WEBVTT - Bloomberg Surveillance TV: March 21, 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 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.960 Terminal and the Bloomberg Business app. Nrian Rabini of NYU 0:00:38.080 --> 0:00:41.199 and Hadson Bay Capital proposing a solution writing quote to 0:00:41.280 --> 0:00:44.800 resolve their current tensions, Canada, Mexico and the United States 0:00:44.960 --> 0:00:49.720 should start drafting plans for a North American economic union. 0:00:49.920 --> 0:00:52.640 Noria Rabini joined us now for more. Welcome to the 0:00:52.640 --> 0:00:54.680 program sir, Thanks for making time for us. That's quite 0:00:54.680 --> 0:00:57.120 a statement. Just go through the way you're thinking about it. 0:00:57.160 --> 0:00:58.520 How on earth would this work? 0:01:00.360 --> 0:01:00.560 Well? 0:01:00.680 --> 0:01:03.880 For now, we have only a free trade area between US, 0:01:03.960 --> 0:01:09.000 Canada and Mexico, and there already tensions involved. There's nothing 0:01:09.200 --> 0:01:12.320 not only to do with of course drugs, fan and 0:01:12.440 --> 0:01:16.000 ila and migrants but the US is also concerned about 0:01:16.040 --> 0:01:21.160 the trade imbalance between Mexico, US and Canada. They are 0:01:21.240 --> 0:01:24.800 very large trade services with the United States. So you 0:01:24.800 --> 0:01:29.880 can really negotiate the USMCA in a direction of restricting trade, 0:01:30.200 --> 0:01:33.840 and US is now probably asking Mexico and Canada to 0:01:33.959 --> 0:01:37.520 also restrict trade in automobiles. There may be twenty twenty 0:01:37.560 --> 0:01:40.040 five percent tarries on that because there are lots of 0:01:40.120 --> 0:01:42.480 job loss in US. Or you can do something that 0:01:42.600 --> 0:01:46.080 is more bold, forming a full economic union. They would 0:01:46.120 --> 0:01:49.760 imply free trade not only in goods, but also in services, 0:01:49.800 --> 0:01:54.240 in the movement of capital, labor, data, technology, and information. 0:01:54.360 --> 0:01:56.720 That's what the European country have done for the last 0:01:56.960 --> 0:02:00.840 few decades, and from any economic point of view, America 0:02:01.080 --> 0:02:05.640 is an optimal trading area that goes beyond goods. Now, 0:02:05.800 --> 0:02:09.000 one step you can take along those lines before having 0:02:09.000 --> 0:02:12.360 a full economic union could be, for example, to form 0:02:12.400 --> 0:02:15.680 a custom union. What's the difference between a custom union 0:02:15.919 --> 0:02:18.760 and a free trade area. In a free trade area, 0:02:18.919 --> 0:02:22.600 there is no common external tariff against other countries. So 0:02:22.600 --> 0:02:25.040 for example, there are lots of Chinese cars that are 0:02:25.080 --> 0:02:28.240 now entering into Mexico, while US is a one hundred 0:02:28.240 --> 0:02:32.160 percent tariff on against Chinese ev if you form a 0:02:32.200 --> 0:02:35.240 custom unions, the first step for economic union, you have 0:02:35.360 --> 0:02:39.440 to have the same tariff impost on Chinese cars whether 0:02:39.800 --> 0:02:43.200 they go to Mexico or US or Canadata. And in 0:02:43.200 --> 0:02:47.160 this way you create a full market, for example, for automobiles, 0:02:47.440 --> 0:02:50.440 and you prevent the imposition of say twenty twenty five 0:02:50.480 --> 0:02:55.000 percent tariffs on experts for Chinese cars or parts from 0:02:55.080 --> 0:02:57.680 Mexico to the United States. So you can do a 0:02:57.720 --> 0:03:01.720 reform of the trade agreement action of shrinking trade, or 0:03:01.760 --> 0:03:04.280 you can do it in the direction of expanding trade. 0:03:04.400 --> 0:03:06.760 And I argue that actually in the economic benefit of 0:03:06.800 --> 0:03:09.920 all three counties to expand trade. To first the custom 0:03:10.040 --> 0:03:12.360 union and then a full economic union. 0:03:12.200 --> 0:03:14.639 You offer a different vision then first, before we get 0:03:14.680 --> 0:03:16.840 to the much bigger one later, Can we just talk 0:03:16.880 --> 0:03:20.000 about the much bigger one. Freedom of labor, free movement 0:03:20.040 --> 0:03:22.639 of labor between the United States and Mexico just sounds 0:03:22.639 --> 0:03:25.320 like a complete nonstarter, Noriel, do you actually think that 0:03:25.320 --> 0:03:27.840 could be a stepping stone further out down the road 0:03:27.960 --> 0:03:28.560 in the future. 0:03:30.280 --> 0:03:32.280 Well, in the case of the European Union, you had 0:03:32.320 --> 0:03:34.800 the same problem. The country with the were much poorer 0:03:35.200 --> 0:03:38.240 in central Eastern Europe. They you joined the U, there 0:03:38.320 --> 0:03:42.280 was a transition period of many decades until they reached 0:03:42.320 --> 0:03:45.080 a certain level of per capita income, a certain level 0:03:45.080 --> 0:03:48.200 of governor, at a certain level of reform. Of course, 0:03:48.240 --> 0:03:51.200 free trade in labor within US and Canada would not 0:03:51.280 --> 0:03:54.840 be a problem, same per capita income, same culture, language, 0:03:55.120 --> 0:03:58.040 and actually there'll be probably more people going from US 0:03:58.080 --> 0:04:00.840 to Canada. They yeah, we around because of global climate 0:04:00.920 --> 0:04:03.200 change and shipland in Canada. 0:04:03.360 --> 0:04:04.040 With Mexico. 0:04:04.080 --> 0:04:06.280 Of course, at the current level of per capita income, 0:04:06.480 --> 0:04:09.880 you cannot have free trade in labor. But as I said, 0:04:10.200 --> 0:04:12.160 like in the case of Europe, you can have Sundard 0:04:12.560 --> 0:04:15.720 criteria that suggests that maybe after ten or twenty years, 0:04:15.880 --> 0:04:18.919 when Mexican per capita income is much higher, there's better 0:04:19.000 --> 0:04:21.280 governance than you free up that type of trade. So 0:04:21.320 --> 0:04:24.080 I say that in economic union, the part that is 0:04:24.160 --> 0:04:27.760 controversial is only probably migration of labor. It will be 0:04:27.760 --> 0:04:29.720 in the interest of the United States who have free 0:04:29.760 --> 0:04:34.280 trade in goods, in services where it has comparative advantage, 0:04:34.400 --> 0:04:37.640 in the movement of capital, portfolio and FDI, and of 0:04:37.640 --> 0:04:40.960 course data information technology, where the US as a major 0:04:41.240 --> 0:04:45.039 comparative advantage. Real to Mexico and to Canada. The only 0:04:45.080 --> 0:04:48.400 controversial part, as I said, is labor movement, but you 0:04:48.440 --> 0:04:49.679 can restrict it over time. 0:04:50.480 --> 0:04:52.400 Noel, do you get the sense that anyone in the 0:04:52.400 --> 0:04:56.120 current administration is sympathetic to this type of proposal at 0:04:56.120 --> 0:04:58.440 a time where it seems like people are increasingly going 0:04:58.480 --> 0:05:02.279 for economic isolation rather than reducing the walls entirely. 0:05:04.440 --> 0:05:07.599 I will start conversation within the administration on this matter, 0:05:08.120 --> 0:05:12.200 but I would say that certainly a step towards reforming 0:05:12.240 --> 0:05:15.720 the USMCA in the direction of a custom union makes 0:05:15.760 --> 0:05:19.400 sense because right now, of course, the automakers, that the 0:05:19.480 --> 0:05:22.960 producers are very worried about the impact on their own 0:05:23.000 --> 0:05:26.600 production costs and profit margins of restricting and imposing a 0:05:26.640 --> 0:05:30.320 lot of tariffs on say auto trade. The unions and 0:05:30.360 --> 0:05:33.400 the workers are in favor of it, but the problem 0:05:33.480 --> 0:05:36.280 is that you're imposing these twenty five percent tariff or 0:05:36.360 --> 0:05:39.600 on both automotive trade. The cost of cars in North 0:05:39.640 --> 0:05:42.880 America is going to increase by ten twenty percent. That's 0:05:42.920 --> 0:05:46.000 going to hurt first of all, consumers, but it's going 0:05:46.040 --> 0:05:49.120 to also hurt the workers. So if you care about 0:05:49.240 --> 0:05:53.080 US auto workers, there are two options wanted to impose 0:05:53.120 --> 0:05:56.680 the tariffs and restricting trade in automotive, but that's going 0:05:56.680 --> 0:05:59.480 to be bad for everybody. Another one is instead having 0:05:59.480 --> 0:06:02.640 a casto union, where if you essentially have an external 0:06:02.680 --> 0:06:07.360 tariff that is common against Chinese autos, then Chinese autos 0:06:07.360 --> 0:06:10.240 that are not entering the United States today will not 0:06:10.400 --> 0:06:14.400 enter Mexico either, and therefore the market for US automaker 0:06:14.480 --> 0:06:16.080 is going to be much bigger because you have one 0:06:16.120 --> 0:06:18.920 hundred and twenty million Mexican they need auto and that 0:06:19.080 --> 0:06:21.760 by now mostly Chinese cars. So you can have a 0:06:21.760 --> 0:06:25.279 win win solution that makes everybody better off, including the 0:06:25.320 --> 0:06:27.520 auto workers if you go in the direction of a 0:06:27.600 --> 0:06:30.680 custom union and eventually in economic union, so you have 0:06:30.720 --> 0:06:33.200 to go forward other than going backward. And I think 0:06:33.279 --> 0:06:37.200 that those arguments can be made in Washington, in Mexico City, 0:06:37.480 --> 0:06:39.120 and of course in Canada as well. 0:06:39.839 --> 0:06:43.520 Noreel is this proposal potentially a way that the United 0:06:43.520 --> 0:06:45.920 States could have more heft when it comes to driving 0:06:45.920 --> 0:06:47.480 a wedge between Beijing. 0:06:50.160 --> 0:06:53.440 Well, certainly, one of the concerns that the United States 0:06:53.480 --> 0:06:56.560 has is not just fentanyl that is coming to the 0:06:56.680 --> 0:07:01.640 US via China, but more important that the Chinese have 0:07:01.680 --> 0:07:06.760 avoided tariffs by essentially exporting goods to Mexico and from 0:07:06.839 --> 0:07:10.320 Mexico to the United States as if there were Mexican goods. 0:07:10.600 --> 0:07:14.760 The Mexican production of many goods as a lot of 0:07:14.880 --> 0:07:18.480 content of parts that is Chinese. And there is also 0:07:18.520 --> 0:07:21.679 a concern about the fact that the Chinese are taking 0:07:21.680 --> 0:07:26.200 over the auto market of Mexico as well. Exporting chip 0:07:26.240 --> 0:07:30.120 cars isn't otherwise to Mexico. So if you care about 0:07:30.120 --> 0:07:34.840 the risking the relationship with essentially China, whether it's in 0:07:34.920 --> 0:07:38.119 auto or other critical parts of the economy, it makes 0:07:38.160 --> 0:07:41.960 sense to have initially customed union and then having also 0:07:41.960 --> 0:07:45.240 a full economic union where decisions about how much you 0:07:45.360 --> 0:07:49.720 trade and you investment with China from North America are 0:07:49.760 --> 0:07:53.040 done not by the US alone side alone, and then 0:07:53.120 --> 0:07:55.520 Mexico can do whatever they want as they do right now, 0:07:55.640 --> 0:07:59.080 but everything the context of an economic union, and initially 0:08:00.520 --> 0:08:02.480 so it makes sense for the US, it makes sense 0:08:02.480 --> 0:08:03.440 for North America. 0:08:03.560 --> 0:08:05.920 Noiel provocative as always, It's going to catch up with this, sir, 0:08:05.960 --> 0:08:07.640 and I should say thanks for making sign for us. 0:08:07.640 --> 0:08:09.000 I know you're on a bit of a world tour, 0:08:09.080 --> 0:08:10.520 so looking forward to catching up with you. When you're 0:08:10.560 --> 0:08:12.640 back in New York, Noria Rabini there of n Yu 0:08:12.720 --> 0:08:24.480 Stern and Hudson Bay. We'll begin this hour with stocks 0:08:24.520 --> 0:08:26.880 lower struggling to snap a four week losing street seem 0:08:26.920 --> 0:08:29.640 a shower of principal ascent management writing. Whether the rally 0:08:29.680 --> 0:08:33.679 can reassert itself and deliver positive equity returns going forward 0:08:33.840 --> 0:08:37.640 will likely depend on whether Earning's growth can deliver. Seema 0:08:37.720 --> 0:08:39.760 joins us now for more, Sema, welcome to the program. 0:08:39.840 --> 0:08:44.280 Can it deliver relative to expectations? So let's talk about expectations. 0:08:44.480 --> 0:08:47.880 Have they pulled back sufficiently over the last several weeks. 0:08:48.800 --> 0:08:51.520 Hi, John, I don't know if it necessarily has. I mean, 0:08:51.559 --> 0:08:56.000 we've already seen a couple of downgrades to economic growth forecast. Actually, 0:08:56.000 --> 0:08:58.480 from learning's perspective, I don't think it's moved down enough, 0:08:58.559 --> 0:09:01.720 particularly when you start to think about the second of 0:09:01.760 --> 0:09:05.360 April and the amount that could happen to global stocks, 0:09:05.400 --> 0:09:08.000 global earnings. So I think there's a little bit further 0:09:08.040 --> 0:09:09.959 to go. You know, we need to see a number 0:09:09.960 --> 0:09:13.240 of other I guess boosts coming in the second half 0:09:13.280 --> 0:09:14.880 of the year, but I think for the next couple 0:09:14.920 --> 0:09:16.480 of months it's going to be a really rocky road. 0:09:16.640 --> 0:09:18.360 Same as some of the retailers have come out and 0:09:18.400 --> 0:09:20.440 said that the next year could be difficult. They've loved 0:09:20.440 --> 0:09:24.000 red expectations. Delta air Lines the Airlines Group have done 0:09:24.120 --> 0:09:26.320 a similar thing over the last several weeks as well. 0:09:26.480 --> 0:09:27.960 Which parts of the market do you think are more 0:09:28.040 --> 0:09:29.920 vulnerable going into earning season? 0:09:32.160 --> 0:09:34.280 So I think anything, of course, any which has got 0:09:34.360 --> 0:09:37.120 any kind of international revenue exposure, anything which is linked 0:09:37.160 --> 0:09:39.520 to consumers. The things that we're really concerned about with 0:09:39.679 --> 0:09:42.640 consumer is just what we're seeing with regards to price increases, 0:09:43.200 --> 0:09:45.920 the pressures that people are having on household income. So 0:09:46.000 --> 0:09:48.520 actually it's spread across so many sectors because there's so 0:09:49.000 --> 0:09:52.280 much significant exposure. There are parts of the market which 0:09:52.280 --> 0:09:56.640 we think a little bit less vulnerable, places like financials 0:09:56.640 --> 0:09:58.320 which have had a bit of a pullback. It could 0:09:58.320 --> 0:10:01.800 see some return, but so much really depends on what 0:10:01.840 --> 0:10:04.439 can we expect to come through from a stimulus perspective, 0:10:05.040 --> 0:10:07.040 not just from the FED, but in terms of you know, 0:10:07.080 --> 0:10:09.080 what happens to tabs in the second half of the year, 0:10:09.080 --> 0:10:11.160 Are something can be lifted, Are we going to expect 0:10:11.160 --> 0:10:14.000 to see deregulation if that comes through then there are 0:10:14.080 --> 0:10:16.680 parts of the market that stand to gain over the 0:10:16.679 --> 0:10:19.120 coming months. But as I said, I think the jury 0:10:19.160 --> 0:10:21.760 is out until we have some further clarity of where 0:10:21.760 --> 0:10:24.360 this administration is going with a number of their different policies. 0:10:24.400 --> 0:10:26.360 And there also needs to be some clarity some of 0:10:26.400 --> 0:10:29.640 those inflationary pressures that you're referring to, both with respect 0:10:29.679 --> 0:10:33.080 to households and what that does to their spending capacity, 0:10:33.080 --> 0:10:35.679 as well as two companies and their ability to pass 0:10:35.679 --> 0:10:38.320 it along. Two said consumers, Do you have a sense 0:10:38.400 --> 0:10:41.079 of whether so far some of these price pressures are 0:10:41.240 --> 0:10:44.360 actually inflationary or whether they have the seeds of being 0:10:44.400 --> 0:10:47.680 disinflationary down the line in tandem with weaker growth. 0:10:48.920 --> 0:10:50.680 So actually, I don't think there is any clarity tool. 0:10:50.679 --> 0:10:53.360 I think we're hearing really contradictory stories. You know, about 0:10:53.360 --> 0:10:55.640 a year ago, we were talking to a number of 0:10:55.960 --> 0:10:58.880 our larger clients who had told us that typically you 0:10:58.880 --> 0:11:02.320 can pass on increases twice. You know, consumers can handle 0:11:02.320 --> 0:11:04.400 it twice. The third time the third time is a 0:11:04.440 --> 0:11:07.160 complete nogo, and we're almost looking at the third time now. 0:11:07.480 --> 0:11:09.800 On the other hand, we are hearing some small businesses 0:11:09.960 --> 0:11:13.400 who are saying that there's so much uncertainty and they 0:11:13.400 --> 0:11:15.800 cannot be left out of pockets, so they're already starting 0:11:15.840 --> 0:11:20.120 to increase prices ahead of what could be reciprocation on 0:11:20.120 --> 0:11:22.360 tariffs on April the second. So actually it's a very, 0:11:22.440 --> 0:11:25.600 very very story, which of course it doesn't help businesses, companies, 0:11:25.600 --> 0:11:26.800 investors really plan ahead. 0:11:27.280 --> 0:11:29.400 At the end of another week where my mind feels 0:11:29.400 --> 0:11:32.040 somewhat fried, I wonder if people are just getting sick 0:11:32.160 --> 0:11:34.520 of all of the uncertainty in the United States and 0:11:34.559 --> 0:11:36.960 are looking for the certainty of the budget that was 0:11:37.080 --> 0:11:40.880 just passed in Germany, the certainty of other regions in 0:11:40.920 --> 0:11:44.400 the world that might be engaging in fiscal stimulus. Do 0:11:44.480 --> 0:11:46.400 you jump on that train or do you think that 0:11:46.400 --> 0:11:49.079 that sort of haven from uncertainty or just. 0:11:49.240 --> 0:11:50.720 Another story, another narrative. 0:11:50.720 --> 0:11:54.240 Do you think that that's basically played out as people realize, Okay, 0:11:54.280 --> 0:11:56.079 it's going to be more complicated. 0:11:56.960 --> 0:11:58.760 So it's funny. So I've been in Madrid all of 0:11:58.800 --> 0:12:01.080 this week speaking to clients, and it was interesting from 0:12:01.120 --> 0:12:03.240 their perspective. They're a little bit more skeptical than I'm 0:12:03.240 --> 0:12:06.440 finding the US audience to be. They're looking at this 0:12:06.480 --> 0:12:08.400 and they're saying, look, this is really great news for Germany, 0:12:08.440 --> 0:12:10.960 without a doubt, but in terms of how it feeds 0:12:11.000 --> 0:12:14.800 through to Europe, they are still unsure of really what 0:12:15.000 --> 0:12:17.160 the positive repercussions could be. They don't really think there's 0:12:17.160 --> 0:12:19.240 going to be a major fiscal stimulus from their countries, 0:12:19.520 --> 0:12:21.720 and even if there was, they're worried about what happened 0:12:21.720 --> 0:12:24.760 to debt markets, and on top of that, from their perspective, 0:12:24.800 --> 0:12:27.760 the real game changer that they're looking for is deregulation 0:12:27.840 --> 0:12:30.480 in Europe, which unfortunately is not something that they are 0:12:30.559 --> 0:12:33.559 particularly optimistic about. So I think there is some potential, 0:12:33.600 --> 0:12:36.040 certainly that there's good news at least in one part 0:12:36.040 --> 0:12:39.199 of the world rather than the other. But how far 0:12:39.280 --> 0:12:41.479 this can go in the near term, I think is questionable, 0:12:41.640 --> 0:12:43.240 and certainly we think there could be a near term 0:12:43.240 --> 0:12:45.920 pullback for Europe in equities as you start to see 0:12:45.960 --> 0:12:48.920 some reality set in around what's happening with tariffs, and 0:12:49.000 --> 0:12:51.439 really you know how quickly this fiscal stimus can actually 0:12:51.480 --> 0:12:54.280 feed through to the German economy, let alone the European economy. 0:12:54.360 --> 0:12:56.160 So see, why are you challenging this idea that the 0:12:56.240 --> 0:12:59.440 wall of exceptionalism is shifting over to Europe and China 0:12:59.520 --> 0:13:02.000 and elsehere we're in away from the United States, that 0:13:02.080 --> 0:13:05.040 that's maybe overly simplistic and it's just getting more complicated 0:13:05.080 --> 0:13:07.840 with a less clear path to which area and which 0:13:07.880 --> 0:13:09.160 stocks are going to outperform. 0:13:09.240 --> 0:13:10.600 Is that kind of how you see things? 0:13:11.559 --> 0:13:13.200 So I think that the near term is a little 0:13:13.200 --> 0:13:15.240 bit cloudy than many people who have been thinking. I 0:13:15.240 --> 0:13:17.080 think the near term, you know, there's been so much 0:13:17.280 --> 0:13:20.600 positivity around the fiscal stimulus news, but there's still, as 0:13:20.600 --> 0:13:22.640 you said, you know a lot of things with regards 0:13:22.640 --> 0:13:24.959 to the tariffs, how quickly the fiscal stimulus can be 0:13:25.000 --> 0:13:27.560 passed through that in the near term some of that 0:13:28.200 --> 0:13:31.240 optimism around international equities could take a bit of a setback. 0:13:31.559 --> 0:13:34.320 The other thing that we're thinking is that exceptional sorry 0:13:34.320 --> 0:13:37.160 exceptionalism should necessarily be in question. We do think that 0:13:37.160 --> 0:13:39.760 the US is still going to see superior growth going forward, 0:13:40.320 --> 0:13:43.079 but is it going to does that necessarily stop European 0:13:43.160 --> 0:13:46.760 equities Chinese equities from doing well? Even a move to 0:13:46.840 --> 0:13:50.160 benchmark positions for so many investors would be a significant 0:13:50.160 --> 0:13:52.160 tail wind for equities. So it's just that the world 0:13:52.240 --> 0:13:54.720 is a bigger place now. There are other opportunities for 0:13:54.760 --> 0:13:57.000 investors that and if you haven't had a chance in 0:13:57.040 --> 0:13:58.880 the last couple of weeks to get onto that ride, 0:13:59.040 --> 0:14:01.280 you probably will see aune to within the next few months. 0:14:01.559 --> 0:14:03.280 When it comes to the uncertainty in the United States 0:14:03.320 --> 0:14:05.800 around teriffs, is April second then. 0:14:05.679 --> 0:14:06.760 Going to be a clearing event? 0:14:09.520 --> 0:14:11.880 Well, you know, one hand, yes, we hope that there 0:14:11.880 --> 0:14:14.120 will be some kind of certainty coming through. That is 0:14:14.240 --> 0:14:17.320 one thing which is overhanging, particularly for global investors or 0:14:17.400 --> 0:14:20.080 investors looking at international equities. So I think there'd be 0:14:20.160 --> 0:14:23.880 some clarity. Does it really clear up everything that we 0:14:24.440 --> 0:14:26.880 that we are waiting to hear? I guess I'm fairly 0:14:27.440 --> 0:14:29.360 pessimistic on that, but at least we're getting to a 0:14:29.440 --> 0:14:32.040 process that at some point within the next few months 0:14:32.040 --> 0:14:35.920 we know some kind of direction where this administration is going, 0:14:35.960 --> 0:14:38.120 and then businesses can plan. So that's why for the 0:14:38.200 --> 0:14:40.800 second half of the year we have slightly more optimism 0:14:40.840 --> 0:14:43.600 because we think some of the uncertainty will clear. 0:14:43.440 --> 0:14:47.560 Up the life of a European based strategist. Here Lisa Sprinkler, Madrid, 0:14:47.600 --> 0:14:51.040 a little bit of London, quick trip to Rome, doesn't it. 0:14:51.360 --> 0:14:53.160 I think they we're both really tired. 0:14:54.920 --> 0:14:57.680 Spending its head over there. It's all added up. 0:14:57.760 --> 0:14:59.600 Yeah, but as long as you don't fire to Heathrow. 0:14:59.440 --> 0:15:00.840 Before it did, makes sense at all. 0:15:01.000 --> 0:15:01.200 Yeah. 0:15:01.240 --> 0:15:03.440 Well, but I will say it's interesting that in Spain 0:15:03.520 --> 0:15:06.560 they're not particularly interested in what Germany's doing as being 0:15:06.640 --> 0:15:09.080 the Holy Grail, considering that it doesn't necessarily open up 0:15:09.120 --> 0:15:10.880 the purse strings for them, and frankly it might make 0:15:10.920 --> 0:15:13.560 them more in a difficult spot because of what spreads 0:15:13.600 --> 0:15:15.200 are doing on the periphery. 0:15:15.320 --> 0:15:17.720 Sam, I appreciate your time, as always, sim Michan, they're 0:15:17.840 --> 0:15:29.640 a principal asset man. We begin this hour with stocks lower, 0:15:29.720 --> 0:15:33.000 Kate more of city wealth writing sentiment has weakened, but 0:15:33.120 --> 0:15:37.000 not fully collapsed, an absent full capitulation, and with persistently 0:15:37.080 --> 0:15:40.240 high and certainty around Tariff's growth and policy, we believe 0:15:40.240 --> 0:15:42.280 it it's too soon to step in. Kate joined us 0:15:42.320 --> 0:15:44.040 now for more. Kate morning, good to see you. Yeah, 0:15:44.080 --> 0:15:46.240 thanks John, congratulations on the new seat as well. 0:15:46.440 --> 0:15:46.680 Thank you. 0:15:46.920 --> 0:15:48.200 We've seen you since you moved over. 0:15:48.320 --> 0:15:48.760 That's yeah. 0:15:48.800 --> 0:15:50.760 I had a nice break and I've been getting ramped 0:15:50.840 --> 0:15:52.800 up in city. You know, it sort of pains me 0:15:52.880 --> 0:15:54.560 to have to write what I just wrote and what 0:15:54.600 --> 0:15:55.920 you read, you know, me. 0:15:56.200 --> 0:15:56.960 I like risk. 0:15:57.200 --> 0:15:59.240 I've always liked to look at opportunities. I like to 0:15:59.240 --> 0:16:01.040 see when they're just locations and say, this is a 0:16:01.080 --> 0:16:03.360 nice time to step in and right now to the 0:16:03.360 --> 0:16:06.920 conversation you guys were just having around uncertainty, not just 0:16:06.960 --> 0:16:09.400 in terms of the macro forecast, but also in earnings. 0:16:09.560 --> 0:16:13.040 It's almost impossible for me to say we've seen the bottom. 0:16:13.160 --> 0:16:15.400 We can break out of this trading range, and it's 0:16:15.440 --> 0:16:16.640 time for us to add. 0:16:16.640 --> 0:16:19.320 There's always a price. Have we reset price low enough? 0:16:19.320 --> 0:16:20.760 How much more do we need to do that? Have 0:16:20.840 --> 0:16:24.560 we reset expectations sufficiently? What would you look for that 0:16:24.560 --> 0:16:26.640 would change your mind that a risk reward would become 0:16:26.880 --> 0:16:27.520 more compelling. 0:16:27.920 --> 0:16:29.480 Well, one of the things that I keep getting my 0:16:29.640 --> 0:16:32.760 head stuck on is everyone's focus on pas right on 0:16:32.880 --> 0:16:35.120 multiples and valuation, and they keep on saying over and 0:16:35.160 --> 0:16:37.560 over again, you know we've derated a little bit. It's 0:16:37.560 --> 0:16:39.200 now looking a little bit more attractive, And I say, 0:16:39.240 --> 0:16:41.760 that's great. We have no faith and confidence in the 0:16:41.760 --> 0:16:44.600 denominator and against that backdrop, if you don't know what 0:16:44.600 --> 0:16:46.359 you're measuring yourself against. 0:16:46.320 --> 0:16:48.160 Like are we cheap? I don't think so. 0:16:48.880 --> 0:16:51.160 Look, there are super high quality companies in the US. 0:16:51.200 --> 0:16:53.360 I know we've had some rotation away from those companies 0:16:53.360 --> 0:16:55.960 over the last couple of weeks of trading, but you 0:16:55.960 --> 0:16:57.800 know that doesn't mean we need to step in and 0:16:57.880 --> 0:16:59.640 kind of back up the truck and add back to 0:16:59.680 --> 0:17:01.640 those companies right now. 0:17:01.760 --> 0:17:03.560 And I hate, as I said, sitting. 0:17:03.360 --> 0:17:05.680 On my hands a little bit, because like everyone else 0:17:05.680 --> 0:17:07.399 in this business, I have a bias to action. 0:17:08.160 --> 0:17:10.359 How inconsistent are some of the projections that we're getting 0:17:10.400 --> 0:17:11.480 right now at of Wall Street. 0:17:11.640 --> 0:17:15.800 Gosh, well, on one page you've got I know, it's 0:17:15.840 --> 0:17:17.480 a big question. You want to just start there. 0:17:17.640 --> 0:17:19.560 Yeah, no, this is I mean, it's a terrible time 0:17:19.640 --> 0:17:21.800 to have to put out forecasts. I'm fortunate enough to 0:17:21.800 --> 0:17:23.159 not have to put a target on the S and 0:17:23.240 --> 0:17:25.720 P or say here's my technical buying level, or here's 0:17:25.720 --> 0:17:29.040 my earnings expectation at the moment, because it is going 0:17:29.080 --> 0:17:31.560 to be a losing game at this moment. We could 0:17:31.640 --> 0:17:34.360 get to April second and have some clarity, I would 0:17:34.400 --> 0:17:37.240 put a much higher probability that we don't have clarity 0:17:37.280 --> 0:17:39.320 after April second, and so people are going to have 0:17:39.400 --> 0:17:41.760 to make these constant revisions, and especially as. 0:17:41.680 --> 0:17:44.199 We were talking about four corporates don't know what's going 0:17:44.280 --> 0:17:44.680 to happen. 0:17:45.200 --> 0:17:47.600 One of the things I'm worried about and Slash watching 0:17:47.640 --> 0:17:50.280 as we go into this next earning season is not 0:17:50.359 --> 0:17:52.919 just whether or not companies take down their guidance, but 0:17:52.960 --> 0:17:56.359 whether or not they pull guidance all together. If they say, 0:17:56.400 --> 0:17:59.720 we don't have enough information to even reaffirm or adjust 0:18:00.080 --> 0:18:03.119 or even take down what we've given you before and 0:18:03.200 --> 0:18:05.480 we're going to step back, that tells us that kind 0:18:05.480 --> 0:18:07.199 of all bets are off and kind of continuing to 0:18:07.200 --> 0:18:09.879 sit on the sidelines makes make some sense now to 0:18:09.920 --> 0:18:12.080 be fair for like city wealth clients who have you know, 0:18:12.200 --> 0:18:13.320 multi assid portfolios. 0:18:13.320 --> 0:18:14.800 We're not saying sell, but. 0:18:15.119 --> 0:18:16.280 You know, there are a lot of folks that have 0:18:16.400 --> 0:18:19.560 big cash balances and we want to be convicted when 0:18:19.560 --> 0:18:20.960 we say put that cash to work. 0:18:21.040 --> 0:18:22.120 That was what I was just going to ask. 0:18:22.240 --> 0:18:24.800 Why sitting on your hands actually mean in financial terms? 0:18:24.800 --> 0:18:26.600 This is just means sitting on cash? Does it mean 0:18:26.640 --> 0:18:27.359 sitting on gold? 0:18:27.560 --> 0:18:30.560 Going too big ass allocation decisions right now? Let's wait 0:18:30.600 --> 0:18:33.320 for more information and whether that's you know, tweaking our 0:18:33.359 --> 0:18:36.760 equity allocations or looking for more opportunities across the fixed 0:18:36.800 --> 0:18:39.200 income or alternative space, like, we don't need to do 0:18:39.240 --> 0:18:42.639 that right now. Let's wait for hopefully what will be 0:18:42.680 --> 0:18:43.640 a little bit more clarity. 0:18:43.760 --> 0:18:45.720 Do you think you're going to have the conviction after 0:18:45.760 --> 0:18:47.800 April second? May make some of those decisions. 0:18:47.880 --> 0:18:50.080 I think April second is an arbitrary date. I mean 0:18:50.480 --> 0:18:53.160 it is a point which we will have some information 0:18:53.280 --> 0:18:54.280 on tariffs. 0:18:53.840 --> 0:18:57.040 But we won't have a significant. 0:18:56.920 --> 0:19:00.000 Outlook for the for the entire policy program in the US. 0:19:00.440 --> 0:19:02.760 And until we have that, it's pretty hard to say, 0:19:04.000 --> 0:19:06.280 you know, what the growth forecast should look like. 0:19:06.960 --> 0:19:08.200 This is what I would also say. 0:19:08.200 --> 0:19:10.480 We have a pattern of behavior from this administration over 0:19:10.480 --> 0:19:13.880