9: that's when I was calling.
Speaker 6: Yeah totally, I mean that's like for me that, I mean,
Speaker 6: I actually sailed past that part. It was the next
Speaker 6: part that no, I'm kidding, know what you're talking about. Okay,
Speaker 6: So then the question that I've kind of been wondering,
Speaker 6: and I should point out that futures are around the
Speaker 6: lost of the session right now. Will Wednesday be a
Speaker 6: clearing event, like will we have will be clearing event
Speaker 6: for the market, or it's just going to be more
Speaker 6: volatility and adaptation after that.
Speaker 8: I think many of the answers that I've heard from
Speaker 8: the program already today suggests that it can't possibly be
Speaker 8: a clearing event. It could be a clearing event for
Speaker 8: Wednesday and Thursday, and then on Friday we get a
Speaker 8: labor market report that's going to start to show the
Speaker 8: impact of government layoffs, and so it's again, I honestly
Speaker 8: think that if you gave me a spreadsheet that said
Speaker 8: these are the tariffs that are going to be implemented
Speaker 8: on these countries on this timeline. I've heard investors say
Speaker 8: that's all we need, then we can do the math.
Speaker 5: I don't agree.
Speaker 8: We don't know how countries are going to react. And frankly,
Speaker 8: there are places in the world that have a lot
Speaker 8: of leverage on the US economy. And so even though
Speaker 8: some clarity over the path of tariffs, if we receive
Speaker 8: that can be helpful for those next steps to start
Speaker 8: locking into place. Just the mere fact that we are
Speaker 8: on this path towards more regionalized supply chains, more energy
Speaker 8: and tech independence. That's a capital intensive trend that's on
Speaker 8: its way. It's going to happen regardless, and so I'm
Speaker 8: not really angering on feeling better on Wednesday.
Speaker 2: Have you been rebalancing your portfolio, reallocating your portfolio, de
Speaker 2: risking it, what have you done anything that kind of
Speaker 2: your recommendations.
Speaker 8: We're in the camp of recommending actually pretty significant changes
Speaker 8: to a multi asset portfolio. And just to give a
Speaker 8: little bit of backdrop, if you look back in the
Speaker 8: last fifteen years, knowing what we know now, your ideal
Speaker 8: asset allocation would be ninety percent US large cap growth equity,
Speaker 8: and frankly, even in twenty twenty one twenty two, we
Speaker 8: the investing public were starting to say, oh that lower
Speaker 8: for longer interest rate environment is changing. The world might
Speaker 8: look a little different. The AI boom bought us a
Speaker 8: little time of by the think about US large cap
Speaker 8: growth equity before all that's changing. We're looking forward at
Speaker 8: a market environment that is more volatile, more inflation aware,
Speaker 8: more capital intensive, and that's an environment where I believe
Speaker 8: we need to be building more resilient equity portfolios, closing
Speaker 8: international underweights, looking to generate income within the equity portfolio,
Speaker 8: because we probably can only expect five to seven percent
Speaker 8: on US equity this year, So what does that mean?
Speaker 8: Well for starters. Many of the investors, despite some of
Speaker 8: the news we've seen out of Europe, and frankly, despite
Speaker 8: a much more a much quicker interest rate cutting cycle,
Speaker 8: have ignored the cyclical uplift in international equity, and so
Speaker 8: we're calling on investors to close those underweights. We're staying
Speaker 8: focused on quality in large caps, dividend payers, those that
Speaker 8: are lined up for stock buybacks, but we're also taking
Speaker 8: more equity like risk in credit, and the reason for
Speaker 8: that is as you see economic risks rise, or if
Speaker 8: we see that, certainly spreads will widen. We're already seeing
Speaker 8: it a bit. But on a two to three year
Speaker 8: forward looking basis, I have very little concern that the
Speaker 8: US high yield market, especially in the higher quality issuers,
Speaker 8: won't be able to pay back their debt. And so
Speaker 8: as a buy and hold strategy, getting six to eight
Speaker 8: percent on a high yield bond portfolio, from my perspective,
Speaker 8: that's a real source of resilience in a multi asset portfolio.
Speaker 2: And how much duration would you typically like to take
Speaker 2: in this environment? Most people, I guess a lot of
Speaker 2: people have said kind of the belly of the curve,
Speaker 2: which is a term I learned from Lisa Bromwitz years ago,
Speaker 2: kind of five six, seven years, that kind of thing.
Speaker 8: Lisa Abramowitz was also probably very good at statistics. I
Speaker 8: think we can agree.
Speaker 5: I can see that.
Speaker 8: We are neutral on duration. So I just mentioned that
Speaker 8: from a credit perspective, we like shorter duration exposure, and
Speaker 8: that's because of the payback timeline. But in a portfolio
Speaker 8: as a whole, we have very low conviction of which
Speaker 8: part of the three and a half to five percent
Speaker 8: treasury yield range will stay in for any amount of time.
Speaker 8: I just think we're going to see more market volatility,
Speaker 8: market interest rate volatility as these policy changes come into effect.
Speaker 8: And so we're balancing short duration credit exposure with some
Speaker 8: structured product and also with a little bit of exposure
Speaker 8: in long duration municipal bonds, which is where infrastructure is funded.
Speaker 6: So you're not worried about the tax break going away
Speaker 6: for munies.
Speaker 8: Not particularly, No, And that's it.
Speaker 2: I am paying attention to that.
Speaker 3: I know.
Speaker 5: Well, okay, let me just so.
Speaker 6: Usually we have a show from ten to twelve, which
Speaker 6: I won't be on today, but we have a Muni
Speaker 6: segment every Friday. And when we started doing the show together,
Speaker 6: that was like Muni's man, I can't this is too hard,
Speaker 6: And then finally Paul got me into it. So now
Speaker 6: when I see a Muni headline, I'm like, oh my gosh,
Speaker 6: maybe the tract is going to go away.
Speaker 5: This is going to be terrible. Anyway, that doesn't worry.
Speaker 8: You, No, Our teams feel high conviction that it's just
Speaker 8: highly unlikely to take place. But this is a part
Speaker 8: of the credit environment issuers in state and local governments
Speaker 8: that need funding for things that they are doing. That
Speaker 8: when though you may see how yields gap out, for example,
Speaker 8: in the event of a major tax policy change, you
Speaker 8: still have a quality of issuance and an opportunity that
Speaker 8: we feel as meaningful and interestingly and perhaps more to
Speaker 8: the point, long duration municipal bonds that twenty to thirty
Speaker 8: sort of infrastructure twenty to thirty year infrastructure focus. Those
Speaker 8: are taxable bonds, and so that's something that we're seeing
Speaker 8: not only for a retail investor base sort of thematically,
Speaker 8: but also for institutional investors who don't benefit from the
Speaker 8: tax breaks anyway.
Speaker 2: Interesting. I'm looking at the wrp GO function on the
Speaker 2: Bloomberg terminal the World intst rate probability. It looks like
Speaker 2: the market's counting a couple of rate cuts this year.
Speaker 2: I don't know, maybe the data today influences kind of
Speaker 2: your viewing. How do you think the FED will behave
Speaker 2: this year.
Speaker 8: I think that the FED is incredibly constrained by inflation
Speaker 8: numbers like this. There's nothing wrong with them, it's just
Speaker 8: very difficult to cut rates until we see a further
Speaker 8: deterioration in the other side of their mandate, the employment
Speaker 8: side of their mandate, And so I expect we'd either
Speaker 8: need to see significant disinflation, which I don't believe is likely,
Speaker 8: or meaningful deterioration and employment, or at least a twenty
Speaker 8: percent drawback in the US equity market for the FED
Speaker 8: to cut more than one time this year. And so
Speaker 8: I do think that they will cut that one time.
Speaker 8: I think that staying on a path towards neutral is
Speaker 8: really important to them, but I think it will be
Speaker 8: challenging in this inflation backdrop to do much more Before.
Speaker 5: I let you go, Where do you.
Speaker 6: Guys think of like Gold, for example? I mean, I
Speaker 6: just I can't get over this. I don't record move
Speaker 6: and I look back and what gold was doing back
Speaker 6: in twenty sixteen when we had another bat of uncertainty
Speaker 6: with President fromp and it's like half of what it
Speaker 6: is now. I wonder how you guys talk about it.
Speaker 8: So on a personal basis, we of course are very
Speaker 8: very careful with our personal accounts as sort of institutional investors.
Speaker 8: But this was one of my buy and holes that
Speaker 8: I placed in September, and I'm feeling really.
Speaker 5: Good about it night.
Speaker 8: But for institutional portfolios. For the average retail investor, we
Speaker 8: are advocating a satellite exposure to gold actually as a
Speaker 8: function of inflation and volatility awareness. Effectively that in an
Speaker 8: environment where you just you can expect more geopolitical dynamics
Speaker 8: a little bit of concern about inflation, that that satellite
Speaker 8: exposure makes sense. However, it really should be treated like
Speaker 8: a satellite exposure. This is a volatile and multifaceted asset
Speaker 8: class that most investors frankly don't have a ton of
Speaker 8: understanding on, and it's very impacted by central bank policy,
Speaker 8: which is also on the move. So we if you
Speaker 8: put it in the bucket of making an equity portfolio
Speaker 8: more resilient to the changes that we see going on,
Speaker 8: that's how we classify gold.
Speaker 6: Lauren so great, She's the best. Yeah, thank you so much.
Speaker 6: It's so good to see you. Lauren Goodwin, chief market
Speaker 6: strategist at New York Life Investment Management.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 2: Seventy Balafas, CEO of goal List, a goal Vest Advisory
Speaker 2: based here in New York City. She joints is here
Speaker 2: in our Bloomberg Interactive Broker studio. So coming in studio
Speaker 2: on a Friday to gold stars for you. So I'm
Speaker 2: just letting you know that's big. So how do you
Speaker 2: think about that app performance? Sebasty of European markets, international
Speaker 2: markets or many international markets visa be the US this year.
Speaker 2: Is this something that's sustainable from your perspective?
Speaker 10: First of all, it's been very welcome for a long time.
Speaker 10: As you know, the US markets have outperformed European markets,
Speaker 10: and will it last over the long term. I still
Speaker 10: am a believer in US large tech long term, but
Speaker 10: over the next twelve twenty four months, I do think
Speaker 10: that spread between the USO performance and the international or
Speaker 10: European performance, that spread narrows. Of course, the big investment
Speaker 10: in trillion dollar investment in defense is certainly going to
Speaker 10: help those economies in those markets. But the same reasons
Speaker 10: why we didn't love or weren't out overweight Europe six
Speaker 10: months ago, some of those reasons still persist. So we
Speaker 10: do see that spread narrowing. I am a believer in
Speaker 10: long term US but over the next twelve twenty four
Speaker 10: months do see some more room for growth in Europe.
Speaker 6: Is the belief in US stocks really tied to the
Speaker 6: AI trade?
Speaker 5: Think it broadens?
Speaker 10: It absolutely has broadened. I mean even if you look
Speaker 10: year to date, of course, the S and P five
Speaker 10: hundred is down, the large cap tech is down, the
Speaker 10: MAG seven is down, but you're seeing strong healthcare performance,
Speaker 10: the dividend stocks, those are up year to date, and
Speaker 10: I do think that continues. So I do see a
Speaker 10: broadening happening.
Speaker 2: So peak to trough. We had earlier this year about
Speaker 2: a ten percent corrections pull back in the S and
Speaker 2: P five hundred. How did you view that? Was that
Speaker 2: something that's just kind of a welcome, healthy part of
Speaker 2: a longer term bull market or does it signal something
Speaker 2: more for you?
Speaker 10: Ten percent is normal? Actually more like fourteen fifteen percent
Speaker 10: is average intra year decline on any given year. Right,
Speaker 10: So the ten percent pullback, we can't forget. We had
Speaker 10: the twenty plus percent in twenty twenty three, the twenty
Speaker 10: plus percent in twenty twenty four, so it was almost
Speaker 10: par for the course. It wasn't unexpected.
Speaker 2: I thought it was just me being a great investor.
Speaker 2: Oh well, I looked at my four one k I said,
Speaker 2: how boy, you're good.
Speaker 4: I know.
Speaker 11: I mean that's just the market lifting all both.
Speaker 6: Yeah, No, that's kind of happened to me. And then
Speaker 6: my husband who's now freaking out a little bit. I'm overstating.
Speaker 6: But so when you take a look at the benefits, though,
Speaker 6: where do you hedge you the risk at the moment,
Speaker 6: Like we to give it to him about gold gold
Speaker 6: stocks doing really well, Like even if you have your
Speaker 6: long term theme, even if you think European defense stocks
Speaker 6: will do well, where's that safe haven bid?
Speaker 10: Yeah, that's a great question.
Speaker 5: A couple of things.
Speaker 10: I in terms of having conversations with clients who ask
Speaker 10: me exactly that, it's a couple of things. So those
Speaker 10: conversations with clients that have cash needs coming up cash
Speaker 10: has been great for us. We've put money aside that's
Speaker 10: already been done. So anyone that has distributions coming up
Speaker 10: cash aside.
Speaker 5: We have that.
Speaker 10: And in terms of longer term growth investors, so we
Speaker 10: still have our neutral weight equity allocation, but we have
Speaker 10: become more defensive by using those dividend stocks as an example,
Speaker 10: the other areas in private markets, so private credit, for example,
Speaker 10: you're not going to see the volatility that you have
Speaker 10: been seeing in the public equities markets. Private credit and
Speaker 10: then other securities, other alternative investments like structured notes for example,
Speaker 10: that do well with volatility.
Speaker 2: All in the structured notes. Unfortunately, there's some taxis issues there,
Speaker 2: SEVESSI stay right there, You're gonna hang with us. We're
Speaker 2: gonna get the market open right now, Lise Miteo, and.
Speaker 12: It's opening Bellerport brought to you by Oppenheimer. Oppenheimer focuses
Speaker 12: the powered they're thinking on you, creating customized plans to.
Speaker 11: Help achieve your goals.
Speaker 12: Put the power of Oppenheimer thinking into your investing, wealth management,
Speaker 12: capital markets, investment banking. All right, and these markets are open,
Speaker 12: and we've got read on the screen. S and P
Speaker 12: five hundred down two tens percent sixteen points five thousand,
Speaker 12: six hundred and seventy seven, the Downtown to ten percent
Speaker 12: seventy six points forty two thousand, two hundred twenty one,
Speaker 12: and then NAZAC down four tens a percent seventy eight
Speaker 12: points at seventeen thousand, seven hundred and twenty two. The
Speaker 12: two year yield. Let's head over there. The three to
Speaker 12: two point nine six percent, that's down two basis points,
Speaker 12: and the yield on the tenure four point three zero
Speaker 12: percent down five basis points. We have the Bloomberg Dollar
Speaker 12: Spot Index. That is a little change after point comex
Speaker 12: goal three one hundred and twelve dollars an ounce. Now,
Speaker 12: as far as Bitcoin, it's down about two and a
Speaker 12: half percent, just above eighty five thousand. That is your
Speaker 12: Bloomberg opening bell report, all of Alex.
Speaker 6: All right, thanks so much, Lisa, Sorry I jugged you
Speaker 6: on that, No problem. I was going to talk about
Speaker 6: that sectors too. You got utilities and real estate doing well.
Speaker 6: When those two are doing well, you know there's a
Speaker 6: little bit of a save haven bid in the market. Tech,
Speaker 6: consumer discretionary industrials, communication services, so tech and the cyclic goals.
Speaker 5: Under performing just a touch.
Speaker 6: What are your clients asking you right now in terms
Speaker 6: of the tariff uncertainty and how to navigate that, And
Speaker 6: if it's a huge structural portfolio shift or just trimming
Speaker 6: around the edges.
Speaker 10: It's trimming around the edges for us, it's not a
Speaker 10: big structural shift because frankly, we don't have all the
Speaker 10: information yet. The announcement on auto tariffs the other day
Speaker 10: was a bit of a surprise. By the next day
Speaker 10: we had additional information on that. So there's more and
Speaker 10: more information coming out, and the questions are around is
Speaker 10: this going to last? How long will it last? Is
Speaker 10: this a negotiating tactic? What will we really see? But
Speaker 10: in terms of restructuring portfolios, it's tweak on the margin
Speaker 10: because we've had diverse fried portfolios. We're adding a little
Speaker 10: bit more, as I said, to defensive, but not making
Speaker 10: large changes. We just don't have information yet.
Speaker 2: Yeah, let's talk a couple of names here. Progressive Insurance. Now,
Speaker 2: when I got into VESPA, yeah, the guy said, the salesman,
Speaker 2: who is also a Progressive agent, said go get your
Speaker 2: quote from your insurance company. I got it over the phone. Huh,
Speaker 2: he says, I guarantee I can beat that by like
Speaker 2: thirty forty percent. Sure enough, Progressor came through and it
Speaker 2: is so easy. The app is awesome. So I've become
Speaker 2: a fan of Progressive Insurance because they insure the VESPA.
Speaker 5: It's huge.
Speaker 2: It's huge.
Speaker 4: You know.
Speaker 6: It's funny talking about insurance companies. We'll get to the
Speaker 6: actual stock pick in a second. But this on streaming,
Speaker 6: A lot of the insurance companies actually advertise, So my
Speaker 6: daughter now can sing and it's into all the insurance jingles,
Speaker 6: so Progressive, Geico, all State, like she knows them by name,
Speaker 6: and I was like, what, it's.
Speaker 2: Such a competitive business that they advertised, like crazy talk
Speaker 2: to us about reasons to own Progressive.
Speaker 5: Well, exactly what you said.
Speaker 10: You sold it for me, exactly what you said. So
Speaker 10: they are great with digital technology, that's certainly true. Number one.
Speaker 10: They're growing, so it's not only auto insurance, but they're
Speaker 10: really good with bundling the cross selling, so you mentioned
Speaker 10: some of that as well. And right now when we
Speaker 10: talk about staying allocated to equities but being more defensive Progressive.
Speaker 10: Progressive is a wonderful name. Expected double digit earnings for
Speaker 10: this year. We've seen solid earnings from them in the past,
Speaker 10: even in down markets like twenty twenty two, actually they
Speaker 10: were positive. So it's a name that even if we're
Speaker 10: into a recession, you're still paying your insurance. It's a
Speaker 10: name that we like to have in the portfolio.
Speaker 5: That's a good point. All right, thanks pot, We really
Speaker 5: appreciate it.
Speaker 6: It's really great to get your perspective on how you're
Speaker 6: navigating this environment.
Speaker 5: Thank you so much for coming into the studio too.
Speaker 6: We always love that when people come in a SEVESTBA
Speaker 6: office joining a CEO of Goldfest Advisory.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
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Speaker 1: say Alexa Play Bloomberg eleven thirty.
Speaker 2: Market's really been whipsawed by the news coming out of Washington, DC.
Speaker 2: The folks there seem to be having the narrative here
Speaker 2: as it relates to financial markets. So we figured, let's
Speaker 2: get one of these folks on. Michael harrodappolisk play and
Speaker 2: screw it up too badly. Republican representative from Florida in
Speaker 2: the US Congress Joints is here in our Bloomberg Interactive Studio. Michael,
Speaker 2: how do you guys think about Are you guys aware
Speaker 2: in Congress that when you guys and when the White
Speaker 2: House talks about tariffs and economic policy, boy, that has
Speaker 2: a big impact on global financial markets. How do you
Speaker 2: guys think about that well, like it absolutely, and now
Speaker 2: one of my long term goals is offer a certainty
Speaker 2: instability to the markets. What I led the Florida Senate
Speaker 2: twelve years ago, we had a very challenging economy. We
Speaker 2: wanted to offer certainty stability. We said, no new taxes,
Speaker 2: no new fees, We're not going to make it easier
Speaker 2: for people to sue people. It really consolidated the Florida market.
Speaker 2: People flocked to Florida. We need to offer the same
Speaker 2: thing in Washington. But as you see with these.
Speaker 11: Tariffs, there's a lot of whipsaws you put it.
Speaker 6: So the idea behind this right, and I think that
Speaker 6: the Trump administration has been really clear, is to move
Speaker 6: from an economy that's reliant on fiscal spend to an
Speaker 6: economy that's reliant on private spend. And that is going
Speaker 6: to be a really difficult transition from anyone that you
Speaker 6: talk to, And I guess how much pain are you
Speaker 6: guys willing to take as that happens.
Speaker 13: I think the words turbulence there's going through. The turbulence
Speaker 13: you've already seen in the market. Has been a little
Speaker 13: bit of a slip from this high mark earlier this year,
Speaker 13: and I think what the President's attempted to do is say,
Speaker 13: we all learned during the COVID crisis that we're too
Speaker 13: reliant on foreign markets.
Speaker 11: We want to bring some of those jobs back. We also, of.
Speaker 13: Course, want to offer the great the middle class once
Speaker 13: again those manufacturing jobs can do.
Speaker 11: But I think that challenge is there.
Speaker 13: Our Secretary of the Treasury has talked about making that transition.
Speaker 13: As you put it perfectly, I think you're going to
Speaker 13: see some challenges over the next few months. But one
Speaker 13: of the ways we do that is to reduce government
Speaker 13: spending so that people have more money in their own
Speaker 13: pockets to make those capital decisions, as opposed to the
Speaker 13: let's just say the government making some of those big decisions.
Speaker 2: So what do you think is is is Congress sits
Speaker 2: comes back here? What do you think it's the to
Speaker 2: do list for Congress these days?
Speaker 11: From your perspective, Well, I think the great news.
Speaker 13: First of all, I'll talking about the good news and
Speaker 13: the challenges first and foremost, we realize that the border
Speaker 13: crisis was simply enforcing the laws. We've reduced the border
Speaker 13: crisis by ninety eight percent, and I like the idea
Speaker 13: that means we could actually maybe make some changes in
Speaker 13: the immigration law. There's some folks we need to bring
Speaker 13: in for what to be seasonal workers and agriculture, like
Speaker 13: mind state of Florida, let alone people working at hotels
Speaker 13: and restaurants that are needed to some Americans just don't
Speaker 13: want to do those jobs. That said, I think the
Speaker 13: bad news is there's going to be challenges because the
Speaker 13: President is saying we want reciprocal tariffs. Why are we
Speaker 13: still treating other nations like is nineteen forty five and
Speaker 13: stead at twenty twenty five. These nations are up on
Speaker 13: their own feet right now. The EU economy is almost
Speaker 13: the size of the United States. We want to be
Speaker 13: treated fairly, whether it be on autos or food, and
Speaker 13: I think that's a common sense approach that we get
Speaker 13: treated fairly, especially how generous we are around the world,
Speaker 13: whether it be are support in the Ukraine or of
Speaker 13: course whenever there's a crisis overseas, we always step up.
Speaker 13: That said, I think that the challenges is can we
Speaker 13: actually reduce spending or at least focus on things that
Speaker 13: really matter. And I think one of the things that
Speaker 13: we're most focused on is how do we protect something
Speaker 13: that people have earned Social Security and Medicare, and how
Speaker 13: do we also agree form a program like Medicaid. I
Speaker 13: know it sounds great, but remember medicaid is welfare healthcare
Speaker 13: and these folks pay nothing into the system. But we
Speaker 13: want to protect those folks on Medicaid or disabled or
Speaker 13: in a nursing home. But folks who are able bodied,
Speaker 13: they need to get into this economy and contribute because
Speaker 13: we're all paying a little bit artificially higher in let's
Speaker 13: just say insurance rates for healthcare. Because one third of
Speaker 13: the population is getting free healthcare. There's going to be
Speaker 13: a cost shift when that takes place.
Speaker 6: Yeah, with any of the jobs, I mean, some of
Speaker 6: them have jobs, they just don't pay a lot, so
Speaker 6: it's not like they're just hanging out at home and
Speaker 6: like collecting medicaid at this point.
Speaker 11: No, I don't think that's the case. I think you're right.
Speaker 13: I think that we do have things like the CHIP
Speaker 13: program that's where you if you're working, you don't qualify
Speaker 13: for Medicaid, and did the chip programs you can provide
Speaker 13: at least low cost health insurance for your kids. I
Speaker 13: think those are the transitions we're looking at, and I
Speaker 13: think with Obamacare that does exist today. At least you're
Speaker 13: paying Most people are paying something into the system.
Speaker 2: How do people in Congress like yourself look at Doze
Speaker 2: and Elon Musk. I mean, you guys have spent your
Speaker 2: whole getting to Congress. You guys are are the bomb.
Speaker 2: They got this dude coming in who elected him to anything?
Speaker 2: How do you guys think about that in Congress?
Speaker 11: About you? Based on your question, I might be the anomaly.
Speaker 11: I love what they're doing. Here's why.
Speaker 13: When I was the leader of the Senate, we literally
Speaker 13: put everything online, from what we took in to what
Speaker 13: we spent to the people who got the contracts.
Speaker 11: I wanted to have that transparency. We are the Sunshine
Speaker 11: State on legislation. I think the same should hold true
Speaker 11: for spending.
Speaker 13: It shouldn't just be Elon must get to be all
Speaker 13: of us looking at where this money is spent. Every
Speaker 13: one of us works hard at this table to earn
Speaker 13: those dollars. The government should think as strongly about that
Speaker 13: same position. When you see them spending some money, let's
Speaker 13: just say some dubious programs. To be generous. You're wondering,
Speaker 13: is that really the best use of our dollars? You
Speaker 13: brought the question of medic it, I think it's a
Speaker 13: legitimate issue. Those people who are on it, a lot
Speaker 13: of them desperately need it because there's no other way.
Speaker 13: When you take money and that this is not such
Speaker 13: great programs, and you take away from needed programs, and
Speaker 13: you undercut the confidence in the government. So I think
Speaker 13: dose is a smart way to make people think. When
Speaker 13: my wife says, hey, let's look at our credit card bill,
Speaker 13: I know I'm only spend on my credit card bill. Really,
Speaker 13: I just be spending on notts of extra items. I
Speaker 13: think that that transparency is essential to gain trust in
Speaker 13: the government, which is so lacking today. And as far
Speaker 13: as your question the political question, Look, I'm a former
Speaker 13: state legislator.
Speaker 11: I hated it when this.
Speaker 13: Federal government tell me the little brother to the big brother, Hey,
Speaker 13: you got to do it this way. I think that
Speaker 13: all of us who came to the state leg league
Speaker 13: to remember, we didn't like it when Big Washington told
Speaker 13: us what to do. We should not be hypocrites when
Speaker 13: we have that opportunity in Washington. Let's have those block
Speaker 13: grants back to the states.
Speaker 11: They're smart folks.
Speaker 13: They can make good decisions on healthcare, education, transportation, the environment.
Speaker 13: They don't have to cycle it through Washington to get
Speaker 13: the AOK.
Speaker 6: Are your constituents freaked out at all by the uncertainty?
Speaker 6: I mean, look at any sentiment data. Republicans, Independents, and
Speaker 6: Democrats are all worried.
Speaker 11: Well.
Speaker 13: I think part of that in not just ubick, is
Speaker 13: a lot of a media build up. Remember, there hasn't
Speaker 13: been no, no, no no. There has not been a
Speaker 13: single cut to Social Security or Medicare at this point.
Speaker 13: We have not changed the Medicaid program at all.
Speaker 11: And so when you.
Speaker 6: Hear us talking about like a trillion dollars worth of cuts, like,
Speaker 6: we know where that's going to come from. It's going
Speaker 6: to be coming at had some point from entitlements.
Speaker 13: It is going to come from. First of all, the entitlements,
Speaker 13: the ones you've earned, are not going to be touched.
Speaker 13: Social Security and Medicare. Every one of us on this
Speaker 13: portal today have paid into that our entire working life.
Speaker 11: That's a pledge you made. The folks.
Speaker 13: Medicaid's a little different program, and there's almost one hundred
Speaker 13: million people on Medicaid. All we've said were we really
Speaker 13: focus At least I have is saying people who are
Speaker 13: able bodied and are choosing not to work, should not.
Speaker 11: Be on medicaid.
Speaker 6: But it's not just that it's tariffs, right, it's the
Speaker 6: worry of higher prices, even in the short term, and
Speaker 6: it's across the board. So are people coming to you
Speaker 6: and being like, look, I'm freaked out what's going on?
Speaker 11: I think people are freaked out a little bit.
Speaker 13: Sure, there's a big change coming government, but come on,
Speaker 13: when we run a trillion dollar deficit, what kind of
Speaker 13: responsibility is that we Again, what I love is we're
Speaker 13: having this discussion finally of what is the role of government.
Speaker 13: Should we be spending in this program or that program?
Speaker 13: And let's all take a look at it, because some
Speaker 13: of these programs that have been identified by DOGE would
Speaker 13: have never passed the smell test if you actually brought
Speaker 13: some of those expenditures before a government committee.
Speaker 2: Florida. Everybody in this greater listenership here, Greater New York
Speaker 2: City is seemingly gone to Florida.
Speaker 5: Paul's just jealous.
Speaker 2: I mean, what's the attraction? I mean, it's this summer's hot.
Speaker 2: I mean, so talk to us about what's the Is
Speaker 2: it still growing down there?
Speaker 11: Is it appeals? I live in fantasyland. I love where live.
Speaker 11: My wife says, I say, what, what are you crazy?
Speaker 11: You're going to Congress. We lived in Florida's the first
Speaker 11: place in the world.
Speaker 13: Remember, we have budget surpluses, we have one of the
Speaker 13: best education systems in America, we handle hurricanes when they
Speaker 13: do come.
Speaker 11: And it's just a fabulous place to live. And so
Speaker 11: we love it there. And I'm a former New York
Speaker 11: myself grew up in Garden City along Island.
Speaker 13: And so when I experienced a winter in Florida after
Speaker 13: going to college with Blase called stats and I said,
Speaker 13: I found home, and it's hot ed where folks in August.
Speaker 13: Let's be honest, and I'm willing to take one and
Speaker 13: a half really bad months for ten and a half
Speaker 13: great months in Florida.
Speaker 11: Come on down. Eventually. You're all going to come.
Speaker 2: Yeah, yeah, exactly. That seems work.
Speaker 5: No, I'm too pale. I can't do Florida.
Speaker 11: You can't to Florida.
Speaker 2: No, well, no, I'm sick in state Jersey Shore. But no,
Speaker 2: there's a lot of folks heading down there. Michael Hiradoupolis,
Speaker 2: thank you so much for joining US Republican and representative
Speaker 2: from the Great State of Florida in US Congress. Thank
Speaker 2: you for coming to our studio. Appreciate it.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple, Coarclay, and Android
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Speaker 1: Bloomberg terminal.
Speaker 2: I'm looking at the thirty year fixed mortgage as per
Speaker 2: the Mortgage Bankers Association, six point seventy one percent. It's
Speaker 2: down from over seven, you know, kind of back where
Speaker 2: we started the year. So it's come down a little bit,
Speaker 2: but it's still not at a level that a lot
Speaker 2: of folks say will free up this market. I don't know.
Speaker 2: Some have chief economists core Logic. She does this stuff here.
Speaker 2: She worries about the mortgage markets. So you see some
Speaker 2: of the economic data here over the last couple of weeks.
Speaker 2: How does that inform kind of where you think the
Speaker 2: Fed is going to go with their interest rate policy
Speaker 2: this year?
Speaker 4: First of all, slight correction. Core Logic is now cautality.
Speaker 4: So we have our brand name change here.
Speaker 5: Oh nice, Yes, I will go ahead and blame Eric
Speaker 5: for that.
Speaker 2: Some consultants somewhere along the way came up with that.
Speaker 2: You know, that was their job. They got paid to
Speaker 2: do that.
Speaker 11: Okay, okay, And what's the new firm name?
Speaker 5: Brutality of Fatality?
Speaker 2: All right, ol In. So what do you think about
Speaker 2: our fed reserve here? Semma?
Speaker 4: Yes, well, thanks for having me on. Well, Federal Reserve
Speaker 4: is a really it's in a pickle in a sense
Speaker 4: because you know, it's trying to maximize employment while stabilizing prices,
Speaker 4: and either one is moving in the direction reel in
Speaker 4: which they would want to. At their last meeting last week,
Speaker 4: they were talking about higher inflation going forward, so they
Speaker 4: don't expect reaching that two percent target until twenty twenty seven.
Speaker 4: At the same time, concerns are building around the job market,
Speaker 4: meaning that we can have a higher unemployment going forward,
Speaker 4: and you know, when you're talking about large layoffs, that
Speaker 4: never bodes well for consumer sentiment. And so consumer sentiment
Speaker 4: has weakened at the moment, and that is not good
Speaker 4: for the housing market. We did see mortgage rates come
Speaker 4: down lower over the course you mentioned from that seven
Speaker 4: percent in January. That is very helpful. And what's also
Speaker 4: helpful is that mortgage rates have been stable over the
Speaker 4: course of last month, because there's nothing worse than mortgage
Speaker 4: rates going up in the middle of spring home buying season,
Speaker 4: and that is what we saw last year. So mortgage
Speaker 4: rates at least are a little bit helpful in terms
Speaker 4: of the housing market at the moment.
Speaker 6: Putting I mean, you really can't put mortgage rates aside,
Speaker 6: but how's affordability aside from mortgage rates, Like our price
Speaker 6: is coming down to reflect this uncertainty that consumers feel.
Speaker 4: No, home prices are still stable. They've been pretty flat
Speaker 4: for the course of last seven months, and we did
Speaker 4: see this little bump in February reflecting entry into spring
Speaker 4: home buying season. It was a little bit weaker than
Speaker 4: we traditionally see in February, but it's still going up.
Speaker 4: And there are still markets where you guys are up
Speaker 4: in the northeast region of the country, where home prices
Speaker 4: are up some nine to ten percent on a year
Speaker 4: over year basis, so where incomes are strong, we do
Speaker 4: continue to see relatively strong home price appreciation. The weakness
Speaker 4: is really in the southern markets in Texas and Florida,
Speaker 4: where we've talked about this over the course of last year.
Speaker 4: Markets and the demand for homes have really weakened, and
Speaker 4: that's reflected in lower and declining home prices.
Speaker 2: Home affordability, I mean, and that's a term that I've
Speaker 2: really come to understand a little bit more fully over
Speaker 2: the last several years. It kind of goes to the
Speaker 2: issue of, Hey, the houses are expenses out there, and
Speaker 2: now we've got mortgage rates high. That makes home affordability
Speaker 2: really really difficult. How long do you think that's going
Speaker 2: to persist, Soma, Well.
Speaker 4: I think we're already seeing pressures building up, and that's
Speaker 4: why the rate of home press appreciation has slow don
Speaker 4: and home prices have been flat, because it's really difficult
Speaker 4: for people to make that new mortgage payment. Our estimate
Speaker 4: is that mortgage just principle and interest over the course
Speaker 4: since the onset of the pandemic has gone up some
Speaker 4: sixty two percent on the same home, exactly the same home.
Speaker 4: Your typical mortgage payment is now up sixty two percent.
Speaker 4: But the other issue, and that's really causing concerns for
Speaker 4: some markets that are more prone to natural disasters, is
Speaker 4: that you have cost of insurance increasing so much, and
Speaker 4: also in some markets that have seen a lot of appreciation,
Speaker 4: you now have much higher property taxes. So that's the
Speaker 4: component that's variable, it's not fixed, and that's really starting
Speaker 4: to weigh on some more on affordability in some markets.
Speaker 6: Some before I let you go, this is not taking
Speaker 6: into account lumber, steel and copper and aluminum tariffs. How
Speaker 6: much will that increase new homes.
Speaker 4: Yeah, so we did an estimate and we think about
Speaker 4: ten percent increasing material costs over the course of next
Speaker 4: twelve months. Now, it's interesting, you know, there are different
Speaker 4: components for residential. The biggest concern is applying is for commercial,
Speaker 4: the biggest concern is steel and cement. But commercial sector
Speaker 4: has been slowing, particularly when you think about multifamily, that
Speaker 4: has been slowing. So the pressure on those prices is
Speaker 4: going to be a little bit less simply because the
Speaker 4: demand for those type of products is not as high
Speaker 4: as it was over the course of the last few years.
Speaker 2: All right, Sama, heep, thank you so much. We appreciate that. Sma.
Speaker 2: She is the chief economist and the new firm is Cutality.
Speaker 3: In you go for.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also listen live
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Speaker 1: say Alexa play Bloomberg eleven thirty.
Speaker 2: Right now, let's hit the newspaper segment, the always popular
Speaker 2: newspaper segment with Lisa Matailisha, what do you have for today?
Speaker 12: Okay, Paul, I know you're not going to know this,
Speaker 12: but Alex, did you notice what Oprah was wearing to
Speaker 12: the Oscars?
Speaker 5: No, but I want to know talk. Wait was it
Speaker 5: a suit?
Speaker 12: Yes, you're onto it, You're onto it, You're onto it. Okay,
Speaker 12: wasn't an evening gown? So she was wearing this long
Speaker 12: black skirt to thetotype laser white shirt with a tie.
Speaker 12: And the tie was like the staple because women wearing ties.
Speaker 12: It's it's not something new. I remember Diane Keaton like
Speaker 12: she wore the all time. Yes, yes, but it's seeing
Speaker 12: this resurgence. So you have like Zendaiya, Zoe Saldanya like
Speaker 12: they're starting to do this. So I was on the
Speaker 12: twenty twenty five runway. So the Wall Street Journal really
Speaker 12: gets into it. They have like a bunch of listings.
Speaker 12: How they can be as high as two hundred and
Speaker 12: fifty five dollars. Some as cheap, you know, maybe twenty
Speaker 12: eight dollars, but they get into the history behind it,
Speaker 12: like in the eighteen thirties in Paris, women needed permission
Speaker 12: from the police to wear a tie.
Speaker 6: Oh my god, that's amazingly wrong.
Speaker 12: But I don't know. I think I would kind I
Speaker 12: like the thin like, yes, I think you would do that.
Speaker 12: Like I've seen people here wear it.
Speaker 2: Too, John far and he wears it very well, but
Speaker 2: you just wear it very well.
Speaker 5: I would totally. I would totally do that.
Speaker 2: No, I don't like it. Sorry, you don't like the
Speaker 2: women tie thing?
Speaker 11: No?
Speaker 2: No, can I ask it an adjacent by the way.
Speaker 5: But that's fine.
Speaker 11: You can have your opinion, but that's my opinion.
Speaker 2: Yeah, can I ask it an adjacent oprah question?
Speaker 3: Yes?
Speaker 2: Do we know is she has been reported whether she's
Speaker 2: doing like theozepic kind of we govy things.
Speaker 12: She talked about it because you had the whole special right.
Speaker 2: Yes, Okay, so she's okay, okay, just wonder phenomenal. Yeah
Speaker 2: she does. Okay, great tie.
Speaker 5: Oh yeah, what else are you looking at?
Speaker 11: Okay?
Speaker 12: President Trump's childhood home. I didn't know this, but he
Speaker 12: had this. You know, he lived in a tall jewelry
Speaker 12: twenty one undred square foot it's like a tutor style
Speaker 12: residence in Jamaica States in Queens until he was like
Speaker 12: four years old. His father actually built.
Speaker 2: It in nineteen forty area.
Speaker 12: Yeah, but it was sold at a steep discount.
Speaker 2: Okay.
Speaker 12: The reason why, Well, it was sold for eight hundred
Speaker 12: and thirty five thousand dollars. Right, it was less than
Speaker 12: half of the two point one four million that it
Speaker 12: was sold for back in twenty seventeen. But it's been unoccupied, right,
Speaker 12: it's run dad, And you said the area is nice,
Speaker 12: So the neighbor are like, this is a nysore. This
Speaker 12: is horrible. So they started trying to keep up with
Speaker 12: like a lawn and then you have like thirty straight
Speaker 12: cats that are like wandering around this house and they
Speaker 12: are feeding the cats because they and it's become this
Speaker 12: whole thing. But the person who owned it before, they
Speaker 12: actually used to rent it out as like an Airbnb
Speaker 12: for like eight hundred and something dollars a night.
Speaker 5: I love they owned that. The neighborhoods started. I love
Speaker 5: that is.
Speaker 12: So the neighbors were like pitching in. So now it
Speaker 12: was finally sold after being abandoned for a while.
Speaker 11: But it was just gonna be.
Speaker 2: You put a million dollars into that thing, which somebody
Speaker 2: will and it can be.
Speaker 12: And they're totally They have the dumpsters out there tearing
Speaker 12: everything down. So yeah, so that's interesting. I didn't even
Speaker 12: know that that that he lived there.
Speaker 2: He was like years old exactly.
Speaker 12: For those of you, are you guys on Facebook, I
Speaker 12: don't know you're not, okay.
Speaker 6: I mean I think I have an account, okay, but
Speaker 6: I think I haven't been on it for five years.
Speaker 12: I know I haven't either. My daughter says, only old
Speaker 12: people do it. So so Mark Zuckerberg athlete, wants to
Speaker 12: bring down back like the og Facebook, like when you
Speaker 12: you would talk and we'd see content from your friends
Speaker 12: instead of all these recommendations that you get. So they're
Speaker 12: introducing this friends tab. It shows your friend's stories, reels, birthdays,
Speaker 12: you know, all that kind of stuff what it kind
Speaker 12: of used to do. So it shows how they're going
Speaker 12: back to their roots a little bit. I mean, they've
Speaker 12: been trying to get popular, they've been falling to like
Speaker 12: all the other social media platforms.
Speaker 5: So what is it now? Feed basically versus a friend.
Speaker 12: Few, it's like the recommend date, like you gets recommended
Speaker 12: on the algorithm, like what you they think you would like,
Speaker 12: and they put that on your feed. So if you
Speaker 12: click on this friend's tab, it'll go directly to only
Speaker 12: what your friends are posting, so you can see that.
Speaker 5: And there's something very weird about this, isn't it.
Speaker 2: I don't know. I'm looking at you're going back to
Speaker 2: the OG way. I'm looking at the stock one point
Speaker 2: five trillion dollar market cap up three percent year to date,
Speaker 2: up twenty four percent over the trailing four months. This
Speaker 2: has become a story that used to be all driven
Speaker 2: by subscriber growth and growth and growth, and then it
Speaker 2: became a cost cutting story, which worked great for the stock.
Speaker 2: And now that we're going to how to MoMA, ties, Instagram, WhatsApp,
Speaker 2: all that kind of stuff.
Speaker 5: Now it's an a I play too for like.
Speaker 2: A high press another exactly right now. Now they've got
Speaker 2: the AI think go ahead, all right, very good, lisha
Speaker 2: miteo with the newspapers. We appreciate that.
Speaker 1: As always, this is the Bloomberg Surveillance podcast, available on Apple,
Speaker 1: Spotify and anywhere else you get your podcasts. Listen live
Speaker 1: each weekday, seven to ten am Eastern on Bloomberg dot com,
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