Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: How all of these flip flops within the volatility and
Speaker 2: the price action of markets.
Speaker 3: I think it's more likely that we revisit the lows
Speaker 3: than we done.
Speaker 4: It turns out that's the beginning of the volatility in bonds,
Speaker 4: not the end.
Speaker 5: So the next ninety days is going to be quite
Speaker 5: volatile in the bond market.
Speaker 6: What's happened generally lowering the risk in the portfolio. In
Speaker 6: this type of environment. Rather than a strong bed on
Speaker 6: you want to be in bond's and equities, you want
Speaker 6: to bring risks down.
Speaker 7: What we're looking for is a very choppy year, unfortunately.
Speaker 1: This is Bloomberg Surveillance with Jonathan Ferroll, Lisa Bromowitz, and
Speaker 1: Anne Marie Hordern.
Speaker 6: Live from New York City this evening. Good evening, good
Speaker 6: evening for audience worldwide. Bloombag savandid Stats right now wrapping
Speaker 6: up a wild week in financial markets, investors getting their
Speaker 6: hopes up following the biggest weekly gain of the year
Speaker 6: so far, the White House unveiling what appeared to be
Speaker 6: tariff exemptions for big tech, only for COMMAS Secretary Howard
Speaker 6: Latnik to reign on their parade.
Speaker 8: They're exempt from the reciprocal tariffs, but they're included in
Speaker 8: the semiconductored tariffs which are coming in probably a.
Speaker 9: Month or two.
Speaker 6: President Trump doubling down, writing there was no tariff exception
Speaker 6: announced on Friday. They're just moving to a different tariff bucket.
Speaker 6: So we enter a brand new training week with a
Speaker 6: very brief sigh of relief.
Speaker 5: Is this a sigh of relief? Do we have a
Speaker 5: sense of what the tariff is? We moved from one
Speaker 5: bucket of one hundred and forty six percent to maybe
Speaker 5: twenty percent, which is the fentanyl bucket, which is where
Speaker 5: electronics fit in. Look, this seems like President Trump coming
Speaker 5: out and trying to push back against the idea that
Speaker 5: he pivoted, while still offering some support to the idea
Speaker 5: of electronics. It is clear based on what Davison Greer
Speaker 5: as well as Howard Lutnik said that they are looking
Speaker 5: to move forward with an additional framework of tariffs for semiconductors.
Speaker 6: Are we negotiating with China or negotiating with ourselves? And
Speaker 6: after a week like the one we just saw a
Speaker 6: six percent rally almost on the S and P five hundred,
Speaker 6: is this a policy pivot or not from this administration?
Speaker 7: What was the policy?
Speaker 5: I think that that is the bigger question right now,
Speaker 5: and there is a level of exhaustion. Is this the
Speaker 5: ultimate goal? Is this all according to plan? Because that's
Speaker 5: what a lot of people were saying right now. People
Speaker 5: are exhausted, People on Wall Street are exhausted. The uncertainty
Speaker 5: itself is going to drag on growth and that is
Speaker 5: what you see in notes pretty much across the board.
Speaker 7: Did we get clarity, Yes, we.
Speaker 5: Got one note of clarity, and that is that this
Speaker 5: is a president who is watching the treasury market, but
Speaker 5: the sort of input there is still unclear.
Speaker 6: The first trade this morning in the equity market this
Speaker 6: evening rather positive by zero point nine percent on the
Speaker 6: S and P five hundred. Coming up this hour, Bob
Speaker 6: Michael a JP Morgan as bond market moves spook investors worldwide,
Speaker 6: Lebby Cantrell of Pimco as this weekend's policy confusion continues,
Speaker 6: and Stuart Kaiser city on why we need good news
Speaker 6: and we need it quick. We begin this out with
Speaker 6: our top story this weekend, Apple and Nvidia appearing to
Speaker 6: score a major win and for the white has to
Speaker 6: reign on the parade, joining US now from the nation's capital,
Speaker 6: Bloomberg's tyn of Kendo Tyler, you need to explain just
Speaker 6: what happened this weekend.
Speaker 2: Yeah, hey, John, good evening. Well, it's unclear how long
Speaker 2: this for pre will last because it does appear that
Speaker 2: these tech imports will be subject to a Section two
Speaker 2: thirty two investigation, which could take weeks or even months.
Speaker 2: We have to keep in mind that when President Trump
Speaker 2: signed that initial executive order on April second, it always
Speaker 2: excluded chips, as well as some other key industries like lumber, pharmaceuticals,
Speaker 2: and copper that could be subject to Section two thirty
Speaker 2: two tariffs on the basis of national security concerns. It
Speaker 2: now appears that these other tech imports, including consumer electronics,
Speaker 2: will fall under the sector specific umbrella instead of the
Speaker 2: so called reciprocal plan umbrella. As you said, President Trump,
Speaker 2: just saying that this moved from one bucket to another. Now,
Speaker 2: with that said, when this White House has invoked Section
Speaker 2: two thirty two before, including on steel and aluminum imports
Speaker 2: auto imports, they've implemented a twenty five percent tariff rate.
Speaker 2: Let's just say for the sake of the example, that
Speaker 2: ends up what goes into effect that would be considered
Speaker 2: to be at least an initial of victory for big tech,
Speaker 2: because that is so much lower than what could have
Speaker 2: been the now one hundred and forty five percent tariff
Speaker 2: in across the board when it comes to Chinese imports.
Speaker 2: But still some really big questions here, not just on
Speaker 2: the timeline uncertainty, but also how is the White House
Speaker 2: going to look at the full scope of these electronics,
Speaker 2: for example? Or are they going to tariff of the
Speaker 2: value of an iPhone on its whole, or are they
Speaker 2: going to tariff just the value of the chip inside
Speaker 2: of the iPhone. Questions like this are going to keep
Speaker 2: coming up. But John, I will just quickly add the
Speaker 2: one thing that remains the through line here is that
Speaker 2: President Trump doubled down in his post that this really
Speaker 2: is about China, reiterating that all of these products are
Speaker 2: still subject to that twenty percent baseline tariff that Washington
Speaker 2: imposed back in February.
Speaker 6: It's Tyler Knda with the lightsis down in Washington, d C. Tyler,
Speaker 6: thank you stay close as always you are looking for
Speaker 6: that first trade. This evening. The Sunday Evening Equity features
Speaker 6: here it is positive by one full percentage point with
Speaker 6: more his Donny Berger hate Donny, and.
Speaker 10: More than that when it comes to tech, John, you're
Speaker 10: looking at an AZZAK one hundred future session that's up
Speaker 10: one and a third percent. Maybe it is by now,
Speaker 10: ask questions later. There's signal in the fact we are
Speaker 10: trading this as something of a relief rally, So one
Speaker 10: percent for the S ANDP just under one and a
Speaker 10: third for the NASDAK or small cap session so far
Speaker 10: with trading just underway seven tenths of one percent. Calling
Speaker 10: this a relief though, might be a misnomer because we
Speaker 10: have seen some huge swings. What is one percent when
Speaker 10: we've seen stocks up and down ten percent on some days.
Speaker 10: So let me just show you where we came from
Speaker 10: to get to this future session. The past five trading
Speaker 10: days was the best week for the S and P
Speaker 10: five hundred since November of twenty twenty three. Why did
Speaker 10: it not feel like that? It's because of this volatility
Speaker 10: that we've seen. In fact, in the five days through Thursday,
Speaker 10: we saw a trading range of more than six percent.
Speaker 10: That streak has only happened two other times in history.
Speaker 10: One was March twenty twenty the COVID epidemic, and then
Speaker 10: the other one was October of two thousand and eight,
Speaker 10: the peak of the financial crisis. John, I think a
Speaker 10: lot of traders are going to be relieved that we're
Speaker 10: heading into a holiday shore trading week coming.
Speaker 6: Up, Danny, We can't wait, Danny Burger. Thank you. More
Speaker 6: from Danny later on this hour. Wild swings in the
Speaker 6: equity market, wild swings in the bond market too. Here's
Speaker 6: the big take on Wall Street this evening, Bob Michael
Speaker 6: a JP Morgan Asset Management right in the following. Over
Speaker 6: the last couple of weeks, investors have been searching for science,
Speaker 6: for anything that broke. At the end of this week,
Speaker 6: the most unlikely of candidate surfaced the US treasury market.
Speaker 6: The glob I had a fixed income joined us. Now
Speaker 6: for more, Bob, good evening, It's good to see you.
Speaker 3: Yeah, happy to be here.
Speaker 6: Two sundays in a row. Let's wrap up this week.
Speaker 6: The move we saw this week in the bond market.
Speaker 6: Yields up by forty to fifty basis points on a
Speaker 6: tenure and thirty year maturity, the dollar down by close
Speaker 6: to three percent. Everyone's got the same question. Evidence of
Speaker 6: bond trades blowing up, or are you starting to see
Speaker 6: people distance themselves from dollar assets.
Speaker 3: I think that's a great question for from our perspective,
Speaker 3: we're seeing a complete deleveraging of positions and that's what's
Speaker 3: been driving it. So, whether it's been swap spread trades,
Speaker 3: where it's been the treasury basis, whether it's been investors
Speaker 3: who sold Germany and bought the US, all those things
Speaker 3: have begun to unwind and it's put a lot of
Speaker 3: downward pressure on treasury prices. Two things happened at the
Speaker 3: end of the last week that make me feel a
Speaker 3: lot more positive this week than going into last week.
Speaker 3: The first is Susan Collins came out and broke from
Speaker 3: the FED script of the only thing we're watching is
Speaker 3: inflation and talked about will be prepared. We're watching the market.
Speaker 3: If we need to step in, we'll step in. The
Speaker 3: other thing that we saw was the FED report that
Speaker 3: showed that actually foreign central banks and reserve managers weren't
Speaker 3: selling treasuries as was widely rumored. They actually even added
Speaker 3: a little bit, and in our conversations with overseas investors,
Speaker 3: they're not being shaken out of treasuries if that's.
Speaker 5: The case, and how concerning would it be to you
Speaker 5: if treasuries didn't rally this week.
Speaker 3: I think there's still a bit more of a washout
Speaker 3: to go. I think there are still the investors that
Speaker 3: are coming in overseas that have seen the downward price
Speaker 3: moves and may be unwinding some positions. But I feel
Speaker 3: pretty good that we're putting in a low and price
Speaker 3: and a high end yield here.
Speaker 7: So this is the ultimate question right now.
Speaker 5: Can this be a haven asset at a time where
Speaker 5: the dollar didn't get that bid and the Treasury didn't
Speaker 5: get that bid going forward? How much has to happen
Speaker 5: for the Fed to come back into play Given the
Speaker 5: fact that Neil Kashgari over the weekend came out and said,
Speaker 5: ultimately where the yield ends up isn't going to.
Speaker 7: Really be a determined of the Fed.
Speaker 5: It's going to be about these policies when people can
Speaker 5: understand what the new normal really is.
Speaker 3: Yeah, and I think he also threw in inflation being anchored.
Speaker 3: It's funny to me how the entire FOMC and we'll
Speaker 3: see more this week, are coming out and just highlighting inflation.
Speaker 3: When a month ago, their chair j Palll discredited at
Speaker 3: the press conference and called a transitory again. He's going
Speaker 3: to be right this time that it is transitory. It's
Speaker 3: a one time price reset for tariffs that will create
Speaker 3: demand destruction and lead us to recession. And when I
Speaker 3: read Bruce Kasman and Mike Faroli stuff, they still have
Speaker 3: the probability of recession still up at sixty percent. The
Speaker 3: Fed is watching two things. They're looking for signs that
Speaker 3: something systemically broke and that becomes a bigger problem. Right now,
Speaker 3: we're not seeing that. It eerily feels like an orderly
Speaker 3: online I think that's good news. The other thing they've
Speaker 3: got to be watching is the other side of their mandate,
Speaker 3: which is the unemployment rate. We think if you get
Speaker 3: up four point seven percent or higher, that's up half
Speaker 3: a percent from here, then that will put the pressure
Speaker 3: on them to come in and bring rates down. Remember
Speaker 3: they told us this isn't the neutral rate. This is
Speaker 3: moderately restrictive. Three percent is neutral.
Speaker 6: The next meeting my seventh. Last time you sat there,
Speaker 6: just last week, you doubted whether they could hold on
Speaker 6: until May seventh. What's your view on things now? Can
Speaker 6: they hold on until May seventh, and do you think
Speaker 6: May seventh is the day they pulled the trigger.
Speaker 3: Yeah, last week it looked like we were in meltdown
Speaker 3: phase unless there was a policy response. I think we've
Speaker 3: seen three soft policy responses. The first came from the
Speaker 3: administration you already went through. They gave us a ninety
Speaker 3: day reprieve. That's fine, and they took some of the
Speaker 3: tariffs off of electronics for the time being. That's okay,
Speaker 3: that's backing up. The second came from Congress, where the
Speaker 3: House passed the Senate Budget Resolution, So Congress in a
Speaker 3: way gave us something. And then I'm going to say
Speaker 3: the third is Susan Collins finally sending us home over
Speaker 3: the weekend, saying, yeah, the Fed's watching this.
Speaker 6: We got this list. So we went into the weekend
Speaker 6: with some pretty dreadful data. You mintioned, consumer confidence came out,
Speaker 6: sentiment near a three year low, inflation expectations multi decade
Speaker 6: highs anxiety about unemployment the worse since two thousand and nine.
Speaker 6: And I think we say, hey, the saving gun into
Speaker 6: when you tread and wait, thinking about the next phase
Speaker 6: of all this, the damage that's done already and what
Speaker 6: it looks like in the economic data in a weeks
Speaker 6: to come.
Speaker 7: That's really the main message.
Speaker 5: You can't put the toothpaste back in the tube, you
Speaker 5: can't put the genie back in the bottle.
Speaker 7: We have seen a change.
Speaker 5: We've talked about uncertainty, but there is some certainty that
Speaker 5: things are less good than they were earlier this year,
Speaker 5: and that this is going to have ramifications for spending
Speaker 5: and certainly among corporation.
Speaker 6: Well, just finally for this part of the conversation with
Speaker 6: you this hour, can you want to do the damage
Speaker 6: that's already done and you anticipating a round about of
Speaker 6: pretty weak data in the weeks to come?
Speaker 3: Yeah, I think so. And again, as I was reading
Speaker 3: for Rolean Casman's pieces over the weekend, it's really hard
Speaker 3: to change the confidence of businesses and households, and hence
Speaker 3: that probability of recession is still up there at sixty percent.
Speaker 3: It's not one hundred percent because you can see an
Speaker 3: overwhelming policy response. How many times have we been here
Speaker 3: during COVID or during during the regional banking crisis, when
Speaker 3: for sure we were parleling into recession, but the aggregate
Speaker 3: policy response was sufficient to stop it. We may see
Speaker 3: that this time, but for now we're on path to
Speaker 3: recession this time.
Speaker 6: To get that response, you need to see the data
Speaker 6: break Lisa, and that job's report for this month that
Speaker 6: you'll see in early May. I think a lot of
Speaker 6: people are going to put a lot of weight on
Speaker 6: that particular print.
Speaker 5: But how quickly can you get some sort of layoff
Speaker 5: wave given the fact that so many companies are still
Speaker 5: scarred from the experience during the pandemic, and we've seen
Speaker 5: this in note after note is going to lag behind
Speaker 5: and that is a complication for the Vetero's a.
Speaker 6: Difference between langoff and just not hiring. And given how
Speaker 6: many times we've heard people say wait and see, wait
Speaker 6: and see, you have to imagine for a lot of people,
Speaker 6: they're just going to pause hiring, aren't they for the
Speaker 6: next few weeks, next few months.
Speaker 5: Which is the reason why I watch the quits rate.
Speaker 5: Watch how many people stay on the unemployment claims for
Speaker 5: longer as that number goes up. These are some of
Speaker 5: the peripheral data points that people are watching.
Speaker 6: If you're just joining us, welcome to the program. Good afternoon.
Speaker 6: SeeU Equity Futures Training and we are positive by zero
Speaker 6: point nine percent Michael A JP Morgan will be sticking
Speaker 6: with us. Up next on the program, the White House
Speaker 6: keeping the pressure on.
Speaker 9: What President Trump is doing and his vision and his
Speaker 9: leadership is to completely realign the world economy, but in
Speaker 9: so doing put America first.
Speaker 8: The President is on it.
Speaker 6: Up next on the program, we'll get the view of
Speaker 6: Libby Cantrello PIMCO live from New York City. This evening,
Speaker 6: good evening, the first trades underway. Equity futures at the
Speaker 6: moment positive by zero point eight percent on A S
Speaker 6: and P five hundred on the NASTAG up by one
Speaker 6: point three and the savannahs This evening, the White House
Speaker 6: attempted to keep the pressure on.
Speaker 8: The President is on it.
Speaker 11: It's very very important for people to understand, you know,
Speaker 11: why we're doing what we're doing.
Speaker 9: What President Trump is doing and his vision and his
Speaker 9: leadership is to completely realign the world economy, but in
Speaker 9: so doing put America first.
Speaker 6: The world cheats us.
Speaker 3: They've been cheating us for decades.
Speaker 9: We have been living under a teriff regime, but it
Speaker 9: has been the regime of other countries.
Speaker 8: More importantly, they cheat us with the so called non
Speaker 8: tariff barriers.
Speaker 3: It's the VAT tax, is dumping, the currency manipulation.
Speaker 8: We can't be relying on China for fundamental things that
Speaker 8: we need.
Speaker 2: What's going to be up these countries to come to
Speaker 2: the table, continue coming to the table and make these
Speaker 2: kinds of offers.
Speaker 6: So here's the license, the saving, the White House pushing
Speaker 6: for change, the President of right saying, nobody is getting
Speaker 6: off the hook. We will not be hal hostage by
Speaker 6: other countries, Lisa, especially hostile trading nations like China will
Speaker 6: There was.
Speaker 5: No teriff exception announced on Friday. These products are subject
Speaker 5: to the existing twenty percent fentanyl tariffs and they are
Speaker 5: just moved to a different tariff buckets. We need to
Speaker 5: understand the tariff buckets, and the twenty percent tariff bucket
Speaker 5: does apply to what we're.
Speaker 7: Seeing in China. Got that good? Is it now thirty percent?
Speaker 5: If you've got a ten percent base that comes out,
Speaker 5: is it going to be added to the one hundred
Speaker 5: and forty six?
Speaker 7: You know, you can explain that.
Speaker 6: Just what is the number? Paul Ashworth of Capital Economics
Speaker 6: how to go at this and said the increase in
Speaker 6: the headline tariffray on China specifically remains at one hundred
Speaker 6: and forty five percent, but the effective increase once those
Speaker 6: exemptions are accounted for, it's now closer to one of six.
Speaker 7: You got that clear as mud.
Speaker 5: I mean, look, this is the difficulty for so many
Speaker 5: people is that the layers of tariffs just become incredibly
Speaker 5: difficult to even start to calculate, to the point where
Speaker 5: people start to discount them entirely. Amazon had a note
Speaker 5: where they came out and said, if we calculate this correctly,
Speaker 5: the numbers would be so ridiculous that we couldn't even
Speaker 5: come out with those estimates, which is what we're hearing
Speaker 5: pretty much across corporate America.
Speaker 6: Let's get to the take from Libby Cantell of Pinco
Speaker 6: right in the following. We should not underestimate Trump's ideological
Speaker 6: commitment to this issue. So while the worst may have
Speaker 6: been avoided, trade policy uncertainty should be priced in going
Speaker 6: forward and places. The Libby Joints is now for more Libby.
Speaker 6: Good evening, we go again. Here we go again. It's
Speaker 6: good to see it, least get to see you. After
Speaker 6: last Sunday, a lot of people started to believe there
Speaker 6: was a policy pivot, a ninety day pause and into
Speaker 6: the weekend some exemptions, then we got the pushback over
Speaker 6: the weekend. Has that been a pivot or not from
Speaker 6: your perspective, Yeah, I don't.
Speaker 7: Think there's necessarily been a pivot.
Speaker 4: Maybe some practicality has has has sort of trumped the ideology,
Speaker 4: if you will. However, I think a couple of important points.
Speaker 4: One is that this Section two thirty two investigation on
Speaker 4: semi conductors that has been that was previewed at the
Speaker 4: beginning of this administration. They are very committed to this.
Speaker 4: Ambassador Greer reiterated this in front of st of Finance
Speaker 4: and Ways and Means this week. So this is coming, however,
Speaker 4: and I think your earlier segments alluded to this, it
Speaker 4: will likely be a much lower tariff schedule for these
Speaker 4: for semiconductors, potentially for phones, potentially for consumer technological products.
Speaker 4: And so that means they're going from one hundred and
Speaker 4: forty five percent tariff maybe down to a twenty five
Speaker 4: percent product traff plus those twenty fentanyl that's forty five percent.
Speaker 4: These are still incredibly draconian.
Speaker 9: Right.
Speaker 4: If you had mentioned any of these types of tariff
Speaker 4: levels the beginning of the Trump administration, I think the
Speaker 4: market would have obviously gotten you know, had some indigestion.
Speaker 4: The second thing, though, I think really importantly is that
Speaker 4: the actions over the weekend, I believe make this AEPA authority,
Speaker 4: this emergency economics powers authority that the President is using
Speaker 4: more vulnerable to legal challenge because he is using this
Speaker 4: with the declaration that this is a national emergency. Well,
Speaker 4: is it or not right? If you're actually carving out
Speaker 4: exemptions a sort of Swiss cheese approach and Ambassador Agre
Speaker 4: you're actually had said about two weeks ago. If you're
Speaker 4: doing that, then then it kind of undermines the entire
Speaker 4: basis for IEPA. So in some ways, I think actually
Speaker 4: the real story is that this is already a legally
Speaker 4: vulnerable kind of maybe specious use of AIPA authority, probably
Speaker 4: is more vulnerable given the actions of the weekend.
Speaker 5: Okay, hold on, This is actually fascinating to me. Who
Speaker 5: would then sue President Trump? And how long would it
Speaker 5: take for this to be undermined in a court of
Speaker 5: law and would it be followed?
Speaker 4: Yeah, So a couple of things. One is that there
Speaker 4: is already litigation and process. There are some trade associations
Speaker 4: that have already filed kind of the first steps towards
Speaker 4: litigation in terms of questioning this use of AIPA. But
Speaker 4: to your to your question, and this is obviously very
Speaker 4: pertinent to markets. This will take a while to go
Speaker 4: through the judiciary. There's not likely to be an injunction
Speaker 4: because you'd have to see a reparable harm. And that's
Speaker 4: I think that threshold is very very high.
Speaker 7: I'm no lawyer, but you play our trade.
Speaker 4: From what our trade attorneys are telling us, it is
Speaker 4: that the threshold is high. However, however this is and
Speaker 4: again I think a lot of trade lawyers, those who
Speaker 4: are actually attorneys, would say that this was already a
Speaker 4: very aggressive use of this statue. And again I think
Speaker 4: today or you know, today's or this weekend's actions make
Speaker 4: this more vulnerable.
Speaker 6: A lot of traders would become lawyers overnight. You know that.
Speaker 6: But Michael might become one too, Bob. How would this
Speaker 6: market respond to legal challenges in a week's to count?
Speaker 3: It wouldn't like it because that's more volatility, that's more uncertainty,
Speaker 3: that's more confusing.
Speaker 6: Negative.
Speaker 3: I do think it's negative. I think that at this
Speaker 3: point the markets would like to see some sort of
Speaker 3: agreement on where tariffs are going to settle, be able
Speaker 3: to model them and move on the other thing. I
Speaker 3: wonder when I listened to Libby, we're talking about Trump
Speaker 3: having an ideological view about rebalancing trade. I also think
Speaker 3: he likes the revenue. Now when you listen to him,
Speaker 3: whatever they're modeling on tariffs, he doesn't want to give
Speaker 3: that up. And I wonder how sustainable that actually is.
Speaker 5: So this raises a question, Libby, about what exactly was
Speaker 5: the point of putting out the tariffs as they did,
Speaker 5: if they were going to carve out exemptions a couple
Speaker 5: of days later, and whether this was planned.
Speaker 7: You always start your letters. I'm going to just sort
Speaker 7: of give you your cheat sheet what is going on,
Speaker 7: and then you list things that are going on.
Speaker 5: You don't have to actually listen anything, and you just
Speaker 5: say what is going on and send it out.
Speaker 7: At this point, but ken of a sense of.
Speaker 5: What exactly led to the shift and the exemptions being
Speaker 5: announced or was this already planned?
Speaker 7: Do you have any insight?
Speaker 4: So I think that this is I mean, I think
Speaker 4: this is the White House, and we'll say this that
Speaker 4: the President Trump is his own economic advisor. From our understanding,
Speaker 4: there were several sort of avenues which he could have explored,
Speaker 4: or he could have pursued. On Liberation Day, he picked
Speaker 4: arguably the most draconian, the sort of the most ideological,
Speaker 4: the most extreme, and I think again sort of the
Speaker 4: most legally specious. But there were other avenues that he
Speaker 4: could have pursued. And I think that maybe we're kind
Speaker 4: of going to one of those other channels.
Speaker 7: Maybe more moderated.
Speaker 4: And now, of course, I mean what we are economists
Speaker 4: have said is, and what Bob had said earlier, I mean,
Speaker 4: this is still regardless of these you know, even if
Speaker 4: these exemptions hold, this is still an incredibly high effective teriffrate.
Speaker 4: You were looking at effective tariff rate in like a
Speaker 4: twenty percent potentially on all imports. Now, if if imports
Speaker 4: collapse from China, that's effective terraf frate goes down. There's
Speaker 4: obviously a lot of friction from an economic perspective, and
Speaker 4: that does increase recession risk. So we're definitely not out
Speaker 4: of the woods yet. I do think, actually, I think
Speaker 4: a legal challenge would probably be welcomed by the market.
Speaker 4: I mean, I think they would really like that. However,
Speaker 4: and I think this is maybe to Bob's point, is
Speaker 4: that the President has a lot of unilateral authority around tariff.
Speaker 4: So if it's not AIPA, then it's Section one twenty two.
Speaker 4: If it's not, you know, I it's not necessarily it's
Speaker 4: Section three thirty eight of the nineteen thirty ter Effact.
Speaker 4: The point stands is that Congress is basically delegated a
Speaker 4: lot of authority to the White House, and he can
Speaker 4: do a lot without Congress.
Speaker 6: Here, there are a lot of people after the weekend
Speaker 6: looking forward to going into the trading wait to get
Speaker 6: a lib bit long apple after the announcement. So over
Speaker 6: the weekend, get limit long site and video. Can we
Speaker 6: just sit on sectorial tariffs? Now, what's the base case?
Speaker 6: It's the one, Yes, it would base.
Speaker 4: So I would say, you know, our base case is
Speaker 4: a ten percent baseline tariff is here to stay. And
Speaker 4: to Bob's point, they like the revenue associated with that.
Speaker 4: That also sort of fits with the ideology. So ten
Speaker 4: percent universal tariff and then these sector tariffs on semi's,
Speaker 4: on pharma that are forthcoming, on autos, on steel and aluminum,
Speaker 4: and then a higher terra fright on China. I think
Speaker 4: the big question is like how high is that? You know,
Speaker 4: I think my view is probably doesn't stay at one
Speaker 4: hundred and forty five percent. Does it go down to
Speaker 4: thirty forty fifty percent? Obviously this is all speculation, but
Speaker 4: some sort of mix of that is our base case. Again,
Speaker 4: that is a really high effective terror freight that will
Speaker 4: have real economic and inflationary outcomes, but again less draconian
Speaker 4: that what we've seen over the last two weeks.
Speaker 5: Bobby said that markets wouldn't like uncertainty, and if there
Speaker 5: was some sort of legal challenge, it would just prolong
Speaker 5: the uncertainty. Are you talking about bond markets too, given
Speaker 5: the fact that you still think that they have their
Speaker 5: haven status?
Speaker 3: Two words? Doge elon right, that's where we last had
Speaker 3: the legal challenges. Where did that get you? What's happened there? Nothing?
Speaker 1: Well?
Speaker 5: Okay, creative respect to the bond market as enjoying this uncertainty,
Speaker 5: if it's accompanied with some slowdown and growth, if it's
Speaker 5: still cann act as a haven.
Speaker 3: Absolutely, I do think the bond market, the US treasury market,
Speaker 3: it is a haven. The bond market is a haven.
Speaker 3: I think legal challenges will actually push people into the
Speaker 3: bond market. I think we're finishing that wash out process.
Speaker 3: It may continue into the start of this week, but
Speaker 3: I think everything that needed to de lever has largely
Speaker 3: run through that process. I think the bond market's in
Speaker 3: a pretty good spot.
Speaker 6: Big week coming out for fixed incer Bob, thank you, sir,
Speaker 6: you're going to stick with us. A special thanks to
Speaker 6: Libby Cantrell of PIMCO. Libby, thank you, Thank you. If
Speaker 6: you are just joining us, welcome to the program. Equity
Speaker 6: futures right now just about positive. The first few trades
Speaker 6: of the following week, the brand new trading week are
Speaker 6: on and we're positive by zero zero point five percent.
Speaker 6: In just a moment, we'll catch up with Stuart Kaiser
Speaker 6: City and what he calls the least enjoyable five percent
Speaker 6: rally in recent memory. Like from New York. This is
Speaker 6: Bloomberg thirty minutes into the trade in week correctority market
Speaker 6: looks like this. We're positive just about by zero point
Speaker 6: four percent. Maybe not the games are anticipating after the
Speaker 6: headlines around exemptions over the weekend. The nana's that camp
Speaker 6: by zero point eight percent with more let's crossover to
Speaker 6: Danny Berger Hate Danny.
Speaker 10: It may be a market that's trying to trade off headlines.
Speaker 10: John but this could change as we enter the week.
Speaker 10: We're about to get into the thick of the earning season.
Speaker 10: Julian Emmanuel saying, but I think a lot of people
Speaker 10: have said the results don't themselves, don't matter. It is
Speaker 10: the guidance and how they're navigating terrorists. You've already had
Speaker 10: a bit of a hint of that over the past week.
Speaker 10: Of the earnings we've heard from so far, the general
Speaker 10: consensus we've gotten is it seems like every company is
Speaker 10: handling this in a different way. Walmart's saying we can't
Speaker 10: raise our prices. Value is important for our customer. We're
Speaker 10: going to take the short term. Or there's someone like
Speaker 10: a Fastenal saying the map doesn't work, we have to
Speaker 10: raise prices, like a five below this value discount store
Speaker 10: saying that they're just not getting anything from China they're
Speaker 10: pausing all shipments, or some of the European carmakers saying
Speaker 10: we're not going to have exports into the US markets.
Speaker 10: So if one thing that's important is navigating tariffs, the
Speaker 10: other thing is guidance. Again, the consistent thing here is
Speaker 10: no consistency. Delta Frontier, the airlines, we've heard some from
Speaker 10: so far just have completely done away with their guidance,
Speaker 10: saying we don't know what it's going to look like,
Speaker 10: not giving numbers, or you get a car max that
Speaker 10: says we still have these long term goals, but we
Speaker 10: are removing the timeframe for which we think we're going
Speaker 10: to reach them. We also heard from Walmart, which for
Speaker 10: their part, just increase the range of possible estimates, or
Speaker 10: you can do the le Levi's model, which again this
Speaker 10: was an interesting one. They catch their guidance unchanged with
Speaker 10: a big caveat, saying this assumes that nothing changes in
Speaker 10: the macro or consumer environment, and we're going to assemble
Speaker 10: a team to try to figure out exactly what tariffs mean.
Speaker 6: John, Hey, Denny, thank you. I have to say I
Speaker 6: like the Levi's approach. Just say, based on our assumptions,
Speaker 6: things are going to be okay. Assumptions haven't changed since
Speaker 6: the tariff headlines hit.
Speaker 5: And guess what, we've got a task for us that
Speaker 5: they'll handle it, and you know what, we're not going
Speaker 5: to be responsible.
Speaker 6: Good luck to them, sort of finger up in the
Speaker 6: eletronic gates. What you know which try the windskyn and
Speaker 6: what the temperature.
Speaker 5: Is Honestly, I think that a lot of people are
Speaker 5: going to be saying something similar because guess what, this
Speaker 5: is your free ride, So that's what people are.
Speaker 6: Going to do. Sue at Kansra City has this to say.
Speaker 6: This is a case of tail risks reduced or delayed
Speaker 6: as opposed to removed. Stuart joins us now for more
Speaker 6: as he says, good news is needed and quick Stu,
Speaker 6: it's good to see you. How are you get any
Speaker 6: of that good news over a weekend?
Speaker 11: Yeah, I think we got some of it, you know.
Speaker 11: I think the ninety day tariff delay and then you know,
Speaker 11: try to exempt some of the tech stuff is incremental progress.
Speaker 11: I think that stuff trims the tail a little bit,
Speaker 11: but you know they quickly walk back, you know, the
Speaker 11: positive response. If this was a weekday, we probably would
Speaker 11: have had a five percent rally in there to three
Speaker 11: percent so off. Luckily we were closed on Saturday, so
Speaker 11: we didn't get that.
Speaker 6: It's progress.
Speaker 11: I mean, it's either an acknowledgement that they had gone
Speaker 11: too far and or a little bit concerned about you know,
Speaker 11: market functioning, or you know, they're just trying to deliver
Speaker 11: a little bit of good news but without a doubt
Speaker 11: they've trimmed some of the tail off. It's still a
Speaker 11: long tail, but I think they've trimmed a little.
Speaker 6: So went they got thrown around in the past week. Negotiation,
Speaker 6: We got to negotiation. I thinknic guy shame with them.
Speaker 6: Sounds of the moment. You know, it's a little hard
Speaker 6: to say.
Speaker 11: I mean, a lot of trade delegations are supposed to
Speaker 11: supposedly in town and they're talking. It does seem like
Speaker 11: they negotiated themselves on the way up and on the
Speaker 11: way down. China's basically said we're done, you know, with
Speaker 11: the tit for attached stuff. So it does a little
Speaker 11: bit feel like they're kind of responding to shadows and
Speaker 11: to what's going on in markets as opposed to sitting
Speaker 11: out across the table with someone actually you know, triminal numbers.
Speaker 5: Well you say markets, but it seems like they're looking
Speaker 5: at one market.
Speaker 7: It's not your market. Do you feel left out?
Speaker 5: I mean, is there a sense that basically it doesn't
Speaker 5: matter how much stock sell off as long as the
Speaker 5: bond market is stable, that's not going to be a
Speaker 5: limiting factor for this White House.
Speaker 11: Well, we actually got it right this time. Actually, I
Speaker 11: think Lisa, I mean, I remember a couple of weeks
Speaker 11: ago you said, credit s brets have it widened, So
Speaker 11: this equity response is overdone. You know, equities actually moved first,
Speaker 11: so I would say that we were kind of the
Speaker 11: winner of the clubhouse, so to speak, on a master's thing.
Speaker 11: And you know, look, without a doubt, I mean, I
Speaker 11: don't think this is a trump equity put. If there
Speaker 11: is a put, it's associated with the credits or the
Speaker 11: credit or bomb market's full stop. If you look at
Speaker 11: what happened to credit spreads and applied volatility on HyG
Speaker 11: or QD the last couple of weeks, you can see
Speaker 11: that being being very, very aggressively priced. So yeah, I
Speaker 11: would agree. I mean, if it's an equity put, it's
Speaker 11: it's still quite a bit lower than here.
Speaker 5: I would say, well, Bob, do you get the sense
Speaker 5: right now that the bond market truly is king and
Speaker 5: if there is some sort of bid into the bond
Speaker 5: market that could free up to more policy uncertainty, because essentially,
Speaker 5: if that's the only thing that matters, well, if it's calm,
Speaker 5: let's go first.
Speaker 3: Thanks to you for dragging us out with you down
Speaker 3: into the swamp.
Speaker 6: Credit stops.
Speaker 12: The credit was doing great, it was holding in corporate
Speaker 12: profitability looked okay, and there when the equity market and
Speaker 12: credit spreads had to widen.
Speaker 3: I think for us, when we look at how businesses
Speaker 3: are going to respond to the environment, one of the
Speaker 3: things we're looking at is when you get through the
Speaker 3: quiet period, forget about what they're saying about hiring and labor,
Speaker 3: are they actually going to be back in buying their
Speaker 3: shares and does that create some sort of support. If
Speaker 3: that does, then the bond market will follow. Certainly, credit
Speaker 3: spreads will come in ste What do you think?
Speaker 6: I think that's right me.
Speaker 11: You know, Broadcom last week announce a pretty sizable buy back.
Speaker 11: You know, you guys went through you know, case by case.
Speaker 11: You know, you may say I want to go to
Speaker 11: Levi's approach. I would say, look at the Levi's stock
Speaker 11: price that day and tell me if you still want
Speaker 11: to know do that approach?
Speaker 9: It was?
Speaker 6: It was pretty tough.
Speaker 11: So look, I know, it's like we've talked about this
Speaker 11: multiple times. If you're gonna kind of kitchen sink it,
Speaker 11: you're probably going to have a buyback or something announced
Speaker 11: alongside that, you know, to kind of underwrite it a
Speaker 11: little bit. I do think if you say we're good,
Speaker 11: you better have a lot of evidence, and if you
Speaker 11: just pull guidance, I don't think that's the right way
Speaker 11: to go, right.
Speaker 6: What do you think of the approach of the banks
Speaker 6: so far? We get more bank counties for the week,
Speaker 6: We've heard from several players on Friday. What do you
Speaker 6: make of that approach?
Speaker 11: Look, I think bank earnings and looking very early but
Speaker 11: kind of largely is expected. You're in a volatile environment,
Speaker 11: so trading stuff looks good m and a pipeline has
Speaker 11: been kind of kinked, so you're not going to see
Speaker 11: a lot of response there, and obviously by private wealth,
Speaker 11: AUM in a declining equity environment is going to look
Speaker 11: a little lower. So I think the results are as
Speaker 11: you would have expected. They're clearly going to have to
Speaker 11: signal some caution on the loan side of things because
Speaker 11: it would be kind of irresponsible for them not to.
Speaker 11: So it feels like they're kind of managing things, you know,
Speaker 11: about how you would expect.
Speaker 5: So it sounds like earnings matter for everything except for tech.
Speaker 5: And I do wonder at this point if US tech
Speaker 5: is not uninvestable or but just a lot more difficult
Speaker 5: to invest in given the fact that there's been so
Speaker 5: much volatility. They are a beta trade, and they also
Speaker 5: are facing potentially a special focused type of tariff to
Speaker 5: make sure those products get reshort, whatever that means.
Speaker 7: According to Howard Lutnik this weekend.
Speaker 11: Yeah, I mean it's you know, tech earnings are vital obviously,
Speaker 11: you know, I think the risk coming into the year,
Speaker 11: the risk was tech is very expensive and it's extremely
Speaker 11: over owned. I think you would probably say it's not
Speaker 11: quite as expensive and not quite as over owned as
Speaker 11: it was, but there are clearly a cute risks to
Speaker 11: the earning side depending on how the tariffs go. You know,
Speaker 11: I'm a surprised Nazec isn't up a little bit more
Speaker 11: at least on the open. So that's a little bit,
Speaker 11: you know, a little bit troubling perhaps, But look, if
Speaker 11: you saw it last week when the good news came out,
Speaker 11: what worked. Tech stocks bounced, growth stocks bounced. I think
Speaker 11: the ability to get into those stocks at a lower
Speaker 11: valuation is enticing people. And also, what's your other alternative, Like,
Speaker 11: people do not want to buy cyclicals here because they're
Speaker 11: really worried that the next leg of downside would come
Speaker 11: from recession risk. So I think what you're seeing is
Speaker 11: people are trying to stay in large cap tech and
Speaker 11: growth right now. If they're kind of dipping their toes in,
Speaker 11: and I don't know that those toes are that dipped in.
Speaker 6: How when insulates, do you think those tech names are
Speaker 6: from the cycle, from the international cycle, not just a
Speaker 6: domestics story here in the United States.
Speaker 11: Well, I think the question there is if they are
Speaker 11: insulated to some degree, do you get a knock on
Speaker 11: effect into capex and into buybacks? Right Like, if you
Speaker 11: look at buybacks, historically, for instance, you buy back more
Speaker 11: when you're earning more, right So, if you're earning less,
Speaker 11: you're probably going to be buying back lass. There's a
Speaker 11: lot riding on capex guidance from you know three or
Speaker 11: for these big stocks. If you're a little bit worried
Speaker 11: about earnings and foreign demand, you pull back on that.
Speaker 11: CAPPAX and I think those would be your two biggest
Speaker 11: concerns going into tech earnings. What would be from those
Speaker 11: two sources, How do they view their earnings profile going forward?
Speaker 11: How much does that impact their intent to spend both
Speaker 11: on capex and buybacks Related to that.
Speaker 5: I'm glad that you brought up John the cycle, because
Speaker 5: right now this is really the ultimate question. How much
Speaker 5: is the cycle going to get accelerated to the downside
Speaker 5: on a global basis when you have essentially a lot
Speaker 5: of pressure from the tear for the trade war around
Speaker 5: the world.
Speaker 7: And I just wonder at what point.
Speaker 5: We could see that, and Bob, we're going to get
Speaker 5: a host of data this week, like retail sales. Does
Speaker 5: it start to matter at that point to get a
Speaker 5: sense of where we are in the cycle.
Speaker 3: I think it does. I think what is going to
Speaker 3: be interesting is to see if consumers hit a pothole,
Speaker 3: if they have pulled back on spending, if they feel
Speaker 3: that things are uncertain, if they feel that prices are
Speaker 3: going to reset so much higher, they just want to
Speaker 3: stop and say. If they have equity exposure, maybe through
Speaker 3: their retirement plan, and they see that's been reset lower,
Speaker 3: it's not the kind of environment that you want to
Speaker 3: go out and spend. I keep going back to when
Speaker 3: you look at tariffs, it's taxes on businesses and households.
Speaker 3: And I don't remember an economy that taxed its way
Speaker 3: to prosperity.
Speaker 6: No doubts of run Mac just Ryan said, Neil, thanks
Speaker 6: for watching, says the following, I feel like the limit
Speaker 6: of how much Trump can escalate, that part of this
Speaker 6: is over. As the Chinese have rightfully said, it's a
Speaker 6: joke at this point.
Speaker 7: Well, that has been the feeling.
Speaker 5: The question is whether the escalation takes another form, because
Speaker 5: we did see, for example, China putting some.
Speaker 7: Limits on some of the rare Earth's metals.
Speaker 5: Over the weekend. They said this is a good first step.
Speaker 5: Let's see if they still think so given some of
Speaker 5: the other things. And then it's less bad because you're
Speaker 5: taking the tail risk out. But if you have this
Speaker 5: level of escalation for a long time, does it take
Speaker 5: on a different type of contour in the economy?
Speaker 6: Just a final word, Hey, you've taken a conservative approach
Speaker 6: to trade and over the past number of months waiting
Speaker 6: for that data to break, and I remember you saying
Speaker 6: that repeatedly over the last few months. What's the approach
Speaker 6: now into this week, into things like retail sales.
Speaker 11: Look, I mean our view is kind of the the
Speaker 11: risk in the near termor probably tilted a little bit
Speaker 11: to the upside, because if you're going to get good
Speaker 11: news from negotiations. I think that has to happen in
Speaker 11: the next two to four weeks, and if you don't
Speaker 11: get good news on negotiation by then, then to Lisa's point,
Speaker 11: you have to start pricing downside risks to the economy
Speaker 11: via recession. So excuse me if you want to get bullish,
Speaker 11: I think it's actually kind of a tactical trade. If
Speaker 11: we're sitting here six or eight weeks from now and
Speaker 11: they're still like diddling around with negotiations, I think you're
Speaker 11: going to see numbers significantly lower.
Speaker 6: Scott Crohner on our side.
Speaker 11: You know, cut his EPs number to two fifty five
Speaker 11: for the S and P from two seventy, and I
Speaker 11: think you would argue that that's probably pricing in tariffs alone,
Speaker 11: not really a full recession. So it you know, the
Speaker 11: one is the data crack you know, who knows you
Speaker 11: missed on Friday was certainly not encouraging to see sentiment,
Speaker 11: you know, hit in that way, and so I do
Speaker 11: think you're going to need to see like real progress
Speaker 11: in the new next two to three, two to four
Speaker 11: weeks before the market really stars and cut numbers, and.
Speaker 6: Then I'm as Friday with dreadful Curt Gray Moss twat
Speaker 6: Kaiser sits straight. Thank you got to see you. Bob's
Speaker 6: going to stick with us. Let's get you an update
Speaker 6: on stories. Ask where the savening with your Bloomberg brief
Speaker 6: lest crossback cover to Danny Berger, Hey, Danny, Hey John.
Speaker 10: The Trump administration has exempted smartphones and other electronics from
Speaker 10: its so called reciprocal tariffs this past Friday, a major
Speaker 10: reprief for global tech manufacturers like Apple and Nvidia. However,
Speaker 10: officials say that they are still subject to a twenty
Speaker 10: percent levy on China related to fentanol. However, this morning,
Speaker 10: Commerce Secretary Howard Lutnik said that those tariff exemptions will
Speaker 10: be temporary. He said the administration is creating a new
Speaker 10: set of tariffs targeting popular consumer electronics and hopes to
Speaker 10: announce them in the next month or two. Meanwhile, President
Speaker 10: Trump doubled down on coming tech tariffs in a truth
Speaker 10: social post this afternoon. Elsewhere, Minneapolis Fed President Neil Cashkari
Speaker 10: has ruled out a rate cut as an insurance policy
Speaker 10: against an economic slowdown, saying the priority is inflation as
Speaker 10: the labor market looks strong.
Speaker 7: Cash Carr express.
Speaker 10: Confidence that markets will remain orderly despite trade uncertainty. And
Speaker 10: that's your Bloomberg brief, John.
Speaker 6: Danny, thank you, Feed officials. Pramo not blinking here, not
Speaker 6: blinking at all.
Speaker 5: Yeah, I mean some people are trying to hang their
Speaker 5: hat on Susan Collins, but other than that, pretty much
Speaker 5: they're like, look, this market's functioning.
Speaker 7: It doesn't like things.
Speaker 5: It's volatile, but volatility is not breaking, so we've seen
Speaker 5: no problem. Good luck.
Speaker 6: What did the kids say? Not my monkey, not my circus.
Speaker 6: It seems to be the last week.
Speaker 7: Not my bag baby.
Speaker 6: Equity features this evening positive by zero point seven percent.
Speaker 6: I'm next on the programs and final thoughts, heading into
Speaker 6: a brand new trading week line from New York. You're
Speaker 6: watching Bloomberg TV. If you want to just chaining again,
Speaker 6: welcome to the program. We are life, of course, on
Speaker 6: a Sunday evening, once again looking for better news to savening.
Speaker 6: Equity futures are positive by zero point six percent with
Speaker 6: a deeper look at the markets. Let's cross back over
Speaker 6: to Danny Berger for more eye Donny, hey.
Speaker 10: John, We've also had effects markets trading for about the
Speaker 10: past four hours, and if you're hoping for reprieve or
Speaker 10: at least a decisive reprieve for the dollar. Maybe shut
Speaker 10: your screen off and hope for something better tomorrow morning.
Speaker 10: You're looking at a euro which is weaker versus the dollar,
Speaker 10: but it has started to peter out. When the currency
Speaker 10: markets first opened, the euro was weaker versus the dollar
Speaker 10: about three quarters of a percent. But as you've got
Speaker 10: that truth social post for Donald Trump, the dollar then
Speaker 10: again started to lose steam. It's that ominous link between
Speaker 10: risk assets selling off and a weaker dollar that seems
Speaker 10: like it might persist into next week. Speaking of risk assets,
Speaker 10: just a quick look at some other commodity markets this evening.
Speaker 10: You are looking at oil, which opened higher again, unable
Speaker 10: to sustain onto those gains. We're not really seeing anything
Speaker 10: convincing in markets both beauty, IM Brent down about a
Speaker 10: third of one percent. Gold, of course, this hit an
Speaker 10: old time new Hight still is holding about thirty two hundred.
Speaker 10: That's also lower by about half percent.
Speaker 6: John, Hey, Danny, thank you. The most exhausting rally ever
Speaker 6: in a past week. Just think about what we delivered
Speaker 6: again of almost six percent on the S and P
Speaker 6: five hundred. If you ask someone what equities did over
Speaker 6: the last week. Do you think they've come up with
Speaker 6: that the best week of the year. I don't think so.
Speaker 5: I don't think it felt like the best week of
Speaker 5: the year, and I don't think anyone has confidence that
Speaker 5: it's going to stick.
Speaker 7: That said, there is this feeling that we have gained
Speaker 7: a lot back.
Speaker 5: If you said that we had all time highs just
Speaker 5: a couple of weeks ago, I also.
Speaker 7: Wouldn't believe you.
Speaker 5: It feels like such a roller coaster and people are exhausted.
Speaker 6: The all time hig on February nineteenth feels like a
Speaker 6: lifetime ago.
Speaker 7: Right, It was a lifetime ago.
Speaker 6: The most we've seen in the bond market since just
Speaker 6: this week, fifty basis point moved on a ten and
Speaker 6: a thirty, and the dollar was weaker, not stronger. A
Speaker 6: lot to figure out in the week to come, and
Speaker 6: your week to come looks like this. So here's the
Speaker 6: Canada on Monday. Earnings from Goldman on Tuesday, more earnings
Speaker 6: from City Bank for America and United Airlines on Wednesday,
Speaker 6: US retail sales and comments from the feed chat japound
Speaker 6: look out for that Thursday, an ECP right decision and
Speaker 6: another round of jobless claims before wrapping up the training
Speaker 6: week early for the Good Friday holiday, Let's sat down
Speaker 6: to Washington, DC and catsch up with Tala Kendo in
Speaker 6: the nation's capital. Tyler, Let's wrap up the weekend and
Speaker 6: think about what's still to come this week. What are
Speaker 6: you in the tame looking for in the dice to count?
Speaker 2: Yeah, hey, John, Well we could get a better sense
Speaker 2: on how negotiations are going when it comes to the tariffs.
Speaker 2: On Thursday, the Italian Prime Minister will be here at
Speaker 2: the White House as the European Union in particular tries
Speaker 2: to find a path forward here when it comes to negotiations,
Speaker 2: considering that all those countries were tariffed as a block. Now,
Speaker 2: people familiar do tell Bloomberg News that Italian Prime Minister
Speaker 2: Maloney will propose to President Trump eliminating all tariffs on
Speaker 2: bilateral trade between the EU and the US, something actually
Speaker 2: Elon Musk had floated earlier this month. But it really
Speaker 2: remains to be seen if that's something that this White
Speaker 2: House would seriously entertain, or what sort of concessions they
Speaker 2: would need to entertain it. Of course, we hear a
Speaker 2: lot about those non tariff barriers like the VAT and
Speaker 2: digital services taxes, which Italy have. So we'll try to
Speaker 2: see if we can glean any details, particularly when it
Speaker 2: comes to the European Union next week, because john as
Speaker 2: you know, they were supposed to put into retaliatory impacts
Speaker 2: this week but ended up holding off on that reprieve
Speaker 2: once this White House put into effect that ninety.
Speaker 6: Day pause, Tyler, before you go, when can we change
Speaker 6: the conversation from tariffs to taxes? How quickly can we
Speaker 6: achieve that?
Speaker 9: Right?
Speaker 2: So that's one of the big questions here. Of course,
Speaker 2: of both the House and the Senate ended up going
Speaker 2: on recess on Friday after they had passed that critical
Speaker 2: Senate budget blueprint through the House chamber. But there's still
Speaker 2: some big questions here, and trust me, lawmakers are going
Speaker 2: to hear a lot from their constituents, particularly when it
Speaker 2: comes to spending cuts over the next two weeks, and
Speaker 2: that could potentially impact the conversation going forward, because as
Speaker 2: you know, the Senate ended up passing four billion dollars
Speaker 2: in spending cuts, the House plan wanted two trillion. They
Speaker 2: ended up coming together on the pledge from Mike Johnson
Speaker 2: that there will be one point five trillion dollars in
Speaker 2: spending cuts, but that is raising questions about what that
Speaker 2: will mean about the future benefit programs like Medicaid. Lawmakers
Speaker 2: are going to need to come together to figure that out.
Speaker 2: House wants to get their version passed by May. As
Speaker 2: of now, that seems pretty ambitious, but we'll have to
Speaker 2: see as President Trump ramps up the pressure because this
Speaker 2: White House wants to get cashed into consumers pockets and quickly,
Speaker 2: because this is all linked to that tax cut agenda.
Speaker 6: Tonna, thank you, great work. We'll see you early tomorrow morning.
Speaker 6: Thank you very much for some fun of thoughts around
Speaker 6: the table of the savening. Jpmulkin's Bob my cope buff.
Speaker 6: Let's wrap it up. How will you and the tabe
Speaker 6: approach the coming week?
Speaker 3: Well, when I left last Sunday, I was extremely concerned
Speaker 3: about the week, what the week held, and that proved
Speaker 3: to be right. When I leave tonight, I feel much
Speaker 3: more optimistic. I feel that we're in a market that's
Speaker 3: going to be stable. I expect treasury yields to be
Speaker 3: stable and actually drift a bit lower. I think a
Speaker 3: lot of the de leveraging has occurred. When I listened
Speaker 3: to Stu, I think he's right. I think we're in
Speaker 3: the negotiation phase of the tariffs and that will be
Speaker 3: pretty positive for the next couple of weeks. I need
Speaker 3: the equid market to do better, for credit spreads to
Speaker 3: do better. I think that's going to happen. And when
Speaker 3: I think about our client base, I think about the
Speaker 3: pension fund and insurance companies that have been looking for
Speaker 3: a five percent thirty year and wider credit spreads to
Speaker 3: get into this market, They're going to have it. So
Speaker 3: I think this week will be one of stability.
Speaker 7: This week of stability.
Speaker 5: Does it depend at all on any of the granular
Speaker 5: data we get out, whether it's retail sales, whether it's
Speaker 5: the earnings, Well, let's market respond to those things, or
Speaker 5: is it focused squarely on the White House and what
Speaker 5: we hear there.
Speaker 3: I think the data will be overwhelmed by what's going
Speaker 3: on with the trade negotiations. So if there's good news
Speaker 3: that comes out of that, people will dismiss the data.
Speaker 3: If there isn't good news that comes out of that,
Speaker 3: and if we hear more noise out of the administration
Speaker 3: about ever higher tariff levels on all the things that
Speaker 3: haven't been addressed yet, yeah, then the market's not going on, Well,
Speaker 3: what do you.
Speaker 6: Think change the story from when we all last spoke?
Speaker 6: What changed it? Was it the bond market? What was it?
Speaker 3: I think the insane amount of volatility and trading. I
Speaker 3: think the deleveraging that we know occurred throughout the bond market,
Speaker 3: the things that didn't make sense unless they were deleveraging trades.
Speaker 3: And then I think the administration coming in and putting
Speaker 3: in place ninety days of negotia.
Speaker 6: Their response to that. Does that give you confidence that
Speaker 6: you know there is a pain threshold and you can
Speaker 6: identify where it actually is.
Speaker 3: It does give me some level of confidence. And there
Speaker 3: are many other pieces of the puzzle. Talking to our
Speaker 3: non US clients and seeing that they are structural holders
Speaker 3: of US debt and they're going to remain structural holders
Speaker 3: of US debt. All of those are positive things and
Speaker 3: dismiss the narratives that were created out there that have
Speaker 3: no basis.
Speaker 5: There is a quote out on X and thank you,
Speaker 5: Hank Reardan, Hank MF. Reardan, You are a king until
Speaker 5: the bond market takes your sceptor. And this was the
Speaker 5: feeling in Marcus this week and the reason why some
Speaker 5: people are saying that we do have some certainty now,
Speaker 5: Is that there is some response to some market pain
Speaker 5: that this Trump administration will listen to. Is there a
Speaker 5: level of certainty that we have today that we did
Speaker 5: not have last Sunday when we sat here waited for
Speaker 5: futures to open, saw them open, wanted to shut our
Speaker 5: computers and go home.
Speaker 3: Well, it is true that funding pressures on not only
Speaker 3: businesses and households, but also governments can bring people to
Speaker 3: the bargaining table pretty quickly. So that is true. I
Speaker 3: agree with the writer of that. Do I think that
Speaker 3: things are stable and have been resolved? I think they're stable. No,
Speaker 3: they haven't been resolved. Will know that over the course
Speaker 3: of this month.
Speaker 6: Buon Vigilanc's on a new concept. What's newest to see
Speaker 6: this in the treasury market. So I think that's what's
Speaker 6: surprising is something you've talked about for months and months.
Speaker 6: If not yet waiting for that moment, then maybe that
Speaker 6: moment would develop in the treasury market. And to some extent,
Speaker 6: I think you can make the argument it has to
Speaker 6: Bob's point, though, this week's been a really interesting one.
Speaker 6: So you've had the price move and people have attached
Speaker 6: to it a theory and narrative that international investors are
Speaker 6: moving away from dollar denominated assets, that it's threatening the
Speaker 6: safe haven status. The treasury markets will no longer provide
Speaker 6: what we call on this program, those risk mitigation characteristics.
Speaker 6: How much longer do you need to really get that
Speaker 6: definitive answer have you had it already? How much longer
Speaker 6: do other people need to get that final answer on that,
Speaker 6: because those are the kind of things that don't happen overnight.
Speaker 6: They take weeks, months, years, and sometimes they take decades.
Speaker 3: I think we've seen enough. I think the FED report
Speaker 3: on Friday showing that there were actual net foreign buyers
Speaker 3: of treasury securities is one answer to that. I think
Speaker 3: if that changes down the road, yeah, then I might
Speaker 3: change my view. But right now, I don't see an
Speaker 3: alternate reserve currency to the US. I don't see an
Speaker 3: alternate save haven asset to US treasuries. I can understand
Speaker 3: the price movements, and actually where we are on ten
Speaker 3: year treasuries is about the average yield since the start
Speaker 3: of the year, so there's been a lot of volatility
Speaker 3: around that. But we've moved a lot and really gone nowhere.
Speaker 5: You said a couple of months ago, or maybe it
Speaker 5: was less that you could see this whole yield curve
Speaker 5: in the US be below three percent, maybe even by
Speaker 5: the end of this year.
Speaker 7: Do you still believe that?
Speaker 3: I do. I think I'm going first off with the
Speaker 3: FED telling us before all of this their neutral rate
Speaker 3: was three percent. I'm going with our probability of recession
Speaker 3: is still above sixty percent, and our expectation is that
Speaker 3: businesses and households do retrench and do some saving. And
Speaker 3: I'm going off of a belief that the FED is
Speaker 3: talking tough now, but when unemployment goes up, they're going
Speaker 3: to step in and bring down rate a lot. And
Speaker 3: I think three percent isn't the floor of where they're going.
Speaker 3: I think that could be the ceiling. We'll see what
Speaker 3: other policy responses there are.
Speaker 6: Bob, it's going to see. As always, thanks for doing
Speaker 6: this again. I appreciate your time. Thank you, Bob. Michael
Speaker 6: a JP Morgan. Asset management language is important, Bob said,
Speaker 6: when when unemployment goes up and there's a failing gets
Speaker 6: when and not if at the moment.
Speaker 5: If it goes up though later in the year, does
Speaker 5: the FED have the air cover to respond to quote
Speaker 5: Mohammad al Arian. But this is the feeling right now,
Speaker 5: consensus across the street as they ratchet down their expectations.
Speaker 6: See it's morrow morning.
Speaker 7: I guess again, this is going to be great.
Speaker 5: We'll sleep on the under the table. Look, ultimately, this
Speaker 5: is going to be a tumultuous period.
Speaker 7: People are exhausted.