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Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: We are advantaged at Bloomberg with a gentleman who's done

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Speaker 2: a tour of duty in government at the White House,

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Speaker 2: directly at the White House in Bloomberg Economics, and then

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Speaker 2: up ten years ago, somebody said let's put Brendan Murray

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Speaker 2: in charge of trade, and he has begun absolutely definitive

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Speaker 2: for not only the usual show up and throw up

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Speaker 2: verbiage on trade, but anecdote, an actual what's going on

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Speaker 2: on the ground. Brendan Murray from a cornfield in Iowa

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Speaker 2: and he's a Queen Victoria Street in London and joins

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Speaker 2: us this morning. Brendan, you got a great article about

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Speaker 2: Republican farmers in Iowa going what in God's.

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Speaker 3: Name is going on?

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Speaker 2: What did you learn in your reporting on Iowa corn

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Speaker 2: and their future?

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Speaker 4: Well, yeah, you know, Tom, there's going to be a

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Speaker 4: lot of focus today and the nudey's ahead on the

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Speaker 4: automobile industry, on electronics and energy and food and a

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Speaker 4: lot of these major products that move back and forth

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Speaker 4: between Canada, Mexico and the US. But if you look

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Speaker 4: at in the heartland of the US, at American farmers,

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Speaker 4: one of their key products was something that China retaliated

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Speaker 4: against today, and that's soybeans. And the soybeans are you know,

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Speaker 4: kind of a pretty basic sort of commodity. You can

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Speaker 4: grow them in Brazil just the same way you can

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Speaker 4: grow them in Iowa. And the farmers in the Midwest

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Speaker 4: and now went in particular in large blocks blows voted

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Speaker 4: for Trump. But at this meeting that that that that

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Speaker 4: we've that we've seen some reporting on they're not happy

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Speaker 4: about this trade war that Trump is starting, and they

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Speaker 4: if you alienate China as one of their main customers,

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Speaker 4: that's not good for them. And of course prices fell today.

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Speaker 4: So in the in the in the grand scheme of things,

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Speaker 4: you know, autos and electronics are much more you know,

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Speaker 4: economically important, but politically the president needs to hold that base.

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Speaker 4: You know, how loudly are Republican farm State senator is

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Speaker 4: going to applaud tonight when he says.

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Speaker 3: You know, let's combine the Brendan Murray magic. Here.

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Speaker 2: There's a guy named Grassley who's one hundred and fourteen

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Speaker 2: years old. I adore the guy. He sounds like my

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Speaker 2: grandfather out of Ames, Iowa. No excuse me, Iowa City,

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Speaker 2: Iowa years ago. Brendan Murray, what is Senator Grassley going

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Speaker 2: to do to sit the President of the United States?

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Speaker 2: Grassley sitting there at the desk with Kevin Hassett with

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Speaker 2: a Pennsylvania PhD. What do they tell the president?

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Speaker 4: He's going to say? You know, he he himself would say, look,

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Speaker 4: I'm in the I'm in the minority on this position,

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Speaker 4: on this free The Republicans used to be the party

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Speaker 4: of free trade, opening markets abroad and that kind of thing.

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Speaker 4: And he'd be the first to admit that he's now

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Speaker 4: in the minority in that with that view. So my

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Speaker 4: guess is he would talk to the President about some

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Speaker 4: sort of farm bill, some sort of assistance to give

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Speaker 4: farmers the way they farmers got the help during the

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Speaker 4: Trump's first term to offset this loss of income that

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Speaker 4: they're looking at. You know, the it's not just it's

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Speaker 4: just it's not just the you know, sales to China

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Speaker 4: that are going to be affected. It's farmer's import you know,

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Speaker 4: this thing called potash, and it's for fertilizer and they're

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Speaker 4: going to have to pay more for it now. So

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Speaker 4: planning sees it, you know, so it just kind of

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Speaker 4: it kind of hits them on both sides. So Rashley

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Speaker 4: is going to say, you know you're going to go

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Speaker 4: if you're go go this route, then we need then

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Speaker 4: we need some you know, we need farmers need some

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Speaker 4: you know, welfare essentially.

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Speaker 2: Okay, Brendan's a city guy, and he's talking about this

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Speaker 2: thing called potash, right just his wind potash.

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Speaker 3: You got a question in here to Brendan Murray.

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Speaker 5: Well, because Brendan, you were just talking about how when

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Speaker 5: it comes to tariffs impacting more electronics and autos, But

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Speaker 5: at what point do you think and how long before

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Speaker 5: we could see changes when it comes to the price

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Speaker 5: of consumer goods at the grocery store.

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Speaker 4: I mean it was just the the you know, targets.

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Speaker 4: Target's CEO was on there on the airwaves today saying

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Speaker 4: that that they customers could see price hikes within days.

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Speaker 4: And he's talking about strawberries, avocados, bananas, you know, vegetables,

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Speaker 4: the kinds of things that you know, the US depends

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Speaker 4: a lot on Mexico for so you know, they flipped

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Speaker 4: the switch to turn the tariffs on, and you know,

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Speaker 4: companies say, I'm suddenly paying twenty five percent more and

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Speaker 4: they just passed that on to consumers. So I don't

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Speaker 4: know how you stockpile tomatoes because they don't exactly last

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Speaker 4: that long, but you know you got to figure that

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Speaker 4: the tomatoes are going to be twenty five percent more

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Speaker 4: expensive next week.

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Speaker 2: Brendon, keep writing with your team these anecdotal, real articles

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Speaker 2: about real people and not people in boat eyes.

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Speaker 3: Going to three decimals.

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Speaker 2: By the way, Brendan, if you go to Michael Barr's refrigerator,

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Speaker 2: you will find age tomatoes and they.

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Speaker 3: Won't find chicken pauls. You're going to find chicken feet.

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Speaker 3: Brendan Murray, thank you.

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Speaker 2: So much driving all of our trade coverage one of

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Speaker 2: the jewels of Bloomberg News.

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Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live

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Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on

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Speaker 1: Applecarplay and Android Otto with the Bloomberg Business app, or

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Speaker 1: watch us live on YouTube right now.

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Speaker 2: With substantial acclaim, Barbara Reinhart, CIO and Voya Investment Management

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Speaker 2: whatever you know.

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Speaker 3: You wrote your usual.

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Speaker 2: Ten thousand words. I'm kidding, it's all like all brevity here.

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Speaker 2: Let me quote, folks the single sentence from young Reinhard.

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Speaker 3: I'd be buying equities.

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Speaker 2: Is it by the dip or is it more sophisticated

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Speaker 2: than that?

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Speaker 6: Well, I think there's two things, Tom, that are really

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Speaker 6: important for everyone to know. Number One, positioning is much less,

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Speaker 6: is more on sides at this point. So coming into

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Speaker 6: the year, you had big positioning. Everybody was running equity

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Speaker 6: overweights big year last year. A lot of that positioning

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Speaker 6: has been taken out of the market right now. So

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Speaker 6: that's number one. Number two sentiment, short term sentiment indicators

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Speaker 6: are very over sold. Those are contraring indicators. S and

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Speaker 6: P versus AG is down over six percent at this point,

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Speaker 6: and you're seeing some fear into the market, which is

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Speaker 6: generally when it's a better time to start adding to equities.

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Speaker 5: That's interesting too, because Tom and I were talking earlier

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Speaker 5: about how Emma wu at GP Morgan actually in video

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Speaker 5: was contributing to the buy the dip inflows when it

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Speaker 5: came to retail investors, but they did see them actually

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Speaker 5: selling names when it came to Tesla and Apple. So

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Speaker 5: we were talking about sentiment at extremes. I mean, the

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Speaker 5: bull bear spread last week for Aii was the lowest

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Speaker 5: it's been since twenty twenty two. And however, you're on

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Speaker 5: those lows since two thousand and ninths. Are your clients

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Speaker 5: going in and asking to puyah?

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Speaker 6: I think it's short term indicat short term sentiment indicators

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Speaker 6: are definitely over sold. The medium term ones are hanging

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Speaker 6: a little bit more towards neutral. But unless you're going

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Speaker 6: to have a recession, your short term indicators generally give

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Speaker 6: you a very good risk reward opportunity. About legging into

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Speaker 6: the market, it could be that you go lower over

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Speaker 6: the course of March and then some seasonality really starts

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Speaker 6: to pick up into April, but we think that it's

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Speaker 6: difficult to time it, and when you've got weakness, it's

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Speaker 6: good to buy in unless you think there's going to

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Speaker 6: be recession.

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Speaker 3: I love the.

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Speaker 2: Phrase legging into the market. I have no idea what

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Speaker 2: that means.

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Speaker 6: That means buying across the dips.

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Speaker 3: Being brave here futures and negative.

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Speaker 2: My eyes are failing here negative forty on the S

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Speaker 2: and P futures right now, so we have to readjust

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Speaker 2: we have to recalibrate, and it's not a day for

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Speaker 2: simplistic equity at questions, are you factor choosing this morning?

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Speaker 2: Are you like securities analysis Graham, Dot and Coddle choosing?

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Speaker 2: What's the method to make the marginal acquisition?

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Speaker 6: I think it's difficult to step in front of momentum

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Speaker 6: at this point. Right momentums had a massive run. After

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Speaker 6: you've had big runs like this, it's difficult to see

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Speaker 6: that would be able to do a three peet of

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Speaker 6: it and have it three years in a row. I'd

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Speaker 6: be more inclined to buy things that are more value oriented.

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Speaker 6: Not internationally, I think that Europe is way over at

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Speaker 6: SKIS at this point. For Europe to continue to outperform,

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Speaker 6: you would need to see earning speed outpacing the US

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Speaker 6: like they did in twenty seventeen. That won't be the case,

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Speaker 6: or at least we don't think it will. So I'd

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Speaker 6: be buying things that were much more of value oriented.

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Speaker 6: If you really want to go bondom picking, look in

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Speaker 6: the small cap universe. It's down over twelve percent at

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Speaker 6: this point. So it's really gotten quite hammered, even though

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Speaker 6: the fundamentals don't look to be quite that bad.

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Speaker 5: It's such a tough space because that's the ongoing debate

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Speaker 5: for years when you think about whether it's the Russell

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Speaker 5: two thousand or the S and P six hundred, and

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Speaker 5: especially the two thousand, just given the amount of zombie

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Speaker 5: company's close to all time highs and it so, I mean,

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Speaker 5: at what point is that really going to be more

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Speaker 5: of a longer term buy than something that you just

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Speaker 5: step in and buy on the shorter term.

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Speaker 6: Yeah, the longer term the key to buying small caps,

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Speaker 6: and it's usually generally in the S and P six

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Speaker 6: hundred if you're coming out of a recession. So if

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Speaker 6: you're halfway through a recession, isms have bottomed, you're starting

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Speaker 6: to see the uptick from something akin to you know,

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Speaker 6: forty to forty.

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Speaker 7: Five on the on isms.

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Speaker 6: That's generally when you want to when you want to

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Speaker 6: buy the junkie stuff. That was the twenty twenty small

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Speaker 6: cap rally. It was really led by the junkie stuff.

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Speaker 2: I haven't even brought this up yet today because as

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Speaker 2: you know, folks have death in the dots. I'm death

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Speaker 2: in the parlor game of the FED. But you know,

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Speaker 2: Jason Furman's on fire this morning out on Twitter, and

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Speaker 2: there has to be a FED rea except the question,

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Speaker 2: Barbara reinhard. Are their hands tied?

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Speaker 6: It's going to feel stagflationary for a little while. You're

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Speaker 6: going through the markets. Right now, they're going through a

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Speaker 6: proper growth scare. Tariffs are only going to exacerbate that

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Speaker 6: to the downside. And when there's a lot of uncertainty

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Speaker 6: what a corporate CEOs and treasurers do. They start to pause,

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Speaker 6: They put out decisions. They make the say, we're going

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Speaker 6: to decide on hiring later this year. So that could

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Speaker 6: get us GDP growth down to sub two percent, but

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Speaker 6: you would need a significant shock to get it below

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Speaker 6: one percent, which would really kind of start skating along

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Speaker 6: the lines of recession.

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Speaker 7: The Fat's hands may be tied.

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Speaker 6: For maybe a meeting or two, but they will react

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Speaker 6: if they start to see weakness in the labor market.

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Speaker 2: Will they react that they start to see weakness in

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Speaker 2: the stock market. Alan Greenspan used to say, the stock

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Speaker 2: market is an important barometer.

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Speaker 7: It is an important barometer.

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Speaker 6: I think they have a little ways to go because

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Speaker 6: of the very big back to back gains that you had.

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Speaker 7: Over twenty two and twenty four or twenty three twenty foe.

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Speaker 5: Is there a specific level all the S and P

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Speaker 5: five hundred or percent draw down that you would need

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Speaker 5: to see?

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Speaker 6: Gosh it, we don't necessarily do things kind of unapplied levels.

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Speaker 6: I mean, two hundred day moving average is what everyone

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Speaker 6: looks at, but that could be a big moving target.

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Speaker 6: I think it's more a culmination of a lot of

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Speaker 6: our indicators. So we have, you know, sentiment indicators, valuation indicators,

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Speaker 6: and also fundamental. The fundamental deterioration that you've seen in

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Speaker 6: the market is really due to this uncertainty. It will

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Speaker 6: get worse if these tariffs are they are going to

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Speaker 6: be imposed, if they continue for a prolonged period of time.

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Speaker 5: Talk to us about the difference between the markets set

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Speaker 5: up when Trump first took office in twenty seventeen versus now.

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Speaker 5: Because even if you're looking at asset manager positioning exposure

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Speaker 5: to those equity futures, I mean, that's tracking above the

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Speaker 5: fortieth percentile coming into this year. Back in twenty seventeen,

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Speaker 5: it was below the tenth percentile.

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Speaker 6: Right, Just that's such a good question I'm so glad

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Speaker 6: you brought it out. In twenty seventeen, it was a

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Speaker 6: very different setup. So the US was kind of still

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Speaker 6: plodding along, having a great deal of difficulty after China

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Speaker 6: devalued its currency in late twenty fifteen and into sixteen,

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Speaker 6: there was a big draw down, almost twenty percent decline

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Speaker 6: in equities, and it was struggling to kind of shake

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Speaker 6: off some.

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Speaker 7: Of that malaise.

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Speaker 6: Europe actually was growing faster than the US, so that

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Speaker 6: setup is not what you have right now. Right equity

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Speaker 6: markets have been on fire over the past five years,

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Speaker 6: even after looking at the twenty twenty two draw down,

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Speaker 6: and valuations are much higher. But I would also say

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Speaker 6: the companies in the SMP five hundred that are generating

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Speaker 6: these big free cash flow, they are not terribly cyclically

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Speaker 6: sensitive to the economy. However, you know, I would say

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Speaker 6: that most investors, retail and institutional investors, were very much

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Speaker 6: longer equities than they were in twenty seventeen. But this

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Speaker 6: is a good, proper shakeout, and I think a growth

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Speaker 6: scare which we didn't have in seventeen.

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Speaker 5: When we're seeing the rotation more globally into European and

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Speaker 5: equities in China, and specifically, how long do you think

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Speaker 5: that'll hold for because a lot of portfolio managers just

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Speaker 5: maxed out their allocation towards the US stock. So is

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Speaker 5: this something you think is going to be more temporary

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Speaker 5: or something that would hold.

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Speaker 6: I think it is temporary as sure as night follows day.

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Speaker 6: Europe will tend to have these kind of an etha

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Speaker 6: in general, so developed international they tend to go through

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Speaker 6: these fits and starts where they have, you know, twenty

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Speaker 6: percent counter trend rallies. They can go out anywhere from

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Speaker 6: one to six months. They draw a lot of investors in.

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Speaker 6: You start hearing the cry to Europe is going to

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Speaker 6: outpace the US.

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Speaker 7: I wouldn't buy that.

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Speaker 6: The valuation gap between Europe and the US is actually

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Speaker 6: closed at this point. Europe is no longer cheap because

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Speaker 6: everyone's piled into it. So my sense is that Europe

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Speaker 6: would not be a place where I'd be allocating capital

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Speaker 6: at this point.

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Speaker 7: I'd be still sticking to the US.

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Speaker 3: We say good morning to all of you across the nation.

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Speaker 2: Here with futures negative thirty nine down futures negative one

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Speaker 2: sixty six, A vixed deteriorates twenty four point two one

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Speaker 2: up one point four to three points.

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Speaker 3: This morning, Barbara Ryan Or.

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Speaker 2: With us, Lavoya Abby Joseph Cohen will be with us

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Speaker 2: next year on confidence to be in equity markets. Part

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Speaker 2: of confidence is a five percent money market funt I

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Speaker 2: believe it's price up, yields down across the bond landscape.

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Speaker 2: What does cash do when they don't enjoy five percent?

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Speaker 6: Well, you know, I think bond yield starting to drop

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Speaker 6: is actually going to be somewhat stimulative, but it kind

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Speaker 6: of buttresses a little bit of the tariff, probably uncertainty

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Speaker 6: in the markets. It won't be able to overcome all

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Speaker 6: of it. You know, five percent is really competitive when

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Speaker 6: you've got a four. When you've got a ten year

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Speaker 6: treasury it close to four fifteen, four, eighteen, four twenty.

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Speaker 6: So cash looks like a really good thing. But I

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Speaker 6: would say cash is a paradox. It is difficult to

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Speaker 6: it's difficult to get out of it because you become

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Speaker 6: so enamored with it usually, and you know that is.

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Speaker 7: The worst thing you can do for your portfolio over

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Speaker 7: the long run.

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Speaker 2: Is it difficult to get out of mag seven when

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Speaker 2: you're so enamored with it.

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Speaker 7: That's a good question.

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Speaker 6: I think the enamoring of the MAG seven is probably

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Speaker 6: the real The shine is off that penny at this point.

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Speaker 6: But do I think that the US has better earnings power,

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Speaker 6: better shareholder practices, better underlying fundamentals than the rest of

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Speaker 6: the world.

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Speaker 7: Absolutely the issue here.

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Speaker 3: Come on, we're talking soybeans and laws.

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Speaker 2: Maybe we're talking, you know, cars, and Michael Barr's on

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Speaker 2: a ladder about the.

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Speaker 3: Windsor Detroit Bridge. It's got nothing to do with Nvidio, right.

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Speaker 7: It doesn't. It doesn't.

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Speaker 6: But I do think that the overall landscape of tariffs

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Speaker 6: will cause enough corporate CEOs to pause and to say,

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Speaker 6: maybe we don't need to do that property, plant and

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Speaker 6: equipment build out. Maybe we should postpone hiring for the

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Speaker 6: near term, just because the visibility is low. When you

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Speaker 6: don't have much visibility and you're driving a car, what

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Speaker 6: do you do? You slow down? And that's exactly what

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Speaker 6: we're concerned about.

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Speaker 5: Tom Keane bringing up those MAGS seven names, I wanted

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Speaker 5: to point out since there was so much talk last

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Speaker 5: week about the MAGS seven, the index, and the terminal

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Speaker 5: entering a correction, but most of those losses were driven

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Speaker 5: more so by Tesla I mean, that's a down by

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Speaker 5: more than a third in that span, and then Meta's

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Speaker 5: actually hire since then if you go back to mid December.

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Speaker 5: So how much more pain do you think in more

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Speaker 5: individual stocks? Because also there's a lot of technicals for

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Speaker 5: certain ones, whether you're looking at in video where people

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Speaker 5: are going to step in and by the lows. Because

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Speaker 5: even if you look at in VideA the last twelve months,

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Speaker 5: I mean, it's still been kind of in a narrow

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Speaker 5: trading ring.

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Speaker 7: You see these.

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Speaker 5: Bounces to all time highs and then drawdowns again.

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Speaker 6: I think the big issue is you've got a lot

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Speaker 6: of concentration in the US equity market. When there's concentration,

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Speaker 6: it's difficult to kind of differentiate.

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Speaker 7: But there are.

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Speaker 6: Many as to a portfolio manager ands I know that

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Speaker 6: are have a very good view on other parts of

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Speaker 6: the mag seven rather than Tesla. So it's difficult to

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Speaker 6: make the case that Tesla can have a really big

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Speaker 6: bounce at this point, simply because I think all autos

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Speaker 6: are going to kind of get washed out together with

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Speaker 6: this potential tariff issue with Canada and Mexico. So I

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Speaker 6: think that they're not moving in unison and that creates

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Speaker 6: more opportunity for active management.

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Speaker 2: Just mentioned the Trump put. I have no idea what

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Speaker 2: that is, the Trump call or the Trump put. But

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Speaker 2: let's all agree, including Trump supporters and detractors, that this

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Speaker 2: president can change the script at any moment. Come out

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Speaker 2: Gilda Radner.

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Speaker 3: At the speech tonight and goes, never mind what happens.

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Speaker 6: Barbara, I think that's a credibility issue. My sense is

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Speaker 6: that he's relatively serious on this one.

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Speaker 7: Yeah, but there's going to be economic pain.

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Speaker 6: I mean, you're talking about throwing Canada and Mexico, your

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Speaker 6: north and southern neighbors, into a severe recession that will

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Speaker 6: be felt in the US. And there's there's certain things

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Speaker 6: on his tariff list that there are no substitution effects for.

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Speaker 7: So that's going to cause, you know, some issues. And

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Speaker 7: I think that.

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Speaker 6: But the issues are it's difficult to get the US

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Speaker 6: to into a recession at this point. The economic strength

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Speaker 6: is coming off of oil. I'd be more I'd be

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Speaker 6: more focused on a FED put than I would on

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Speaker 6: a Trump Put's strongly.

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Speaker 2: I agree, that's strongly, Barbara Reinhert. This has been brilliant

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Speaker 2: and a great effort into Abbie Joseph Cohn Barber rhinhert

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Speaker 2: Is with Voyagen.

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Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

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Speaker 1: starting at seven am Eastern on Apple Corplay and Android

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00:17:58,359 --> 00:18:01,720
Speaker 1: Atto with the Bloomberg Business. You can also listen live

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00:18:05,440 --> 00:18:07,960
Speaker 1: say Alexa Play Bloomberg eleven thirty.

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Speaker 2: We're gonna go NonStop with a person you want to

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Speaker 2: listen to. Abby Joseph Cohen has an earned career through

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Speaker 2: the thick and thin of the American landscape like no

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Speaker 2: one else. At Columbia Business School now off of Gold

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Speaker 2: and Sacks. We're thrilled that the Professor of Business could

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Speaker 2: join us this morning. Abby, We've been here, but we haven't.

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Speaker 2: Kevin Gordon over Schwab says, these are proposed tariffs and

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Speaker 2: reciprocity that go back at least to the nineteen forties.

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Speaker 2: What does the future look like if we affect these tariffs?

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Speaker 8: Good morning Tom, Good morning Jessica.

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Speaker 9: Gee.

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Speaker 8: That's a simple question, Tom.

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Speaker 3: That's what we're doing.

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Speaker 8: Yeah, you know what, I would disagree a little bit.

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Speaker 8: It's not going back to the nineteen thirties, it's going

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Speaker 8: back to the nine teenth century. Tariff based economy is

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Speaker 8: something that didn't work then didn't work in the nineteen thirties,

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Speaker 8: and I think it's very dangerous. You know, you have

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Speaker 8: had other guests on who have talked about quantifying the impact,

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Speaker 8: which will be very substantial if in fact these tariffs hold.

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Speaker 8: And it's not just the US tariffs on our best

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Speaker 8: neighbors and best trading partners, but also what they decide

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Speaker 8: to do. I'll use the word to reciprocate, but this

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Speaker 8: is a very difficult situation. Obviously. The thing that is

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Speaker 8: somewhat odd about this and different from what was seen

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Speaker 8: in previous periods of history, is these are tariffs being

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Speaker 8: levied on our friends, and the blowback, the damage economically

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Speaker 8: can actually be extremely severe on our own economy, even

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Speaker 8: without the so called you know, pushback and reciprocal nature to.

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Speaker 2: The nineteenth century, and folks, you've heard me talk about

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Speaker 2: this of a new gilded age. Maurice Sobsfield, who Abby,

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Speaker 2: Joseph Cohen and I worship iconict with Roguolf and Opsfeld

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Speaker 2: and crudmen in International Economics, writes in the Ft This

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Speaker 2: Morning and says it's simple there is an inequality in

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Speaker 2: America the Genie coefficient, which is fancy math is completely

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Speaker 2: out of whack, Abby Joseph Cohen, how does Senator Grassley

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Speaker 2: of Iowa or Marquis of the Commonwealth of Massachusetts, how

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Speaker 2: do they get us away from the gilded age so

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Speaker 2: that we don't affect these harmful tariffs.

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Speaker 8: You have combined two very important topics. Tom One is

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Speaker 8: the inequality, which clearly is there and has worsened in

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Speaker 8: recent years. We typically look at inequality based on punt income,

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Speaker 8: but also on wealth, and we have seen that the

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Speaker 8: inequality related to wealth has actually become even more pronounced

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Speaker 8: than that related to income. But what you also need

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Speaker 8: to think about is how do we adjust our economy

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Speaker 8: to reflect this and the power that is being wielded

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Speaker 8: by those in the corporate arena but also being assisted

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Speaker 8: by the government. And you're right to say, what can

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Speaker 8: the Congress do about this? And one of the things

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Speaker 8: that is troubling, of course at this point, and I'm

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Speaker 8: an economic analyst, I'm a markets analyst, I'm not a

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Speaker 8: political analyst, is that we don't really see the Congress

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Speaker 8: getting involved in a lot of the discussions about what

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Speaker 8: is happening right now. As I see it. Bottom line

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Speaker 8: is many of these changes, especially on tariffs, are extraordinarily

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Speaker 8: painful and will be more hurtful for people at the

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Speaker 8: lower end of the income and wealth spectrum.

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Speaker 5: Abby of course, there has been ongoing debate that Trump

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Speaker 5: wants to raise revenues to finance tax cuts potentially. How

439
00:22:16,480 --> 00:22:18,520
Speaker 5: do you view that and what are the repercussions with

440
00:22:18,880 --> 00:22:21,640
Speaker 5: tariffs being so severe? As you mentioned on our Trading Partners.

441
00:22:22,520 --> 00:22:26,320
Speaker 8: Yeah, again, I have not done the calculations myself, but

442
00:22:26,440 --> 00:22:31,120
Speaker 8: looking at those people and firms that have done the calculations,

443
00:22:31,359 --> 00:22:34,760
Speaker 8: there's a mismatch. The sort of revenue that would be

444
00:22:34,880 --> 00:22:38,920
Speaker 8: raised from these tariffs may in fact not be all

445
00:22:38,960 --> 00:22:44,080
Speaker 8: that significant and certainly were pale in comparison with some

446
00:22:44,119 --> 00:22:47,199
Speaker 8: of the tax cuts that are being discussed, So there

447
00:22:47,240 --> 00:22:50,240
Speaker 8: seems to be a mismatch. The other thing to keep

448
00:22:50,240 --> 00:22:53,600
Speaker 8: in mind is that when you analyze tariffs, it's a

449
00:22:53,680 --> 00:22:57,720
Speaker 8: dynamic process. It's not just look at a certain percentage

450
00:22:57,760 --> 00:23:01,120
Speaker 8: in this case, twenty five percent against Mexico and Canada

451
00:23:01,440 --> 00:23:05,520
Speaker 8: and then use that number against what the imports have been.

452
00:23:06,000 --> 00:23:09,359
Speaker 8: You also need to think about what will happen to

453
00:23:09,440 --> 00:23:12,600
Speaker 8: those imports, What will happen to aggregate demand, and I

454
00:23:12,640 --> 00:23:15,560
Speaker 8: would say that most economists would agree at this point

455
00:23:16,000 --> 00:23:18,879
Speaker 8: that the sort of tariffs that are being discussed will

456
00:23:19,320 --> 00:23:23,919
Speaker 8: negatively impact aggregate growth in the United States. And again

457
00:23:24,440 --> 00:23:28,800
Speaker 8: that pain will be felt most significantly by middle income

458
00:23:28,840 --> 00:23:31,359
Speaker 8: and lower middle income workers in the United States.

459
00:23:31,359 --> 00:23:34,000
Speaker 2: Abby Joseph Cohen with us for an extended moment here

460
00:23:34,240 --> 00:23:34,879
Speaker 2: this morning.

461
00:23:35,160 --> 00:23:36,960
Speaker 3: Abby, I was at a.

462
00:23:36,920 --> 00:23:41,080
Speaker 2: Wonderful store, Dangerous Provisions on Madison Avenue, where they've raised

463
00:23:41,119 --> 00:23:43,760
Speaker 2: the price of their egg sandwich, and next to me

464
00:23:43,840 --> 00:23:49,720
Speaker 2: with as a student with the Blue Patagonia Columbia Business School,

465
00:23:50,240 --> 00:23:55,399
Speaker 2: how are you teaching tariff economics in the market impact

466
00:23:55,920 --> 00:23:58,480
Speaker 2: to the students of Columbia Business School.

467
00:24:01,240 --> 00:24:05,280
Speaker 8: Once again, Tom a very important question, and I think

468
00:24:05,359 --> 00:24:07,720
Speaker 8: that we need to keep in mind that many of

469
00:24:07,720 --> 00:24:11,200
Speaker 8: the students at Columbia, and they are wonderful students. About

470
00:24:11,240 --> 00:24:14,760
Speaker 8: half of the people in my class were from outside

471
00:24:14,800 --> 00:24:18,000
Speaker 8: the United States, and I have to say that the

472
00:24:18,040 --> 00:24:22,720
Speaker 8: discussion about tariffs puzzles them just the way it puzzles

473
00:24:22,720 --> 00:24:26,680
Speaker 8: many of us here in the United States. Many of them,

474
00:24:26,760 --> 00:24:30,080
Speaker 8: for example, hail from countries that are quite friendly to

475
00:24:30,119 --> 00:24:34,480
Speaker 8: the United States, nations that are military allies of the

476
00:24:34,600 --> 00:24:40,480
Speaker 8: United States, and to use tariffs against your friends seems

477
00:24:40,680 --> 00:24:43,160
Speaker 8: a little bit odd. Now, let's keep in mind that

478
00:24:43,200 --> 00:24:48,200
Speaker 8: there can be an appropriate use of tariff. For example,

479
00:24:48,560 --> 00:24:52,719
Speaker 8: in cases where there's dumping, where a nation is dramatically

480
00:24:52,800 --> 00:24:57,119
Speaker 8: overproducing and perhaps is selling that item in the United

481
00:24:57,160 --> 00:25:01,080
Speaker 8: States or another country for below the cost of production,

482
00:25:01,720 --> 00:25:05,800
Speaker 8: that might be a good reason to impose a tariff. Similarly,

483
00:25:05,840 --> 00:25:09,240
Speaker 8: if you're looking to protect a particular industry for national

484
00:25:09,280 --> 00:25:13,439
Speaker 8: security reasons, that might be yet another reason to impose

485
00:25:13,480 --> 00:25:17,919
Speaker 8: a tariff. But these widespread across the board, tariffs on

486
00:25:18,040 --> 00:25:22,360
Speaker 8: all items coming into particular country, especially a country that's

487
00:25:22,400 --> 00:25:26,240
Speaker 8: friendly to us. There doesn't really seem to be economic

488
00:25:26,320 --> 00:25:27,520
Speaker 8: rationale behind it.

489
00:25:28,040 --> 00:25:30,399
Speaker 2: Abby, you're too young to remember this, but at the

490
00:25:30,480 --> 00:25:34,680
Speaker 2: clearest memory of October of nineteen eighty seven, and over

491
00:25:34,720 --> 00:25:38,680
Speaker 2: a series of days, we enjoyed down thirty one percent,

492
00:25:39,359 --> 00:25:43,439
Speaker 2: we're down six percent, and we're pretty much hysterical. Have

493
00:25:43,560 --> 00:25:46,920
Speaker 2: we forgotten what a correction is in the stock market?

494
00:25:48,880 --> 00:25:52,600
Speaker 8: Tom, Yes, I do remember that day. And one of

495
00:25:52,640 --> 00:25:56,880
Speaker 8: the big differences between October of that year is that

496
00:25:56,880 --> 00:26:00,960
Speaker 8: that big decline had to do with internal mechanic within

497
00:26:01,000 --> 00:26:04,080
Speaker 8: the stock market. I think that one of the reasons

498
00:26:04,200 --> 00:26:07,879
Speaker 8: people are so concerned right now is not just the

499
00:26:08,080 --> 00:26:11,879
Speaker 8: dollar amount or the percentage amount, or the rise in

500
00:26:11,920 --> 00:26:16,720
Speaker 8: the VICS. It's the economic uncertainty. Back in nineteen eighty seven,

501
00:26:16,840 --> 00:26:21,640
Speaker 8: there was no economic change that had triggered that particular decline,

502
00:26:21,760 --> 00:26:25,760
Speaker 8: and so it was quickly reversed. I think what people

503
00:26:25,800 --> 00:26:29,400
Speaker 8: are concerned about now is that there is true uncertainty

504
00:26:29,720 --> 00:26:33,520
Speaker 8: with regard to economic policy, and there doesn't really seem

505
00:26:33,560 --> 00:26:38,480
Speaker 8: to be a clear rationale economic rationale behind the numbers

506
00:26:38,520 --> 00:26:41,040
Speaker 8: that had been thrown out vis a v A twenty

507
00:26:41,080 --> 00:26:45,840
Speaker 8: five percent increase in tariff. In addition, we're facing uncertainty

508
00:26:46,000 --> 00:26:49,960
Speaker 8: with regard to whether the continuing resolution that has kept

509
00:26:50,040 --> 00:26:55,520
Speaker 8: the federal government working it will expire March fourteenth. We

510
00:26:55,600 --> 00:26:58,359
Speaker 8: do not yet have a new budget in place, so

511
00:26:58,440 --> 00:27:02,200
Speaker 8: that's another area of uncertain Indeed, one of the things, however,

512
00:27:02,240 --> 00:27:05,280
Speaker 8: that I'm looking at very closely, are not some of

513
00:27:05,320 --> 00:27:08,639
Speaker 8: these things right on the news flow, but rather the

514
00:27:08,720 --> 00:27:12,600
Speaker 8: long term issues. And something that I don't think is

515
00:27:12,640 --> 00:27:16,080
Speaker 8: getting enough attention is that decisions made by the Trump

516
00:27:16,160 --> 00:27:20,199
Speaker 8: administration are damaging the long term status of the United

517
00:27:20,200 --> 00:27:25,600
Speaker 8: States as a scientific and technological leader. We're basically cutting

518
00:27:25,640 --> 00:27:28,440
Speaker 8: off at the knees a lot of the work that's

519
00:27:28,480 --> 00:27:32,359
Speaker 8: being done by leading scientists in the US government and

520
00:27:32,440 --> 00:27:35,000
Speaker 8: also in US universities.

521
00:27:35,440 --> 00:27:36,679
Speaker 3: I look, aby where we are.

522
00:27:36,720 --> 00:27:38,400
Speaker 2: I got to be quick here because just met once

523
00:27:38,400 --> 00:27:40,760
Speaker 2: again and we're going to have headlines out of Mexico here.

524
00:27:41,560 --> 00:27:45,520
Speaker 2: President Steinbaum is speaking right now and announcing quote countermeasures

525
00:27:46,640 --> 00:27:51,040
Speaker 2: on a Sunday. How do you be comfortable long term investment?

526
00:27:51,160 --> 00:27:55,720
Speaker 2: Abbey owning securities here? I don't you want you to

527
00:27:55,920 --> 00:27:58,880
Speaker 2: redo what David Costin's working with this morning at your

528
00:27:58,920 --> 00:28:03,480
Speaker 2: Goldman said always your golden sechs, But just in general,

529
00:28:03,680 --> 00:28:07,080
Speaker 2: how do we have comfort with equities as a long

530
00:28:07,200 --> 00:28:09,080
Speaker 2: term opportunity.

531
00:28:10,119 --> 00:28:13,240
Speaker 8: Right now? I think we need to kind of sit

532
00:28:13,320 --> 00:28:17,040
Speaker 8: back and see which way policy is moving, and then

533
00:28:17,080 --> 00:28:20,439
Speaker 8: of course we can apply the models. As you well know,

534
00:28:21,400 --> 00:28:25,199
Speaker 8: the long term benefit of investing in the United States

535
00:28:25,240 --> 00:28:28,920
Speaker 8: has been related to the strength of our economy, including

536
00:28:28,920 --> 00:28:32,080
Speaker 8: the long term investment that is made by companies in

537
00:28:32,160 --> 00:28:37,119
Speaker 8: cap X, also the investment that's made in information, whether

538
00:28:37,200 --> 00:28:40,320
Speaker 8: that's education at the K through twelve level or at

539
00:28:40,320 --> 00:28:43,760
Speaker 8: the university level. But also, as I mentioned before, our

540
00:28:43,800 --> 00:28:46,760
Speaker 8: willingness is a nation to invest in the future by

541
00:28:46,800 --> 00:28:50,720
Speaker 8: funding places like NIH and the National Science Foundation and

542
00:28:50,800 --> 00:28:54,720
Speaker 8: NOAH and CDC, And I think that many investors ought

543
00:28:54,720 --> 00:28:59,760
Speaker 8: to be paying attention to whether Prump administration will reduce

544
00:29:00,480 --> 00:29:03,720
Speaker 8: those cutbacks and in fact, I hope reverse them because

545
00:29:03,920 --> 00:29:06,440
Speaker 8: they make no economic sense.

546
00:29:06,680 --> 00:29:09,160
Speaker 5: What else potentially could be coming from the White House

547
00:29:09,200 --> 00:29:11,680
Speaker 5: when it comes to trade policy, Because you're mentioning that

548
00:29:11,760 --> 00:29:15,360
Speaker 5: March fourteenth deadline for the government to avert a shutdown,

549
00:29:15,360 --> 00:29:17,520
Speaker 5: but then on March twelfth, just next week as well,

550
00:29:17,560 --> 00:29:20,760
Speaker 5: twenty five percent tariffs on all steel and aluminum imports

551
00:29:20,800 --> 00:29:21,960
Speaker 5: are also set to come.

552
00:29:23,240 --> 00:29:26,239
Speaker 8: Yeah. Now, one thing that I don't know again I'm

553
00:29:26,280 --> 00:29:29,800
Speaker 8: an economic analyst, a markets analyst, not a political analyst,

554
00:29:30,200 --> 00:29:33,760
Speaker 8: is I don't know what the game theory is behind this.

555
00:29:34,560 --> 00:29:37,080
Speaker 8: There are some people who are postulating that the twenty

556
00:29:37,080 --> 00:29:40,440
Speaker 8: five percent numbers that were picked out for tariffs were

557
00:29:40,480 --> 00:29:44,120
Speaker 8: designed basically to be an opening bid, if you will,

558
00:29:44,880 --> 00:29:48,920
Speaker 8: for negotiations with various countries. So where we end up,

559
00:29:49,720 --> 00:29:53,680
Speaker 8: I don't know, but I think to kind of throw

560
00:29:53,720 --> 00:29:59,000
Speaker 8: the gauntlet down in front of nations that have been

561
00:29:59,120 --> 00:30:02,680
Speaker 8: cooperative with us over the years that have their own

562
00:30:02,720 --> 00:30:06,200
Speaker 8: economies intertwined with hours. You know this is not a

563
00:30:06,240 --> 00:30:11,000
Speaker 8: mechanicalist economy. We are highly dependent upon these inter relationships

564
00:30:11,000 --> 00:30:14,920
Speaker 8: that we have, and many of these tariffs will adjust

565
00:30:16,000 --> 00:30:16,800
Speaker 8: very significantly.

566
00:30:16,840 --> 00:30:18,520
Speaker 2: I mean the time we got left, I got to

567
00:30:18,520 --> 00:30:20,800
Speaker 2: interrupt you. I mean, you're working a hard fifteen hour

568
00:30:20,920 --> 00:30:24,160
Speaker 2: week up at Columbia Business School. Let's be honest to

569
00:30:24,200 --> 00:30:26,760
Speaker 2: Abby Joseph Cohen. You could slide right over to be

570
00:30:26,840 --> 00:30:29,640
Speaker 2: vice chairman of the FED, or dare I say chairman

571
00:30:29,680 --> 00:30:30,160
Speaker 2: of the FED?

572
00:30:30,320 --> 00:30:31,120
Speaker 3: In a heartbeat?

573
00:30:31,200 --> 00:30:34,840
Speaker 2: Given the moment, the politics of the nation, how should

574
00:30:34,920 --> 00:30:37,719
Speaker 2: your own Powell respond to this moment?

575
00:30:39,360 --> 00:30:42,440
Speaker 8: I think mister Powell and the other members of the

576
00:30:42,480 --> 00:30:45,760
Speaker 8: FOMC need to be doing what they have been doing,

577
00:30:46,080 --> 00:30:49,080
Speaker 8: and that is to focus on the data and to

578
00:30:49,160 --> 00:30:53,920
Speaker 8: keep in mind the dual mandate of inflation but also employment.

579
00:30:54,760 --> 00:30:57,880
Speaker 8: And one of the things that has been terrific throughout

580
00:30:57,920 --> 00:31:02,200
Speaker 8: the Biden administration has been ongoing creation of jobs and

581
00:31:02,240 --> 00:31:06,000
Speaker 8: then the increase in the average wage adjusted for inflation

582
00:31:06,480 --> 00:31:11,000
Speaker 8: for the American American family. They will be watching at

583
00:31:11,040 --> 00:31:14,800
Speaker 8: the FED whether that good news continues. If we see

584
00:31:14,800 --> 00:31:18,080
Speaker 8: an erosion in the labor markets, if we see an

585
00:31:18,080 --> 00:31:22,160
Speaker 8: erosion in wages adjusted for inflation. I think at that

586
00:31:22,240 --> 00:31:25,440
Speaker 8: point they're going to need to adjust the policy and

587
00:31:25,560 --> 00:31:30,560
Speaker 8: provide some stimulus to basically offset some of these policy

588
00:31:30,640 --> 00:31:32,280
Speaker 8: decisions coming out of the White House.

589
00:31:32,440 --> 00:31:33,200
Speaker 3: Interesting and of.

590
00:31:33,120 --> 00:31:35,160
Speaker 2: Course, folks, that's the first we've heard this morning, and

591
00:31:35,640 --> 00:31:38,440
Speaker 2: always what you hear from Abby Joseph Cohen about wages,

592
00:31:38,480 --> 00:31:42,960
Speaker 2: both wages and real wages given rising inflation is being

593
00:31:43,000 --> 00:31:46,440
Speaker 2: part of the Fed calculus. She is a Columbia Business

594
00:31:46,480 --> 00:31:50,400
Speaker 2: School of course forever with Gulb and Sachs. Abby Joseph Cohen,

595
00:31:50,440 --> 00:31:57,760
Speaker 2: thank you so much extended comments this morning.

596
00:31:58,320 --> 00:32:02,200
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

597
00:32:02,240 --> 00:32:05,560
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

598
00:32:05,680 --> 00:32:08,520
Speaker 1: with the Bloomberg Business app. You can also watch us

599
00:32:08,560 --> 00:32:12,880
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.

600
00:32:12,680 --> 00:32:13,560
Speaker 3: With our question.

601
00:32:13,840 --> 00:32:17,720
Speaker 2: This is our conversation of the day. Jehan Beovan is

602
00:32:17,760 --> 00:32:22,000
Speaker 2: out of university to Montreal and Princeton University. He is

603
00:32:22,040 --> 00:32:25,840
Speaker 2: definitive on his Canada and their economics. He is the

604
00:32:25,840 --> 00:32:28,120
Speaker 2: head of Blackrock Investment Institute.

605
00:32:28,520 --> 00:32:29,680
Speaker 3: But today is different.

606
00:32:29,880 --> 00:32:33,479
Speaker 2: We speak to John Belevan about what is occurring between

607
00:32:33,520 --> 00:32:35,840
Speaker 2: Detroit and Windsor, Ontario.

608
00:32:36,360 --> 00:32:39,320
Speaker 3: Jehan, you know the landscape better than anyone.

609
00:32:39,920 --> 00:32:44,680
Speaker 2: If I look at reciprocity across St Bridge between Windsor

610
00:32:45,120 --> 00:32:50,400
Speaker 2: and Detroit, what's Doug Ford gonna do, mister Trudeau, the future,

611
00:32:50,440 --> 00:32:53,080
Speaker 2: mister Trudeau, what are they going to do on a

612
00:32:53,120 --> 00:32:56,720
Speaker 2: reciprocal basis against what mister Trump is doing?

613
00:32:58,640 --> 00:33:02,600
Speaker 9: Well, good morning, Tom, Just it's a pleasure to be here. Yeah.

614
00:33:02,600 --> 00:33:06,000
Speaker 10: I think, well, we've already started to see reprocessing, reprocessing

615
00:33:06,360 --> 00:33:10,880
Speaker 10: processes at play today, and I think there is uh,

616
00:33:11,080 --> 00:33:13,240
Speaker 10: from what we what we have been they've been saying

617
00:33:13,240 --> 00:33:15,520
Speaker 10: pretty clearly, there will be uh.

618
00:33:15,400 --> 00:33:19,000
Speaker 11: There'll be responding in kind I guess over the as

619
00:33:19,040 --> 00:33:22,160
Speaker 11: things go. So that's the first thing I don't know.

620
00:33:22,240 --> 00:33:24,120
Speaker 11: I mean, I think we're all learning as we go

621
00:33:24,240 --> 00:33:27,360
Speaker 11: here what's going to be the extent of these things.

622
00:33:27,920 --> 00:33:30,480
Speaker 9: But in terms of the intent of responding, I think.

623
00:33:30,360 --> 00:33:32,760
Speaker 11: There's no there's no doubt that this is the current

624
00:33:32,800 --> 00:33:35,640
Speaker 11: stance there, uh, And so we'll see what happens in

625
00:33:35,680 --> 00:33:37,560
Speaker 11: response in the US after that as well.

626
00:33:38,200 --> 00:33:43,360
Speaker 2: Jean Beave, we studied very carefully Ken Rogoff and of

627
00:33:43,360 --> 00:33:48,080
Speaker 2: course Maurice Absfield out at Berkeley. Professor Absfield writes an

628
00:33:48,120 --> 00:33:52,720
Speaker 2: absolutely blistering up ed released about four hours ago in

629
00:33:52,800 --> 00:33:56,080
Speaker 2: the Financial Times. It's like Berkeley, one oh one, John,

630
00:33:56,120 --> 00:33:59,320
Speaker 2: you can appreciate that you're a freshman at Princeton and

631
00:33:59,320 --> 00:34:05,000
Speaker 2: it's like, oh, it's complicated. Professor abs makes clear the

632
00:34:05,040 --> 00:34:11,880
Speaker 2: simplicity of the Trump administration has no academic grounding. Where

633
00:34:11,960 --> 00:34:16,279
Speaker 2: is the part where President Trump is being too simplistic?

634
00:34:18,400 --> 00:34:21,560
Speaker 11: Well, I think, uh, I'll confess I didn't have a

635
00:34:21,640 --> 00:34:26,080
Speaker 11: chance yet to of course I will. But the I

636
00:34:26,120 --> 00:34:28,359
Speaker 11: think the it is a fact that when it comes

637
00:34:28,360 --> 00:34:31,360
Speaker 11: to trade, we have like very good models to think about,

638
00:34:31,440 --> 00:34:34,920
Speaker 11: like you know, more static uh, you know, trained pattern

639
00:34:35,040 --> 00:34:36,839
Speaker 11: and like you know, we go back to Ricardo and

640
00:34:37,200 --> 00:34:40,160
Speaker 11: but the reality is a lot more complex with trade

641
00:34:40,200 --> 00:34:42,640
Speaker 11: and what's going to be the ultimate macro effect on growth,

642
00:34:42,640 --> 00:34:45,239
Speaker 11: for instance, I think is a is a bit difficult

643
00:34:45,280 --> 00:34:47,520
Speaker 11: to uh, for academics to agree. I think the inflation

644
00:34:47,600 --> 00:34:49,839
Speaker 11: impact is pretty clear. I think you're gonna get find

645
00:34:50,040 --> 00:34:52,719
Speaker 11: you know, consensus there. But more broadly than that, I

646
00:34:52,760 --> 00:34:55,640
Speaker 11: think it's a it's harder, uh, And I think you know,

647
00:34:55,680 --> 00:34:58,120
Speaker 11: it all depends also on what is the objective of

648
00:34:58,160 --> 00:35:01,360
Speaker 11: these of these tariffs. I mean it always statistical revenue

649
00:35:02,160 --> 00:35:04,120
Speaker 11: generation could be an objective.

650
00:35:04,160 --> 00:35:06,080
Speaker 9: Are we talking about trade balances?

651
00:35:06,320 --> 00:35:08,279
Speaker 11: I think one thing that is not fully appreciated is

652
00:35:08,280 --> 00:35:10,680
Speaker 11: that these two objectives work against each other. If you

653
00:35:10,719 --> 00:35:13,560
Speaker 11: really are trying to maximize that's revenues, you're gonna have

654
00:35:13,560 --> 00:35:15,240
Speaker 11: to live with a wider trade balance.

655
00:35:15,640 --> 00:35:19,000
Speaker 9: So I think you more than what the academic confusion

656
00:35:19,040 --> 00:35:19,360
Speaker 9: would be.

657
00:35:19,440 --> 00:35:22,040
Speaker 11: I think is the lack of clear understanding of what

658
00:35:22,160 --> 00:35:25,240
Speaker 11: are we doing here that I think creates a certain

659
00:35:26,239 --> 00:35:29,040
Speaker 11: you know, I used to a huge amount of uncertainty.

660
00:35:28,680 --> 00:35:32,400
Speaker 2: Interfering this out just Manton, the Atlanta GDP is a

661
00:35:32,400 --> 00:35:36,520
Speaker 2: as a headline making negative two point eight percent, and

662
00:35:36,600 --> 00:35:39,000
Speaker 2: a lot of people, including hot SIUs and the team

663
00:35:39,040 --> 00:35:43,319
Speaker 2: over at Gold and Sachs, are saying it's actually still diminished,

664
00:35:43,719 --> 00:35:45,960
Speaker 2: but somewhere in the zero even up as high as

665
00:35:46,040 --> 00:35:49,160
Speaker 2: positive one point six. So there's a real argument about

666
00:35:49,160 --> 00:35:50,520
Speaker 2: the growth dynamic.

667
00:35:50,160 --> 00:35:52,279
Speaker 5: Right in the volatility that we see. So Sean, I mean,

668
00:35:52,320 --> 00:35:55,319
Speaker 5: you were actually previously appointed as Deputy Governor of the

669
00:35:55,360 --> 00:35:58,439
Speaker 5: Bank of Canada, and of course we're looking at how

670
00:35:58,880 --> 00:36:02,320
Speaker 5: Canada retaliated tariffs one hundred and seven billion dollars of

671
00:36:02,440 --> 00:36:04,719
Speaker 5: US products. So your view when it comes to the

672
00:36:04,719 --> 00:36:06,560
Speaker 5: Bank of Canada and when it comes to the direction

673
00:36:06,640 --> 00:36:09,759
Speaker 5: of interest rates, we're looking at overnight swaps increasing those

674
00:36:09,760 --> 00:36:11,759
Speaker 5: bets that the Bank of Canada will cut rates by

675
00:36:11,800 --> 00:36:14,480
Speaker 5: twenty five basis points that it's more twelve meetings. So

676
00:36:14,480 --> 00:36:16,040
Speaker 5: how do you view this when it comes to central

677
00:36:16,040 --> 00:36:16,680
Speaker 5: bank policy?

678
00:36:18,040 --> 00:36:20,000
Speaker 11: Yeah, so I think the starting point here is that

679
00:36:20,600 --> 00:36:23,120
Speaker 11: this is not what the market is currently pricing. But

680
00:36:23,200 --> 00:36:26,359
Speaker 11: we I strongly believe that this is a stackflationary shock.

681
00:36:26,440 --> 00:36:26,560
Speaker 12: Right.

682
00:36:26,600 --> 00:36:29,080
Speaker 11: I'm not saying we have stackflation, but I think the

683
00:36:29,160 --> 00:36:32,400
Speaker 11: shock itself, these kinds of measures are stackflationary.

684
00:36:32,400 --> 00:36:36,400
Speaker 9: They're pushing grown down and they're pushing up, and I think.

685
00:36:36,280 --> 00:36:38,960
Speaker 11: That makes it triggy because from the US perspective, like

686
00:36:39,000 --> 00:36:41,359
Speaker 11: the yields are falling. We had like fifty basis points

687
00:36:41,400 --> 00:36:44,600
Speaker 11: of decline in ten years over the last month, and

688
00:36:44,680 --> 00:36:46,879
Speaker 11: I think that has been interprented mostly as a growth shock.

689
00:36:46,920 --> 00:36:48,320
Speaker 9: I think what's going to be the wake.

690
00:36:48,200 --> 00:36:50,080
Speaker 11: Up call over the next two weeks is that like

691
00:36:50,120 --> 00:36:52,360
Speaker 11: inflation is going to be the other part of the

692
00:36:52,360 --> 00:36:54,840
Speaker 11: other leg of that story, and that's going to complicate

693
00:36:54,880 --> 00:36:56,000
Speaker 11: the rate kind of landscape.

694
00:36:56,000 --> 00:36:57,600
Speaker 9: So I think on the side, it's.

695
00:36:57,400 --> 00:36:59,719
Speaker 11: Not clear that to us that there's going to be

696
00:36:59,800 --> 00:37:03,399
Speaker 11: much to cut rates for Canada. The complication is that

697
00:37:03,440 --> 00:37:06,520
Speaker 11: there is like now a week Canadian daughter dynamic, a

698
00:37:06,560 --> 00:37:10,200
Speaker 11: week loony which is which is like a massive issue

699
00:37:10,200 --> 00:37:12,440
Speaker 11: for the for the Central Bank. So I mean, as

700
00:37:12,480 --> 00:37:14,200
Speaker 11: long as this or they will fit that, as long

701
00:37:14,239 --> 00:37:18,319
Speaker 11: as it's orderly, there's no gapping and currencies, you know,

702
00:37:18,400 --> 00:37:19,560
Speaker 11: that's not the objective.

703
00:37:19,600 --> 00:37:21,239
Speaker 9: But I think like once you get to the level

704
00:37:21,280 --> 00:37:23,920
Speaker 9: we're saying right now, it's going to be an additional concern.

705
00:37:24,000 --> 00:37:27,319
Speaker 11: So even though it's a stagflationary shock, on top of that,

706
00:37:27,360 --> 00:37:28,320
Speaker 11: you have a week dollar.

707
00:37:28,840 --> 00:37:30,520
Speaker 9: So I think the knee jerk.

708
00:37:30,400 --> 00:37:33,040
Speaker 11: Reaction will be to cut, but I think that's going

709
00:37:33,080 --> 00:37:35,799
Speaker 11: to be much more messy and predicated, and I think

710
00:37:35,800 --> 00:37:38,560
Speaker 11: it's a given that we have an easy cycle coming

711
00:37:38,680 --> 00:37:40,120
Speaker 11: out of this in Canada.

712
00:37:40,200 --> 00:37:44,120
Speaker 2: Bloomberg surveillance this morning across the nation across Canada as well.

713
00:37:44,160 --> 00:37:47,240
Speaker 2: Thank you for listening on Apple, car play, Android auto

714
00:37:47,320 --> 00:37:52,440
Speaker 2: on YouTube. Subscribe to Bloomberg Podcast growing each in every day.

715
00:37:52,440 --> 00:37:56,719
Speaker 2: Major shout out to David Weston in his conversation on

716
00:37:56,760 --> 00:38:01,120
Speaker 2: Friday with the Treasury Secretary of the United States that

717
00:38:01,280 --> 00:38:05,640
Speaker 2: had over three million downloads on our digital platform. In

718
00:38:05,680 --> 00:38:08,560
Speaker 2: a matter of ours, just a final question please to

719
00:38:08,640 --> 00:38:09,480
Speaker 2: doctor Boven.

720
00:38:10,120 --> 00:38:12,719
Speaker 5: As far as when it comes to the economy, what

721
00:38:12,760 --> 00:38:14,640
Speaker 5: do you think is the biggest risk when obviously we're

722
00:38:14,719 --> 00:38:17,799
Speaker 5: continuing to talk about tariffs, but what's the follow through here?

723
00:38:19,280 --> 00:38:21,400
Speaker 12: Yeah, so I think this is this is this is

724
00:38:21,400 --> 00:38:23,960
Speaker 12: an environment with you know, I don't think I've ever

725
00:38:24,040 --> 00:38:28,720
Speaker 12: seen an environment where there's so many moving parts over

726
00:38:28,760 --> 00:38:32,120
Speaker 12: which you have as wide a range of views from

727
00:38:32,120 --> 00:38:33,960
Speaker 12: the commentators on how they're going to play out.

728
00:38:34,000 --> 00:38:36,680
Speaker 9: So I think this is very unusual to me. The

729
00:38:36,800 --> 00:38:37,920
Speaker 9: most important thing.

730
00:38:37,840 --> 00:38:39,640
Speaker 11: To watch is that, as I said, I think this

731
00:38:39,719 --> 00:38:43,680
Speaker 11: is mostly a stagflationary shock where the tariff piece inflation

732
00:38:43,880 --> 00:38:47,000
Speaker 11: was not a resolved issue from our perspective, so it's

733
00:38:47,040 --> 00:38:49,400
Speaker 11: adding a layer to something that was already a problem.

734
00:38:49,719 --> 00:38:52,080
Speaker 9: And then we're going to have the fiscal side of

735
00:38:52,120 --> 00:38:52,799
Speaker 9: things that's going.

736
00:38:52,719 --> 00:38:54,239
Speaker 11: To play out over the next week, right, so we're

737
00:38:54,280 --> 00:38:58,880
Speaker 11: going to have the discussion government shutdown potentially. So the

738
00:38:58,960 --> 00:39:04,840
Speaker 11: waking up of this is stickflationery nature plus a fiscal story,

739
00:39:04,880 --> 00:39:07,640
Speaker 11: and I think will be expansionary those two things where

740
00:39:07,640 --> 00:39:09,920
Speaker 11: and when you see the yields at four thirteen on

741
00:39:10,120 --> 00:39:13,760
Speaker 11: the ten year, I think that raises questions and Jimine as.

742
00:39:13,600 --> 00:39:16,760
Speaker 2: The much Jean, thank you so much here and shorting

743
00:39:16,800 --> 00:39:19,200
Speaker 2: us really really appreciate your attendance today.

744
00:39:19,400 --> 00:39:21,560
Speaker 3: He is with Blackrock. We hope to get doctor.

745
00:39:21,280 --> 00:39:26,799
Speaker 2: Beavener's studios for an extended conversation here in the coming week.

746
00:39:26,880 --> 00:39:29,520
Speaker 3: Shamblevent is with Blackrock.

747
00:39:29,640 --> 00:39:33,520
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

748
00:39:33,560 --> 00:39:36,600
Speaker 1: starting at seven am Eastern on Apple Corplay and Android

749
00:39:36,600 --> 00:39:39,640
Speaker 1: Auto with the Bloomberg Business App. You can also listen

750
00:39:39,719 --> 00:39:42,959
Speaker 1: live on Amazon Alexa from our flagship New York station,

751
00:39:43,520 --> 00:39:46,200
Speaker 1: Just say Alexa Play Bloomberg. Eleven thirty.

752
00:39:46,440 --> 00:39:49,400
Speaker 2: We're looking at the three month correlation of no eggs

753
00:39:49,440 --> 00:39:54,440
Speaker 2: at Costco with our newspaper report this morning Lisa Matteo, Oh, Lisa,

754
00:39:54,480 --> 00:39:56,560
Speaker 2: are there eggs at Aisle six?

755
00:39:56,960 --> 00:40:01,080
Speaker 13: There are eggs, but paying more as usual. And speaking

756
00:40:01,120 --> 00:40:03,960
Speaker 13: of paying more, this is kind of a look into

757
00:40:04,320 --> 00:40:07,279
Speaker 13: what products are going to be You're going to be

758
00:40:07,320 --> 00:40:08,840
Speaker 13: paying more. And the Wall Street Journal, i mean the

759
00:40:08,920 --> 00:40:11,560
Speaker 13: Washington Post did this analysis. It was like international trade

760
00:40:11,600 --> 00:40:14,160
Speaker 13: data from the Census Bureau. So this is a breakdown.

761
00:40:14,440 --> 00:40:16,239
Speaker 13: Stick with me because there's some numbers here. So we

762
00:40:16,320 --> 00:40:18,960
Speaker 13: start with China, right, the main source of imported consumer

763
00:40:19,000 --> 00:40:21,800
Speaker 13: goods spending, sending about two hundred and ten billion dollars

764
00:40:21,840 --> 00:40:24,960
Speaker 13: worth of everyday household to the US in twenty twenty three.

765
00:40:25,040 --> 00:40:25,759
Speaker 7: So what does that mean.

766
00:40:25,800 --> 00:40:30,560
Speaker 13: It means electronics, clothing like cotton shirt, shoes, kids, toys,

767
00:40:30,600 --> 00:40:33,120
Speaker 13: things like that. Then you get to the grocery aisle.

768
00:40:34,080 --> 00:40:37,240
Speaker 13: You know about nine point nine billion dollars worth of vegetables,

769
00:40:37,280 --> 00:40:39,760
Speaker 13: more than eleven billion worth of fruit and frozen juices

770
00:40:39,800 --> 00:40:41,480
Speaker 13: come from Mexico in twenty twenty three.

771
00:40:41,719 --> 00:40:42,359
Speaker 5: What about the beer?

772
00:40:42,440 --> 00:40:44,799
Speaker 13: And then yes, then you have back up avocados, right,

773
00:40:44,800 --> 00:40:47,880
Speaker 13: the beer, tequila. You can't forget the tequila just and

774
00:40:47,920 --> 00:40:49,960
Speaker 13: then we talked about cars, right, We've been talking about

775
00:40:49,960 --> 00:40:53,399
Speaker 13: cars Canada and Mexico. The US also imported ninety three

776
00:40:53,440 --> 00:40:55,919
Speaker 13: billion dollars worth of crude oil from Canada and twenty

777
00:40:55,960 --> 00:40:57,920
Speaker 13: twenty three. So it's kind of this good breakdown of

778
00:40:58,200 --> 00:41:02,839
Speaker 13: what you can possibly pay more for it's going to be, I.

779
00:41:02,800 --> 00:41:06,799
Speaker 3: Think it's unknown. The uncertainty here is off the chart.

780
00:41:06,920 --> 00:41:09,799
Speaker 2: Some of the research notes. I mentioned George Sarahvellis at

781
00:41:09,840 --> 00:41:12,759
Speaker 2: Deutsche Bank with a blistering note like ten minutes ago

782
00:41:12,800 --> 00:41:15,080
Speaker 2: and we'll get more in futures. De tiorate now new

783
00:41:15,120 --> 00:41:18,320
Speaker 2: Low's negative thirty seven. Another story, Lisa, Yes.

784
00:41:18,160 --> 00:41:19,680
Speaker 13: So Tom, you always sees me about looking for a

785
00:41:19,719 --> 00:41:23,680
Speaker 13: gluten free products, right, so how about tariff free products?

786
00:41:23,760 --> 00:41:23,880
Speaker 3: Well?

787
00:41:23,880 --> 00:41:25,400
Speaker 7: What tariff free?

788
00:41:25,719 --> 00:41:26,640
Speaker 3: Oh? Tariff free?

789
00:41:26,800 --> 00:41:28,560
Speaker 13: Yes, so this is these are the signs.

790
00:41:28,600 --> 00:41:29,120
Speaker 9: Yes with a T.

791
00:41:29,840 --> 00:41:33,319
Speaker 13: It's happening that this housewares trade show in Chicago, the

792
00:41:33,400 --> 00:41:35,480
Speaker 13: Inspired Home Show. So a lot of the booths are

793
00:41:35,520 --> 00:41:39,040
Speaker 13: posting these signs that say tariff free because they're trying

794
00:41:39,040 --> 00:41:42,399
Speaker 13: to attract new customers. One company did it. He said

795
00:41:42,400 --> 00:41:45,600
Speaker 13: that they actually helped him land new customers. He started

796
00:41:45,680 --> 00:41:47,680
Speaker 13: changing up some of the things he does with this company.

797
00:41:47,680 --> 00:41:49,360
Speaker 13: But he says that is starting to help. So you

798
00:41:49,480 --> 00:41:52,279
Speaker 13: might start seeing some of these signs you know as

799
00:41:52,480 --> 00:41:52,759
Speaker 13: it is.

800
00:41:53,040 --> 00:41:55,200
Speaker 3: Yes, I mean you know you're the Texas girl here.

801
00:41:55,480 --> 00:41:58,600
Speaker 3: I mean Texas is booming. Let's all agree on that.

802
00:41:59,360 --> 00:42:03,560
Speaker 2: What does the Mexican border slow down? Do now to Texas?

803
00:42:03,560 --> 00:42:05,560
Speaker 3: So the answers is ginormous.

804
00:42:05,040 --> 00:42:07,240
Speaker 5: Well, it is ginormous. I grew up in South Texas,

805
00:42:07,239 --> 00:42:09,680
Speaker 5: so especially when it comes to a lot of the hospitality,

806
00:42:09,719 --> 00:42:13,360
Speaker 5: construction jobs as well as landscaping. That's a big question

807
00:42:13,360 --> 00:42:14,760
Speaker 5: mark is what it means for some of these smaller

808
00:42:14,760 --> 00:42:17,000
Speaker 5: businesses that depend on some of that labor and what

809
00:42:17,040 --> 00:42:18,680
Speaker 5: it means for if it's not as cheap as far

810
00:42:18,719 --> 00:42:20,839
Speaker 5: as how that feeds into their businesses as well as

811
00:42:20,880 --> 00:42:22,359
Speaker 5: wage infleetion can get.

812
00:42:22,920 --> 00:42:24,640
Speaker 13: Yeah one more so, we heard about Target right the

813
00:42:24,680 --> 00:42:27,200
Speaker 13: CEO saying that he was going to start having to

814
00:42:27,320 --> 00:42:30,400
Speaker 13: increase prices, especially fruits, vegetables, things like that. But the

815
00:42:30,440 --> 00:42:33,759
Speaker 13: CEO of Chipoli actually told NBC Nightly News that they

816
00:42:33,760 --> 00:42:37,200
Speaker 13: are going to fit the bill for any cost increases

817
00:42:37,200 --> 00:42:40,200
Speaker 13: from tariffs. He said, for now, that's what they intend

818
00:42:40,320 --> 00:42:43,480
Speaker 13: to do because their economic model can withstand it. But

819
00:42:43,560 --> 00:42:46,000
Speaker 13: he did add that pricing changes could eventually come if

820
00:42:46,040 --> 00:42:49,560
Speaker 13: those costs become a quote significant headwind. And when we

821
00:42:49,560 --> 00:42:52,080
Speaker 13: were talking about the avocados, they actually get fifty percent

822
00:42:52,120 --> 00:42:54,600
Speaker 13: of their avocados from Mexico, but they also have the

823
00:42:54,640 --> 00:42:58,319
Speaker 13: rest coming from Columbia, Peru, Dominican Republic too, so that

824
00:42:58,400 --> 00:43:00,440
Speaker 13: might help out. But he estimated the cost of goods

825
00:43:00,480 --> 00:43:03,880
Speaker 13: increasing six ten percent on a rolling basis from tariffs,

826
00:43:03,920 --> 00:43:06,520
Speaker 13: but he says right now they're not going to pass

827
00:43:06,560 --> 00:43:07,880
Speaker 13: that on to the consumer.

828
00:43:08,239 --> 00:43:12,120
Speaker 2: Lisa Mateo, thank you so much on the newspapers.

829
00:43:12,520 --> 00:43:17,360
Speaker 1: This is the Bloomberg Surveillance Podcast, available on Apple, Spotify,

830
00:43:17,480 --> 00:43:21,760
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

831
00:43:21,880 --> 00:43:25,360
Speaker 1: seven to ten am Eastern on Bloomberg dot com, the

832
00:43:25,440 --> 00:43:29,480
Speaker 1: iHeartRadio app, tune In, and the Bloomberg Business app. You

833
00:43:29,520 --> 00:43:32,880
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834
00:43:33,080 --> 00:43:34,800
Speaker 1: always on the Bloomberg terminal