WEBVTT - Bloomberg Surveillance TV: March 20, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and a Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:37.159 Bloomberg Terminal and the Bloomberg Business app. In stately of 0:00:37.200 --> 0:00:39.720 JP Morgan assen management rights, we believe the Fed will 0:00:39.720 --> 0:00:42.320 be able to respond with more aggressive rate cuts if 0:00:42.320 --> 0:00:46.640 the labor market falters, even with inflation still above target. 0:00:46.720 --> 0:00:48.879 In joins us now for more in Welcome to New York. 0:00:48.880 --> 0:00:49.519 It's going to see you. 0:00:49.520 --> 0:00:50.120 Thanks having much. 0:00:50.159 --> 0:00:52.239 I think you've now the most important point for financial 0:00:52.280 --> 0:00:55.480 markets right now. Are they constrained? Can they respond if 0:00:55.480 --> 0:00:57.920 the labor market data weekends over the next several months? 0:00:57.920 --> 0:00:59.480 What gives you the confidence that they can? 0:01:00.000 --> 0:01:01.200 I think if you take a take a step back 0:01:01.200 --> 0:01:03.920 and think what happened back in twenty eighteen. The response 0:01:04.240 --> 0:01:06.640 was that they waited a little bit, and they probably 0:01:06.640 --> 0:01:08.520 waited a bit a little bit too long, but ultimately 0:01:08.560 --> 0:01:11.800 they then reacted and during Power was absolutely right. That 0:01:11.920 --> 0:01:15.920 was a period where inflation was transitory, where it didn't 0:01:15.920 --> 0:01:17.679 have a huge impact, and actually it was a growth 0:01:17.880 --> 0:01:20.000 and the laid market that was more critical to them. 0:01:20.000 --> 0:01:21.800 And I think that will be the case this time. 0:01:21.880 --> 0:01:23.520 And I look at it from the way if you 0:01:23.520 --> 0:01:26.240 think about what they did yesterday, growth forecast revised down 0:01:26.280 --> 0:01:29.600 both years, inflation forecasts revised up one year next year, 0:01:29.640 --> 0:01:31.720 they don't actually see much of an impact. So I 0:01:31.760 --> 0:01:33.520 do think they're going to look through it, and if 0:01:33.520 --> 0:01:35.680 they start to see really weak payrolls, that's when they're 0:01:35.680 --> 0:01:36.520 going to react. 0:01:36.840 --> 0:01:37.960 I'm with Stuart Kaiser. 0:01:38.040 --> 0:01:41.440 I found yesterday deeply confusing and deeply contradictory, because on 0:01:41.440 --> 0:01:44.360 one hand they were talking about how they're downgrading growth 0:01:44.440 --> 0:01:45.680 and they're going to look through inflation. 0:01:45.760 --> 0:01:48.080 On the other hand, he seemed to Vetcher J. 0:01:48.200 --> 0:01:50.440 Powell seemed to dismiss some of the soft data that 0:01:50.560 --> 0:01:54.760 indicates weakening, which suggests that they'll be late. How much 0:01:54.840 --> 0:01:57.320 do you have confidence that they could adjust that stance? 0:01:57.680 --> 0:01:59.680 Should some of the SAFT data. 0:01:59.440 --> 0:02:02.640 Start maybe being a little bit more consistent or bleeding 0:02:02.640 --> 0:02:05.000 into on the margin certain hard data points. 0:02:05.400 --> 0:02:06.960 I think the weather way I looked at it was 0:02:07.000 --> 0:02:09.240 that they I saw this as a FED chair who 0:02:09.240 --> 0:02:12.160 actually is concerned about the economy the way like reading 0:02:12.200 --> 0:02:13.920 between the lines. I thought, they've concerned about a bit 0:02:13.960 --> 0:02:16.560 of weakness going on, but they haven't got the evidence 0:02:17.000 --> 0:02:19.720 yet on the hard data to react to it. And 0:02:19.760 --> 0:02:21.919 I think what actually is quite clear is they just 0:02:21.960 --> 0:02:23.839 don't know, and none of us actually know exactly what's 0:02:23.880 --> 0:02:26.359 going to happen. They're in a really tough spot at 0:02:26.440 --> 0:02:28.760 the moment. And you think back to twenty twenty three, 0:02:28.800 --> 0:02:31.400 we had the headfake of the soft data there showing 0:02:31.400 --> 0:02:33.400 signs of weaknesses. It never never fed through, So they're 0:02:33.400 --> 0:02:35.520 probably a bit mindful of that. But ultimately, if you 0:02:35.560 --> 0:02:37.400 do start to see how data roll over, and it 0:02:37.440 --> 0:02:39.600 does typically take a few months, I do think they're 0:02:39.600 --> 0:02:40.880 going to react. So it's probably going to be more 0:02:40.960 --> 0:02:43.000 later later this year that will be happening. 0:02:43.040 --> 0:02:45.440 I understand why the front end of the yield curve rallied. 0:02:45.440 --> 0:02:47.600 I understand where people started to believe that maybe this 0:02:47.639 --> 0:02:50.799 FED would respond to weakness in the economy. Why did 0:02:50.800 --> 0:02:52.760 that triggle into the long end of the yield curve? 0:02:52.800 --> 0:02:54.920 Why did people buy the idea that not only is 0:02:54.919 --> 0:02:57.880 this transitory, but the entire international story that we've been 0:02:57.880 --> 0:03:01.720 talking about of a relevering in Germany and in China 0:03:02.240 --> 0:03:05.480 wouldn't suddenly be relevant anymore because the Fed's cutting rates. 0:03:05.520 --> 0:03:08.480 Why is that sort of the logical conclusion, right? 0:03:08.560 --> 0:03:10.080 But I think humane it pretty clear he was they 0:03:10.080 --> 0:03:12.079 were going to focus on the growth aspect of thing. 0:03:12.080 --> 0:03:14.960 He sort of dismissed all the questions around inflation. And 0:03:15.000 --> 0:03:17.639 if they were concerned around inflation, maybe that's the back 0:03:17.760 --> 0:03:19.720 end gets you know, it has to move a little 0:03:19.760 --> 0:03:21.320 bit higher. But if he's going to look through all 0:03:21.360 --> 0:03:23.680 of that and then you've got the asymmetry where he 0:03:23.720 --> 0:03:26.560 talked about we're either on hold or we're cutting, that 0:03:26.600 --> 0:03:28.960 probably gives confidence to the bond market. 0:03:29.000 --> 0:03:31.120 So this is basically the market believe in him. This 0:03:31.160 --> 0:03:33.600 is the market getting back on team transitory. The market 0:03:33.639 --> 0:03:35.600 is getting back in the trans team transitory band. 0:03:35.640 --> 0:03:36.360 Is that what you're saying? 0:03:36.440 --> 0:03:38.040 And I think that's right because that's what happened in 0:03:38.120 --> 0:03:41.480 twenty eighteen. The last time we did transittory was the pandemic, 0:03:41.560 --> 0:03:43.400 and yes, that was wrong, But if you think about 0:03:43.400 --> 0:03:45.760 what the pandemic, the difference there is we had positive growth, 0:03:46.080 --> 0:03:48.800 and that and positive inflation. If you're having an environment 0:03:48.840 --> 0:03:51.640 of negative growth or a slowing in growth, then the 0:03:51.680 --> 0:03:53.680 inflation we should be looking through that, particularly it's a 0:03:53.720 --> 0:03:56.720 one hit from taris and particularly we start seeing weakness 0:03:56.760 --> 0:03:58.960 in the late market, because that ultimately will bring inflation down. 0:03:59.080 --> 0:04:02.560 Howell referred to the teriff yesterday as being tariff inflation 0:04:02.760 --> 0:04:05.440 different from regular inflation. How do you decipher from between 0:04:05.480 --> 0:04:05.800 the two. 0:04:06.400 --> 0:04:07.960 I think it's difficult, and I think he actually said 0:04:08.040 --> 0:04:10.280 it's going to be difficult for us to exactly calculate 0:04:10.320 --> 0:04:13.040 what is tariff and what is what is just regular. 0:04:13.120 --> 0:04:15.520 And the problem and the slight nuance that we've got 0:04:15.520 --> 0:04:18.480 relative to twenty eighteen. We obviously went into twenty eighteen 0:04:18.520 --> 0:04:21.400 and inflation was below target. It's not at the moment. 0:04:21.440 --> 0:04:23.480 So again that's something they just have to be mindful 0:04:23.520 --> 0:04:26.240 of over over the coming months as they think about 0:04:26.240 --> 0:04:28.359 what they're going to be doing, because inflation was just 0:04:28.360 --> 0:04:29.880 at a worse place to start with. 0:04:30.160 --> 0:04:32.039 Just to pick up on Lisa's line of questioning, let's 0:04:32.040 --> 0:04:34.400 sit on the markets a little bit more perfectly intuitive, 0:04:34.400 --> 0:04:36.279 FED cuts rates, see a rally at the front end, 0:04:36.360 --> 0:04:38.440 got that you're stru up. That's what happened yesterday. How 0:04:38.560 --> 0:04:40.800 me understand what happens to risk if the FED is 0:04:40.839 --> 0:04:43.280 cut in because growth is deteriorating but inflation is still 0:04:43.279 --> 0:04:46.480 above target. How does high your credit trade in that world? 0:04:46.839 --> 0:04:49.839 Soros? Obviously it's widening a little bit because of the grossience. 0:04:49.839 --> 0:04:52.200 I think it depends how deeply we think these growth 0:04:52.279 --> 0:04:54.640 impacts are going to be. And again that goes back 0:04:54.640 --> 0:04:56.839 to the problem that we've got that your impower's got 0:04:56.880 --> 0:04:58.520 is we just don't know. We don't know what's going 0:04:58.560 --> 0:05:00.440 to happen exactly on April the second, We don't know 0:05:00.440 --> 0:05:01.960 how long this is all going on for. It's a 0:05:02.080 --> 0:05:04.760 very difficult argument. I think what we can say though, 0:05:04.800 --> 0:05:08.039 is going into this, corporates were in really good position, 0:05:08.320 --> 0:05:11.120 very healthy. Fundamentally looks very sad, and I think that's 0:05:11.120 --> 0:05:14.280 what you have to step back and think about. And yes, 0:05:14.320 --> 0:05:17.160 if you see a real deterioration in growth, of course 0:05:17.160 --> 0:05:19.200 we're going to see some widening credit spreads. But I 0:05:19.240 --> 0:05:20.960 still think there's this all in yield argument that we've 0:05:20.960 --> 0:05:23.480 talked about a lot people like seven and a half percent. 0:05:23.520 --> 0:05:24.520 There's no question about that. 0:05:24.800 --> 0:05:27.080 So that throughout the end of last year as well 0:05:27.080 --> 0:05:29.160 coming into twenty twenty five. Let's just finish on this 0:05:29.240 --> 0:05:31.680 economic data later this morning, Hey thirty easton time we 0:05:31.720 --> 0:05:34.680 get us jobless claims. This feeling yesterday that the Federal 0:05:34.720 --> 0:05:38.960 Reserve and Shairman power reduce the importance of the soft data. 0:05:39.040 --> 0:05:41.360 I wouldn't say dismissed it, but we've said repeatedly through 0:05:41.360 --> 0:05:43.760 this hour, perhaps downplayed it. How important is the hard 0:05:43.839 --> 0:05:45.640 data going to be? Do we put additional weight on 0:05:45.720 --> 0:05:48.480 things like jobless claims? How do we trade on that information? 0:05:48.560 --> 0:05:50.160 I think the hard data is really important, and I 0:05:50.200 --> 0:05:52.520 think actually the jobs market is probably the thing we 0:05:52.600 --> 0:05:54.480 really need to need to focus on, because if you 0:05:54.560 --> 0:05:56.440 do start to see weakness there, it's going to filter 0:05:56.520 --> 0:05:58.480 through to the rest of the economy. So hard data, 0:05:58.600 --> 0:05:59.880 jobs market, that's what we really need to. 0:06:00.440 --> 0:06:02.359 Mord hard data. A little bit later this morning, in 0:06:02.400 --> 0:06:14.760 steady of JP Morgane and thank you, sir, My Pile 0:06:14.800 --> 0:06:17.360 of black Rock writing well, negative stock bond correlation has 0:06:17.400 --> 0:06:20.040 re emerged. We do not believe it will persist with 0:06:20.200 --> 0:06:23.720 sticky inflation, tariffs and significant US fiscal deficits. The FED 0:06:23.760 --> 0:06:27.480 faces challenges, and term premium will come under pressure. Mike 0:06:27.560 --> 0:06:30.000 joins us now. He's also the former economic advisor to 0:06:30.000 --> 0:06:32.279 President Joe Biden. It's going to see him Mike as always. 0:06:32.600 --> 0:06:34.279 Should we start there? How does it feel? So it 0:06:34.279 --> 0:06:36.560 feel good? If he's shaking the Washington d C off, 0:06:36.680 --> 0:06:37.640 Do you feel better about it? 0:06:37.720 --> 0:06:40.279 Got using my step. Happy to be back in New 0:06:40.360 --> 0:06:41.600 York and happy to do you with you. 0:06:41.760 --> 0:06:43.279 We can get into the markets in just a moment. 0:06:43.360 --> 0:06:45.960 I'd love your assessment of where the economy is and 0:06:46.000 --> 0:06:48.600 how these policy changes might influence where the economy goes 0:06:48.839 --> 0:06:49.800 in the coming quarters. 0:06:50.240 --> 0:06:52.159 Yeah, I mean, certainly. I think we're in the midst 0:06:52.160 --> 0:06:57.200 of a pretty significant set of shocks. So obviously trade 0:06:57.240 --> 0:07:01.000 policy uncertainly, both the magnitude of it and the uncertainty 0:07:01.000 --> 0:07:05.440 around it. Certainly, I think some some slowdowns more broadly 0:07:06.000 --> 0:07:06.599 in the data. 0:07:06.960 --> 0:07:07.120 You know. 0:07:07.160 --> 0:07:09.960 The flip side is, you know, the United States is 0:07:10.000 --> 0:07:12.800 a very dynamic, very resilient economy, and I think what 0:07:12.840 --> 0:07:15.320 you heard from the Fed yesterday is while these shocks 0:07:15.360 --> 0:07:18.160 are significant, while growth is likely to come down, wall 0:07:18.200 --> 0:07:20.440 of inflation in the short term is elite is likely to 0:07:20.480 --> 0:07:22.960 move higher. You know, still there's a kind of underlying 0:07:22.960 --> 0:07:25.440 strength there that's going to see growth through. 0:07:25.600 --> 0:07:27.640 When it comes to tariff you know all the players. 0:07:28.000 --> 0:07:30.080 Obviously you weren't not in the Trump administration, but you 0:07:30.120 --> 0:07:32.520 know who they're dealing with on the other side. Do 0:07:32.560 --> 0:07:36.400 you think we get to a place where it's methodical reciprocity. 0:07:36.880 --> 0:07:40.760 So I think what we've seen from other countries is 0:07:41.200 --> 0:07:44.800 you know a likelihood that you know, this negotiation is 0:07:44.840 --> 0:07:47.520 going to play out in the backdrop of not just 0:07:48.600 --> 0:07:51.760 not just tarif announcements from the United States, but threats 0:07:51.760 --> 0:07:54.280 of retaliation from others, And I think that, you know, 0:07:54.400 --> 0:07:56.240 I think one of the big questions as we roll 0:07:56.280 --> 0:07:58.200 the clock forward over the next three, four, five, six 0:07:58.280 --> 0:08:01.240 months is you know, not just where do US tariff 0:08:01.320 --> 0:08:04.240 levels end up, but where do other countries end up 0:08:04.240 --> 0:08:06.560 with their tariff levels? You know, to the extent that 0:08:06.840 --> 0:08:09.960 you know, deals are possible, negotiations can reach some kind 0:08:09.960 --> 0:08:13.560 of resolution that ends up with tariffs perhaps lower than 0:08:13.600 --> 0:08:16.680 what gets announced in April. Second on both sides, I 0:08:16.680 --> 0:08:19.800 think that's going to be ultimately a world that's healthier 0:08:19.840 --> 0:08:23.400 for growth and inflation. Globally. I also think at a minimum, 0:08:23.560 --> 0:08:25.320 you know, as we roll the clock forward, we're going 0:08:25.360 --> 0:08:27.720 to get more certainty and that's going to take some 0:08:27.760 --> 0:08:31.920 of that uncertainty discount off of economic forecast as well 0:08:31.920 --> 0:08:32.440 as markets. 0:08:32.480 --> 0:08:36.560 But if there's this reciprocal tariffs and then there's the 0:08:36.800 --> 0:08:39.360 hit back, the tit for tet, do you think there's 0:08:39.360 --> 0:08:41.840 a chance you can tip the United States into a recession? 0:08:42.000 --> 0:08:44.040 Powell said, it's moved up, but it's off the table 0:08:44.080 --> 0:08:44.480 for now. 0:08:45.000 --> 0:08:45.200 Yeah. 0:08:45.280 --> 0:08:47.920 Like I said, I would just echo, you know, share Palel. 0:08:48.000 --> 0:08:50.680 The shocks that we've seen are significant. We're going to 0:08:50.720 --> 0:08:53.760 see significant shocks. That's going to lower growth, that's going 0:08:53.800 --> 0:08:55.680 to mean, at least in the short term, higher inflation. 0:08:56.200 --> 0:08:59.480 But you know that the underlying momentum, the underlying dynamos, 0:08:59.520 --> 0:09:02.800 and the lying strength of the US economy is you know, 0:09:02.960 --> 0:09:07.040 quite significant, and that's hard to you know, turn around. 0:09:07.280 --> 0:09:08.760 You might agree with the Fed on that front. 0:09:08.960 --> 0:09:11.320 I get the sense you're not exactly joining the band 0:09:11.360 --> 0:09:12.280 yet of transitory. 0:09:12.400 --> 0:09:14.520 You're kind of on the sideline saying. 0:09:14.280 --> 0:09:16.560 I'm not sure that that's actually the case. And you 0:09:16.600 --> 0:09:18.880 made a point about you're not totally buying the long 0:09:19.000 --> 0:09:20.880 end rally that we're seeing in treasuries. 0:09:21.120 --> 0:09:22.400 Can you talk a little bit about. 0:09:22.240 --> 0:09:24.440 What you're seeing that makes you disagree with the fees 0:09:24.480 --> 0:09:27.240 assessment that we can resurrect this word transitory. 0:09:28.320 --> 0:09:31.280 Yeah, so I think that you know that when you 0:09:31.360 --> 0:09:33.840 look at the long end of the US curve. I mean, yes, 0:09:33.920 --> 0:09:36.000 we've seen a rally over the past couple of weeks 0:09:36.000 --> 0:09:38.840 as these growth scares have worked their way into the market. 0:09:39.120 --> 0:09:42.439 But looking out over the medium term, you know, inflation 0:09:42.640 --> 0:09:45.000 does look somewhat stickier, and obviously we're going to have 0:09:45.040 --> 0:09:46.800 a shock on that. In the short term, I think 0:09:46.840 --> 0:09:51.079 fiscal deficits are likely to be persistently high, and you know, 0:09:51.160 --> 0:09:53.480 when you face a backdrop like that, I think you 0:09:53.559 --> 0:09:56.959 do see pressure on term premium built up, particularly from 0:09:57.000 --> 0:09:59.480 the starting point we're at today, and that means that 0:09:59.600 --> 0:10:02.839 bonds are going to be less strong as diversifiers kind 0:10:02.840 --> 0:10:04.559 of rolling ahead as they have in the last two 0:10:04.600 --> 0:10:06.520 or three weeks, and as they were, you know during 0:10:06.559 --> 0:10:09.000 the twenty tens. You know, that means that investors are 0:10:09.000 --> 0:10:11.560 going to have to seek diversification in other places, whether 0:10:11.640 --> 0:10:15.160 that's managing fixed income in different ways or seeking uncorrelated 0:10:15.200 --> 0:10:17.480 sources of return that can provide that diversification. 0:10:17.559 --> 0:10:19.800 Where do they find those uncorrelated sources of return? And 0:10:19.840 --> 0:10:22.280 I'm so pleased you've brought up this topic because I've 0:10:22.280 --> 0:10:24.240 lost count of how many times you've asked this question 0:10:24.679 --> 0:10:26.440 over the last few weeks or so, haven't we We've 0:10:26.480 --> 0:10:29.079 gone back and forth on this. Are we seeing reduction 0:10:29.120 --> 0:10:32.400 and risk mitigation characteristics or treasuries over the last few weeks. 0:10:32.440 --> 0:10:34.360 I think slowly you've started to see some evidence of 0:10:34.360 --> 0:10:35.200 that gold. 0:10:35.520 --> 0:10:37.800 I keep thinking gold, Are you just going to gold? 0:10:37.800 --> 0:10:39.920 And is that the reason why you see it keeping 0:10:39.920 --> 0:10:40.560 on rallying? 0:10:41.360 --> 0:10:43.640 Yeah? I mean I think that exactly to your point, John, 0:10:43.800 --> 0:10:46.079 I mean, obviously, at the beginning stages of the pullback, 0:10:46.120 --> 0:10:49.320 you saw really strong reactions from the treasury market. That's 0:10:49.360 --> 0:10:52.120 diminished as we've gotten kind of deeper into this period 0:10:52.160 --> 0:10:54.880 of volatility. I think that's a harbinger of what's to common. 0:10:54.920 --> 0:10:57.160 I mean, black rock, you know, one of the things 0:10:57.160 --> 0:10:59.480 that we would say is you should, you know, seek 0:10:59.520 --> 0:11:03.840 diversification from things like stable long term cash flows that 0:11:03.880 --> 0:11:06.560 are less growth sensitive, that are more inflation sensitive, places 0:11:06.600 --> 0:11:08.800 like infrastructure. You know, the thing that we really look 0:11:08.840 --> 0:11:12.600 at are things like you know, our quantitative multi strategy 0:11:12.600 --> 0:11:14.720 hedge fund, you know, built on the back of forty 0:11:14.800 --> 0:11:17.400 years of innovation and leadership. You know, they've come through 0:11:17.440 --> 0:11:20.400 this period generating solid alpha. And what it proves is 0:11:20.800 --> 0:11:23.439 or show proves out is you know, having a range 0:11:23.440 --> 0:11:26.720 of different strategies arranged different ways of generating alpha. And 0:11:26.760 --> 0:11:29.400 in this environment in particular, what's worked is, you know, 0:11:29.440 --> 0:11:33.080 strategies that are primed in market reversal period, strategies to 0:11:33.120 --> 0:11:36.280 provide liquidity to segments of the market across asset classes, 0:11:36.480 --> 0:11:39.199 that can generate alpha even in the face of market dislocation. 0:11:39.320 --> 0:11:40.640 And that's what investors are looking for. 0:11:40.720 --> 0:11:42.280 John, I I'm nearly as sexy as gold. 0:11:42.760 --> 0:11:46.360 Multi asset diversification, city cash flow, you know, things to. 0:11:46.440 --> 0:11:49.600 Sell here much just go bust. So exactly, private markets 0:11:49.640 --> 0:11:53.000 instructure all of those companies. I'm not frond shite to 0:11:53.000 --> 0:11:54.719 how to respect for the position. The answer used to 0:11:54.760 --> 0:11:57.640 be booms, used to be German bombs, and obviously that's 0:11:57.679 --> 0:11:59.760 not the answer anymore. How have things changed in Europe 0:11:59.760 --> 0:12:00.640 from you perspective? 0:12:01.080 --> 0:12:02.960 Yeah, so, I think it's it's actually a really interesting 0:12:03.000 --> 0:12:07.400 moment in Europe. You know, I think the debate within 0:12:07.440 --> 0:12:09.679 the firm. Is is this a trade or is this 0:12:09.760 --> 0:12:14.559 a more durable investment? You know. On one hand, obviously 0:12:14.720 --> 0:12:17.040 Europe Germany has stepped forward with the set of fiscal 0:12:17.040 --> 0:12:19.439 policy changes that you know, as far back as when 0:12:19.440 --> 0:12:22.199 I was in the Obama administration we were calling for. 0:12:22.480 --> 0:12:26.120 That is really tremendous to see, you know. But I 0:12:26.120 --> 0:12:29.480 think that among the bell weathers that we're looking for 0:12:29.640 --> 0:12:31.840 is is this going to be coupled by changes in 0:12:31.880 --> 0:12:34.839 the regulatory environment. You know. The Drogy Report talked a 0:12:34.840 --> 0:12:37.839 lot about the degree to which Europe remains uncompetitive in 0:12:37.880 --> 0:12:41.080 the technology sector, the types of spaces that really drive 0:12:41.120 --> 0:12:44.160 innovation and growth. You know, if we see a turning 0:12:44.200 --> 0:12:47.200 of the page there, that might be, you know, a 0:12:47.240 --> 0:12:50.080 precursor for a much more durable European trade of the 0:12:50.120 --> 0:12:52.560 long term and take it from just a three months 0:12:52.600 --> 0:12:54.880 six month trade to something much more long lasting. 0:12:54.920 --> 0:12:56.880 I'm sitting here smiling. I've done you a while. It's 0:12:56.960 --> 0:12:58.960 nice to hear you talk about markets again. It's been 0:12:59.000 --> 0:13:00.840 too long. It's nice to have you back in the seat. 0:13:00.920 --> 0:13:03.120 I want to finish where we started. How are we 0:13:03.160 --> 0:13:06.160 going to make sure that talented individuals keep going down 0:13:06.160 --> 0:13:08.880 to Washington, d C. To do the kind of work 0:13:09.360 --> 0:13:12.800 that you did, the Deleep Singh did, the Wallyadimo did. 0:13:12.840 --> 0:13:14.480 How are we going to make sure that continues? 0:13:15.720 --> 0:13:19.720 So, you know, I think when I look across you know, 0:13:20.240 --> 0:13:22.400 a number of friends that I've had who've served not 0:13:22.520 --> 0:13:25.560 just in you know, Democratic administrations, but Republican ones. I 0:13:25.559 --> 0:13:27.839 think the folks like, you know, just amusement. She was 0:13:27.840 --> 0:13:29.679 the number two with the Treasury Department and the first 0:13:29.720 --> 0:13:32.640 Trump administration. I look into this one and see, you know, 0:13:32.720 --> 0:13:37.200 really thoughtful, qualified people as well in important pockets of 0:13:37.240 --> 0:13:40.200 that administration. You know, I think that the call to 0:13:40.240 --> 0:13:42.199 service is a strong one, and the call to deliver 0:13:42.280 --> 0:13:44.120 for the country is a strong one, and I expect 0:13:44.120 --> 0:13:46.559 that we're going to continue to see that across administrations 0:13:46.600 --> 0:13:47.240 and both parties. 0:13:47.320 --> 0:13:49.040 I hope that remains the case. Mike is good to 0:13:49.040 --> 0:14:01.080 see my power there of black clop Let's stick with 0:14:01.160 --> 0:14:04.200 retail investors looking ahead to Nike earnings for another read 0:14:04.240 --> 0:14:07.600 on the state of the US consumer, Brookroach of Goma Sex, writing, 0:14:07.880 --> 0:14:11.240 we believe it is still early in Nike's turnaround journey, 0:14:11.360 --> 0:14:14.360 and we have yet to see material signs of brand 0:14:14.400 --> 0:14:17.600 heat environment improvement. She has a buy rating on the 0:14:17.600 --> 0:14:20.880 stock with a ninety dollars price target. Broke Johnsys Now 0:14:20.880 --> 0:14:23.200 for more, Brook, welcome to the program. Let's get into it. 0:14:23.200 --> 0:14:25.000 What are you looking for later on today? 0:14:25.920 --> 0:14:28.120 Good morning, and thank you for having me today. 0:14:29.080 --> 0:14:32.440 We believe that all eyes are on Nike's earnings result 0:14:32.480 --> 0:14:34.280 this afternoon, and as we look. 0:14:34.200 --> 0:14:36.960 To the report, we do believe. 0:14:36.680 --> 0:14:40.520 That focus is centered on signs that the brand turnaround 0:14:40.640 --> 0:14:45.200 is working. New CEO mister Elliott Hill outlines several strategic 0:14:45.240 --> 0:14:48.360 actions taken to improve the brand over the course of 0:14:48.400 --> 0:14:51.080 the past couple of quarters, and we believe that you're 0:14:51.120 --> 0:14:53.960 starting to see signs that those actions are taking root. 0:14:54.280 --> 0:14:57.320 We have seen some refreshers in marketing, We've seen some 0:14:57.440 --> 0:15:00.720 changes in promotional activity, and we've seen some that they're 0:15:00.760 --> 0:15:04.120 looking to reduce discounting on Nike dot Com. As a result, 0:15:04.240 --> 0:15:07.360 all eyes are on any signs that fiscal twenty six 0:15:07.480 --> 0:15:10.480 may be able to return to growth and what the 0:15:10.520 --> 0:15:14.920 impacts of recent changes might have on sales growth and earnings. 0:15:15.040 --> 0:15:16.720 What's the growth market, Brook, Is it going to be 0:15:16.720 --> 0:15:17.480 the United States? 0:15:17.520 --> 0:15:19.160 Is it going to be overseas? At a time where 0:15:19.200 --> 0:15:19.440 there's a. 0:15:19.400 --> 0:15:22.000 Real question about that will be trying to rehitch its 0:15:22.000 --> 0:15:23.040 wagon to the NFL. 0:15:24.480 --> 0:15:26.800 I think one of the big questions is whether or 0:15:26.840 --> 0:15:30.040 not they will be able to return the North America 0:15:30.080 --> 0:15:32.560 market to growth. We believe that the reset in North 0:15:32.560 --> 0:15:36.240 America is very important. We are seeing signs of improved marketing, 0:15:36.240 --> 0:15:39.360 we are seeing signs of improved innovation, and we are 0:15:39.400 --> 0:15:42.080 seeing some signs that the North America consumer is engaging 0:15:42.320 --> 0:15:46.720 with that improved marketing and innovation. Generally in our sector, 0:15:47.000 --> 0:15:50.360 when markets begin to improve in North America for retail brands, 0:15:50.560 --> 0:15:53.240 we start to see signs that that brand heat can 0:15:53.400 --> 0:15:57.040 translate internationally. So we believe investor focus will be very 0:15:57.040 --> 0:15:58.240 centered on North America. 0:15:58.360 --> 0:16:02.720 The big counter argument is on holdings is the potential 0:16:03.120 --> 0:16:05.200 increase in Hokah's is the fact that in all the 0:16:05.280 --> 0:16:07.480 running groups that we all see in the morning in 0:16:07.520 --> 0:16:12.560 Central Park, there isn't necessarily a huge domination of Nike shoes. Instead, 0:16:12.680 --> 0:16:15.080 they're a whole host of other brands. At what point 0:16:15.120 --> 0:16:18.200 does that become a real problem because there are these 0:16:18.200 --> 0:16:20.640 competitors and they're scrappy and they're getting in. 0:16:22.000 --> 0:16:24.440 We are seeing a lot of signs that Nike is 0:16:24.600 --> 0:16:28.640 refocusing on innovation across each of their core sport categories. 0:16:29.000 --> 0:16:31.880 The new CEO is focused on returning the brand to 0:16:32.040 --> 0:16:35.200 focus on sport and to engage with those core running 0:16:35.200 --> 0:16:38.240 communities and those core sport communities. As a result, we've 0:16:38.240 --> 0:16:41.600 seen better innovation with more new product. We've seen the 0:16:41.680 --> 0:16:45.840 launch of the Pegasus Premium and the Boomuro eighteen, and 0:16:45.880 --> 0:16:50.320 the company is refocusing on engaging with those local communities 0:16:50.600 --> 0:16:53.280 and with specialty retail running. So we believe that they 0:16:53.320 --> 0:16:56.400 are starting to make the steps that are necessary to 0:16:56.520 --> 0:17:01.920 return to competitive market share positioning in each those core categories. 0:17:01.680 --> 0:17:03.200 Even if they have a better product. 0:17:03.280 --> 0:17:06.239 What's to say people are buying Dick's sporting goods, they 0:17:06.280 --> 0:17:08.320 expect a sales slow down at the same time that 0:17:08.640 --> 0:17:11.960 surveys continue to say that consumers are worried about the 0:17:12.080 --> 0:17:16.000 uncertainty that's coming from policy in Washington and the tariffs. 0:17:17.359 --> 0:17:20.600 Overall, we have seen signs of some consumer slow down 0:17:20.640 --> 0:17:23.720 and macro choppiness over the course at the last few weeks. 0:17:23.960 --> 0:17:26.600 At first, there was some focus on the potential that 0:17:26.640 --> 0:17:29.000 this was a function of weather, but overall we have 0:17:29.160 --> 0:17:32.680 seen some more comments about slowing overall. I think as 0:17:32.720 --> 0:17:36.000 we look at Nike's turnaround story. Investors are much more 0:17:36.040 --> 0:17:39.240 focused on what will happen in fiscal twenty six, which 0:17:39.280 --> 0:17:42.520 will be beginning in June of this year, and what 0:17:42.640 --> 0:17:45.920 Nike can do on a relative competitive positioning to improve 0:17:45.960 --> 0:17:48.560 the brand heat so that they can gain back that 0:17:48.600 --> 0:17:51.440 market share regardless of the macro backdrop. 0:17:51.680 --> 0:17:54.359 So basically what you're saying is twenty twenty five is 0:17:54.400 --> 0:17:57.359 going to be really a period of transition for Nike 0:17:57.720 --> 0:17:59.960 to them potentially nail it in twenty twenty six. 0:18:01.440 --> 0:18:04.360 We believe that the company will be returning to growth 0:18:04.680 --> 0:18:07.399 in the back half of their fiscal twenty six and 0:18:07.440 --> 0:18:09.880 that many of the actions that have already been outlined 0:18:09.920 --> 0:18:14.359 by management are going to drive lower sales and lower 0:18:14.400 --> 0:18:17.600