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Speaker 2: Steve chivone with us with federated Aaron as thrilled he
Speaker 2: could be with this. You were just down in San Diego, Steve,
Speaker 2: talking to people trying to make decisions on asset alloccasion.
Speaker 3: How miserable are people.
Speaker 4: Worried? You know, I think you've got and Frank, I
Speaker 4: don't mean to be callous about it, but it makes
Speaker 4: me like the market set up better today, ironic, given
Speaker 4: the newsflow we just heard that than where we were
Speaker 4: last November. The expectations set last November was unfulfillable. Where today,
Speaker 4: you know, we've got a healthy wall of worry around
Speaker 4: resurgent inflation, hawkish fed tariffs policy, and I think that
Speaker 4: that wall of worry is going to get knocked down
Speaker 4: or taken down brick by brick as we get in
Speaker 4: the second half of the year. So more pain to come,
Speaker 4: but we see a much much better second.
Speaker 2: Half Tursan Slack moments ago with Apollo just put out
Speaker 2: the states affected by terrorists. It's the usual victims of Michigan, Texas.
Speaker 2: I feature Nebraska is today, Indiana, Kentucky is MAG seven,
Speaker 2: Steve chiveron as the technology excellence of growthy federated or
Speaker 2: MEZ is it affected by tariffs.
Speaker 4: It's not necessarily affected by tariffs in an extraordinary way.
Speaker 4: I mean, there is certainly some effects that relates to
Speaker 4: chips and things of that nature. But if you think
Speaker 4: about it, if you were going to retaliate against the
Speaker 4: United States, you really can't do it in a general
Speaker 4: economic sense. Right if you're Canada or Mexico, where exports
Speaker 4: represent twenty five or a third of your GDP and
Speaker 4: the US those imports maybe three or four percent, you're
Speaker 4: not winning that battle. Your only leverage if you are
Speaker 4: a foreign country trying to retaliate against the United States
Speaker 4: is to try to go after the MAG seven where
Speaker 4: fifty percent of the revenue for some of those names
Speaker 4: are overseas, and so I think they are the obvious
Speaker 4: retaliation target if we're going to go down that route.
Speaker 5: Steve, what are we doing with asset allocation these days?
Speaker 5: That we sit back and we had such outperformance by
Speaker 5: the equity markets in twenty three and twenty four. What
Speaker 5: are we doing with asset allocation these days?
Speaker 4: Yeah. Look, I think what we're in is a fog
Speaker 4: of uncertainty, which is what we're calling it, and it's
Speaker 4: an economic slowdown in this first part of the year. However,
Speaker 4: I think inflation concerns are overblown, particularly because the risks
Speaker 4: to growth I think are greater than the risks to inflation.
Speaker 4: I really don't care what Chairman Powell has to say.
Speaker 4: This FED is cutting and I think they may be
Speaker 4: cutting by the middle of the year. I think tariffs,
Speaker 4: for all of the concern Paul, we are going to
Speaker 4: end up essentially with the United States instituting a tariff
Speaker 4: level equal to the world's vats. I think trade barriers
Speaker 4: are going to come down with resident from the tariffs,
Speaker 4: and you're going to see US barriers get up to
Speaker 4: about the level of a VAT. That's not the end
Speaker 4: of the world. You're going to get to a tax
Speaker 4: top package somewhere between Memorial Day and the fourth of July.
Speaker 4: And I think in the back half of the year
Speaker 4: you're going to see cyclicals small caps and the short
Speaker 4: end of the curb rally. I'm not smart enough, clever enough,
Speaker 4: or quick enough to try to get defensive today and
Speaker 4: get bullish tomorrow. We're going to invest for that better
Speaker 4: second half.
Speaker 2: Stay Chiver on one final questionnaire. I think it's really
Speaker 2: really important. The conservative client, they got a retirement plan,
Speaker 2: They're like swingey, it's a five oh one. K the
Speaker 2: things on steroids?
Speaker 3: Do they do something?
Speaker 4: Here?
Speaker 3: I got to do something. I just the newsflow. I
Speaker 3: can't take it. Lisa Matale gave me my first gray hair.
Speaker 3: What do I do? I mean, what's the to do
Speaker 3: list for you? Infederated here?
Speaker 4: I think for a conservative client, one of the best
Speaker 4: things you can do is put together a portfolio that
Speaker 4: generates income. You know, in my household, once a quarter,
Speaker 4: you know, we get our dividend payment on stock that
Speaker 4: we have, and we call it dividend Day. It's one
Speaker 4: of the happiest days of the year for my wife
Speaker 4: four times a year because that money comes in and
Speaker 4: we're not worried about a share price, right, We're not
Speaker 4: worried about a stock being up or down. We know
Speaker 4: that the investments that we hold generate an income, and
Speaker 4: I think for clients that are conservative or tending to
Speaker 4: get skittish, having a portfolio that produces an income that
Speaker 4: helps you to stay calm because you know that check
Speaker 4: is coming in and not overreact to share price movements,
Speaker 4: helps you stay invested, helps you stay long, and helps
Speaker 4: you not overreact to some of the noise that you're
Speaker 4: seeing in the political news flow right now. And I
Speaker 4: think that's the best thing you can do. You don't
Speaker 4: want to overreact.
Speaker 2: Okay, Steve Schiveron, thank you so much for the guidance.
Speaker 2: Cerre and folks, this is a huge issue. Will be
Speaker 2: covering us of course, and really into March. You know,
Speaker 2: get the jobs report coming up, Paul, But I'm sorry.
Speaker 3: S a location. What do we do? Some people say,
Speaker 3: do nothing. You know, we'll have to see.
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Speaker 3: This is joy. I had absolutely nothing to do with this.
Speaker 2: I think Eric and the interns figured this out and
Speaker 2: I just want to take a moment here. People on
Speaker 2: the East coast have absolutely no clue the academic heritage
Speaker 2: of far western Canada, including the University of British Columbia.
Speaker 3: It is I learned this years ago. It is just wacko.
Speaker 2: How good the economics is. She's out of that combine, Catherine.
Speaker 2: These joins US now with pigium as well, like econometrics
Speaker 2: in aid economics. It was like absolutely definitive in my ute.
Speaker 2: Continent of Europe is what you focus on?
Speaker 3: Is it blowing up?
Speaker 2: This morning I saw Italian German spreads really didn't move.
Speaker 2: It's a one off lift.
Speaker 3: Isn't it.
Speaker 6: Yes.
Speaker 7: I think what we're seeing is in some ways a
Speaker 7: quote unquote you know, good move in an orderly move
Speaker 7: asset prices. I think markets are taking this very positively.
Speaker 7: It is you know, I see it as a third
Speaker 7: in a row of droggies, whatever it takes of the
Speaker 7: next generation.
Speaker 6: EU announcement in July twenty twenty, this is big. This
Speaker 6: is huge.
Speaker 8: This.
Speaker 7: When I first heard these numbers, I was like, this
Speaker 7: is a go big or go home number.
Speaker 3: This is a huge deal.
Speaker 2: Like you and I studied Duley Garber Folkards Lando, David
Speaker 2: Fokertslando at jointsche Bank years ago, like the deve Putin invaded.
Speaker 2: Paul Focarts Lando told me the fiscal sphere, the space
Speaker 2: in Europe will never be the same culturally. Are the
Speaker 2: institutions there, BMP, PERRYBA, this the entire structure of Europe.
Speaker 3: Are they ready for this non austerity?
Speaker 6: This is a great question. I mean, it is a
Speaker 6: big move.
Speaker 7: But one argument that I've made a long time in Europe,
Speaker 7: We're so used to having this narrative following the sovereign
Speaker 7: debt crisis, that debt is a problem in Europe. We
Speaker 7: think about Italy more recently, we think about France. But
Speaker 7: if we look at the EU as a whole, or
Speaker 7: even just the euro Area as a whole, debt to
Speaker 7: GDP is very, very low. It's much much lower than
Speaker 7: any other comparable economic region, either in size or level
Speaker 7: of development. It's at the EU level. It's eighty percent
Speaker 7: relative to GDP, so it's.
Speaker 6: Way way lower.
Speaker 7: They have loads of fiscal space. The issue for Europe
Speaker 7: is not the lack of money. The issue in Europe
Speaker 7: is not the lack of general consensus about how these
Speaker 7: funds should be spent. The problem in Europe is there
Speaker 7: is no fiscal mechanism in place to allow this spending
Speaker 7: to happen. So what is so important about this signal
Speaker 7: that we're seeing from Germany is not just the size,
Speaker 7: but what it means for Europe working together, having leadership
Speaker 7: in its largest, most economically important economy.
Speaker 6: In terms of going forward.
Speaker 7: And I think everything else, you know, provided this is
Speaker 7: planned and executed, you know properly, there are there are
Speaker 7: risks clearly around doing big stuff. I think everything else
Speaker 7: is going to fall into line.
Speaker 5: That answer just doubled my knowledge of what's going on.
Speaker 3: Oh this is much.
Speaker 2: I want you to jump in here, but I said
Speaker 2: it with leguard at Jackson Hall. Sure, people called me
Speaker 2: up and said this is a huge speech.
Speaker 3: What Catherine is that Your phone is my fault? Now
Speaker 3: hold on, let me see. Oh it's it's Air France.
Speaker 8: Available.
Speaker 3: I never this is the first time that's happened. It's
Speaker 3: your fault. What card is fired up? Oh that's we're doing.
Speaker 3: Paul saved me. But the guards fired up about that's amazing.
Speaker 5: And Catherine in your notes here, I love this. The
Speaker 5: German spending plan is a game changer, a fiscal bazooko.
Speaker 5: Earlier expectations of a two hundred million dollar defense bill
Speaker 5: were completely surpassed. So just putting in the context a
Speaker 5: huge announcement by Germany as it relates to spending, will
Speaker 5: the rest of Europe?
Speaker 9: Will they follow? And they follow?
Speaker 7: I think they're going to have to follow. I think
Speaker 7: it's going to be a multi pronged approach. We're going to,
Speaker 7: you know, get some announcements today. What I would say
Speaker 7: is a lot of these announcements coming today are.
Speaker 6: You know, these are quote unquote easy.
Speaker 7: They are politically easy, they are financially easy for them
Speaker 7: to agree. It doesn't require, for example, unanimity at the
Speaker 7: EU level.
Speaker 6: These there are.
Speaker 7: Announcements that I'm expecting today that are more in the
Speaker 7: incrementalism bucket. So if we want to see another big
Speaker 7: substantive move from here, I think what I would be
Speaker 7: looking at is one we need a signal that the EU,
Speaker 7: not Europe, but the EU is actually politically aligned and
Speaker 7: moving forward. That doesn't necessarily mean they've got to agree eurobonds,
Speaker 7: but I want to see them smash some old chestnuts
Speaker 7: here along the lines of banking union, along the lines
Speaker 7: of capital markets union, because no matter how much public
Speaker 7: money they throw at this is never going to be enough.
Speaker 7: You need private money and you need the signal the
Speaker 7: politically they're working together.
Speaker 2: I got eight questions, including how she fixes the Toronto
Speaker 2: maple leafs.
Speaker 3: Cather Nize. This is brilliant, and what I think.
Speaker 2: We need to focus on in the time we've got
Speaker 2: left is what's it mean for Americans? Because the risk
Speaker 2: here is they're eighty percent GDP? Are they going to
Speaker 2: become like us with the out of control debt and deficit?
Speaker 2: I mean, is that the fear, the pushback that Europe's
Speaker 2: going to see?
Speaker 7: That risk is always there, but there are mechanisms in place.
Speaker 7: We have these new fiscal rules at the EU level.
Speaker 7: Some people say, you know, they're not really very very stringent,
Speaker 7: but I mean think the proof is in the pudding.
Speaker 7: I mean they have been pretty effective if absolute debt
Speaker 7: to GDP is only eighty percent, So you know, my
Speaker 7: guess is they are going to handle this in a
Speaker 7: way that is constrained.
Speaker 2: Here's the guard when I was with her in Jackson Hall,
Speaker 2: this is Maynard Keynes quote. The difficulty lies not in
Speaker 2: the new ideas but escaping from the old ones. Brilliant
Speaker 2: to Paul's good question is Finland ready to escape the
Speaker 2: old ideas and become like America with a pop phenomenal
Speaker 2: GDP and all the other things.
Speaker 6: I think Europe is ready to move forward.
Speaker 7: I saw, you know, excerbs from the Munich Security conference.
Speaker 7: You know, we saw White House press conferences. I think
Speaker 7: from the perspective of Europe, this was a game changer
Speaker 7: for them.
Speaker 6: This really shifted.
Speaker 7: Going back to these German numbers. Going into the weekend,
Speaker 7: the numbers were two hundred billion for a defense fund.
Speaker 7: Only then on Monday we heard four hundred billion for
Speaker 7: a defense fund and four hundred billion for infrastructure.
Speaker 6: Then we heard five hundred million for each of those.
Speaker 6: So we grew literally in a matter of.
Speaker 2: Days, across the nation, around the world, and particularly to
Speaker 2: those of you in the continent of Europe. Katheransu us
Speaker 2: with PGM. Here a brilliant conversation. This is what surveillance
Speaker 2: is about. We welcome you on your commute across America,
Speaker 2: and of course we say good morning on YouTube. Subscribe
Speaker 2: to Bloomberg Podcast. Growing each and every day, Paul, this
Speaker 2: is I mean, this is thirty years Paul. This is
Speaker 2: a new con with doctor Nase.
Speaker 5: And Catherine talk to us about just the political support,
Speaker 5: the popular support. Isn'tre that support out there across Europe
Speaker 5: for this new way of thinking about spending and maybe
Speaker 5: having to take a bigger role in defending themselves and
Speaker 5: what that costs.
Speaker 7: Well, I think it tells you a lot, you know,
Speaker 7: about where we find ourselves.
Speaker 9: Now.
Speaker 6: If you said we need.
Speaker 7: To increase this defense spending with one for one cuts
Speaker 7: in the social safety network, I think you're going to
Speaker 7: come up against a lot of resistance, which is why
Speaker 7: we've ended up where we are, where the easiest flex
Speaker 7: point has been increasing debt and doing this through debt financing,
Speaker 7: because there is that resistance. But I think the reality
Speaker 7: is is that over the course of time, slowly some
Speaker 7: of this social welfare network is going to need to
Speaker 7: be rained in. And it comes by to your point
Speaker 7: about debt sustainability. So you know, for now this is
Speaker 7: this extra you know, slodge of money over and above,
Speaker 7: but ultimately is going to have to come at the
Speaker 7: offset of something.
Speaker 2: The ambiguity here and this goes back to Stigler's posts,
Speaker 2: not as Nobel Prize, but Stigler's looking at the little
Speaker 2: g the growth rate here, the American bargain has always
Speaker 2: been we will grow our way out of our debt.
Speaker 2: Do you see a new nominal GDP, whatever the mix
Speaker 2: of it is in Europe where they become more like
Speaker 2: America and they get the little g to cover for
Speaker 2: the debt expansion.
Speaker 7: I absolutely think that this is possible. And why do
Speaker 7: I think that? Firstly, you know, demographics is not destiny.
Speaker 7: If I look at what's going on in Japan. I mean,
Speaker 7: it's remarkable Japan grew faster in the fourth quarter of
Speaker 7: last year than the United States. This is a country
Speaker 7: that's facing a significantly, you know, dramatic and dramatically different
Speaker 7: demographic headwin than the United States. And it's because they
Speaker 7: took a very long term strategic view.
Speaker 6: And they have invested.
Speaker 7: They've increased labor market participation, they've improved productivity, and so
Speaker 7: you can get growth. We're also seeing early signs in
Speaker 7: that the European periphery, on the back of these next
Speaker 7: generation EU investments, that potential growth is starting to pick up.
Speaker 7: You know, we're not talking anything huge, but you know,
Speaker 7: a tenth a couple tenths is actually nothing to sneeze
Speaker 7: at if you accumulate that over many, many years. So
Speaker 7: I don't see any reason why Europe cannot grow. Germany
Speaker 7: did actually grow on average by two percent GDP real
Speaker 7: on average every year in the decade before the financial crisis.
Speaker 7: Now they haven't grown it all since twenty nineteen. That's
Speaker 7: not normal. That's not normal. So I think there is
Speaker 7: absolutely scope for them to do.
Speaker 3: We'll get a few more in here.
Speaker 2: We've got someone who's slummed in from Germany we've got
Speaker 2: to talk to exactly.
Speaker 5: So in terms of Germany, a market viewing Germany and
Speaker 5: broader Europe now, is this increased acceptance of higher spending.
Speaker 5: Is it seen as pro growth? Does it raise inflation concerns?
Speaker 5: What are the markets telling us here?
Speaker 7: I think the market for now is working on the
Speaker 7: assumption that this is a positive for growth.
Speaker 3: I looked at a lot of.
Speaker 2: Charts today and the yield move is contained. Yes, cultural
Speaker 2: this is critical for PJUM. If if Greg Peters was here,
Speaker 2: this is the question you'd ask you the is the
Speaker 2: institutional integrity there to sustain European business so they don't
Speaker 2: disinvest or halt investment.
Speaker 7: Well, this is why I think. In addition to this,
Speaker 7: you know, big fiscal Bazooka. I want to see a
Speaker 7: strong signal from the EU level that leaders there are
Speaker 7: working in unison, that they're willing to take hard political
Speaker 7: decisions that you know, are going to go against some
Speaker 7: vested interest to move forward. I want to see that signal.
Speaker 7: We haven't seen it yet. What we're going to hear
Speaker 7: today is not that signal.
Speaker 6: It needs to be more.
Speaker 2: ECB just out of the headlines, the European Central Bank
Speaker 2: says rates are becoming meaningfully less restrictive. Is that a
Speaker 2: societal less restrictive or is that a growthiness imploding?
Speaker 7: So uh, you know you asked the great question before,
Speaker 7: what is it?
Speaker 6: What does it mean for the ECB? This is a
Speaker 6: complete flip.
Speaker 7: For so long in Europe it was really monetary policy
Speaker 7: that was leading and fiscal was lagging. And now fiscal
Speaker 7: is firmly in the driving seat, and the ECB is
Speaker 7: going to have to adjust to that.
Speaker 6: I think at the margin.
Speaker 7: Here it's going to raise there or at least put
Speaker 7: them at the top end of neutral. So yes, I
Speaker 7: was expecting this cut today. I think they probably will
Speaker 7: cut one more time, maybe later this year, but that
Speaker 7: they sit at that top end of neutral of two
Speaker 7: point two five percent by the end of this year,
Speaker 7: so they are going to be more cautious, and of
Speaker 7: course they need to see what this all means for
Speaker 7: the real economy, and it will take time. Right, this
Speaker 7: stuff's not shovel ready. It's not going to impact on
Speaker 7: GDP on day one.
Speaker 2: This is one of Alketzani's from London, visiting today with
Speaker 2: Pgium Fixed Income.
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Speaker 2: I'm cut to the chase at Latour de Jent this
Speaker 2: afternoon at lunch in Paris, overlooking the brand spankin New
Speaker 2: Notre Dame. You're going to have a fancy lunch with
Speaker 2: seasonal duckling on we go to the Crape Mademoiselle. What
Speaker 2: are the fancy people of Europe think of this world
Speaker 2: turned upside down?
Speaker 10: How well had differently? There is a lot on the plate,
Speaker 10: and what we see is on one side, some countries
Speaker 10: that have the FISCUS place to googleld notably polland Germany.
Speaker 10: Some other said that not so. Macron probably now is
Speaker 10: taking the lead. And this is something that honestly it
Speaker 10: was back at twenty seventeen when it said we really
Speaker 10: need in Europe to speed up and get some defense spending.
Speaker 10: So probably it's going to lead the queue and we
Speaker 10: will get there. I don't know how much and how fast,
Speaker 10: but this is the final destination.
Speaker 5: I mean, this is a c change for yes, both
Speaker 5: the US and Europe broader to find if there's going
Speaker 5: to be a lesser role in the US across Europe,
Speaker 5: that means obviously the European countries need to step up more.
Speaker 5: Seen at the EU today, What does that mean for
Speaker 5: investing house That impact your investment outlook as you think
Speaker 5: about allocating capital across the globe.
Speaker 10: Well, the big question is how this is going to
Speaker 10: be financed and how this well have an impact on
Speaker 10: growth because it is a structural it is a permanent
Speaker 10: increase in expenses. And this is why I believe we
Speaker 10: are seeing the bound going to the GUIs this is
Speaker 10: what worries us at the moment. So I would say
Speaker 10: that for the time being, nothing has been approved from
Speaker 10: the Parliament in Germany. So the situation still remains quite
Speaker 10: quite fluid. So we take called staying cautious on the
Speaker 10: risks set.
Speaker 2: If you were at the guard press conference, one question
Speaker 2: would you ask the.
Speaker 10: ECB quantitative titaning? What are you going to do on that?
Speaker 10: Because on cutting rates this is something that was a
Speaker 10: consensus view.
Speaker 3: But news I.
Speaker 2: Find this absolutely extraordinary. How should the United States respond?
Speaker 2: This is all of a sudden, Europe are destiny nation
Speaker 2: for marginal investment? I mean a Monday, What do you
Speaker 2: tell American clients today of the action of the White
Speaker 2: House has changed this whole dialogue.
Speaker 10: Well, to us, it really goes back to the consequence
Speaker 10: on the other classes, so on rates, on the currency,
Speaker 10: so on the US dollar. Honestly, we are shorter the
Speaker 10: US dollar longer Europe because we do expect the US
Speaker 10: dollar to progressively depreciate. In the past, it was because
Speaker 10: of the FED. We thought that the FED action and
Speaker 10: the asynchrony between FED and the ECB would have led
Speaker 10: to depreciating currency. But this is what I think the
Speaker 10: US administration wants. They want a weaker a US dollar.
Speaker 5: Yeah, just looking at the German ten year boomed. Just
Speaker 5: you know since February twenty eighth, when was it two
Speaker 5: point four percent. We're now our two point eighty six percent,
Speaker 5: So big, big move up in German yields. Is the
Speaker 5: expectation within with you and your clients, UH and investors
Speaker 5: in Europe that this backing away from monsterity is a
Speaker 5: good thing for the European economy.
Speaker 10: It is as long as the increase in the death
Speaker 10: spending goes into improving growth. So we are talking about
Speaker 10: a country that has a sixty percent that to GDP ratio,
Speaker 10: which is honestly, it's not issues Germany. This is Germany.
Speaker 3: You are well over one hundred.
Speaker 10: I'm talking about Germany. So if spending on infrastructure this
Speaker 10: is going to be growth constructive. On military expenses, that
Speaker 10: multiplier might be a little bit low lower.
Speaker 2: So I got to get to say, we're going to
Speaker 2: go to the news here in the United States Monica.
Speaker 2: But I think this is just so question is so important.
Speaker 2: So Spain expands their debt, Germany expands their dead, which
Speaker 2: is like Mississippi expanding its dead in Michigan. To the
Speaker 2: Guard's point, where is the fiscal union they will affect
Speaker 2: this efficiently.
Speaker 3: I don't see it. Well.
Speaker 10: What we need to understand is how the framework will
Speaker 10: be fully deployed, because if it goes down to the nations,
Speaker 10: so this is where the issue will be. And not
Speaker 10: all the countries will spend at the same size at
Speaker 10: the same time, just because they have different needs. So
Speaker 10: the issue might be eventually to have an umbalanced Europe
Speaker 10: with some countries that have been spending more Poland, Germany
Speaker 10: and some that have less room.
Speaker 6: Let's see what the commissioners.
Speaker 10: Today will vote on the escape rule, just to allow
Speaker 10: some more spaces to the countries, to the state members.
Speaker 2: So if we ever do a remote tour Dejan right
Speaker 2: there on the front and overlooking the river, can you.
Speaker 3: Join us there?
Speaker 2: Sure there are It would be like lunchtime.
Speaker 3: Yanks, Harris. We could do lunch, you.
Speaker 2: Know, we'll do the deck of the Hausler and then
Speaker 2: we'll do.
Speaker 3: Lisa. It's perfect mound of defect travel guide for Europe.
Speaker 3: Thank you so much. Head of a Monday investment at Racist.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android Auto.
Speaker 4: With the Bloomberg Business.
Speaker 1: App, you can also watch us live every weekday on
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Speaker 3: Now a four hour conversation with Henrietta Trey.
Speaker 2: She's been so kind to be with us on like
Speaker 2: a three day basis here with BEDA partners. Henriette, I
Speaker 2: actually do have a countdown clock going for the first time.
Speaker 3: We're eight days away from March fourteenth. Within the halls.
Speaker 2: Of Congress, Democrats and Republicans buffeted by the company of News.
Speaker 2: What's the path you see to I believe it's March
Speaker 2: fourteenth at midnight.
Speaker 11: It is March fourteenth at midnight, but on the House
Speaker 11: side it's really March twelfth, because they are going on
Speaker 11: recess on that day.
Speaker 8: So what it looks to me like is.
Speaker 11: The House Republican Conference and the Senate Republicans are really
Speaker 11: trying to jam Democrats here by putting a bill out
Speaker 11: at the last minute that they will not support on
Speaker 11: the House side, but then Senate Democrats will be forced
Speaker 11: to support and vote for sometime midweek next week, around
Speaker 11: the eleventh or twelfth, So they're really cutting it down
Speaker 11: to the wire. And we've increased our odds from twenty
Speaker 11: percent to twenty five percent that we might see a
Speaker 11: shut down next week as a result.
Speaker 2: Okay, so they shut down, and let's say since sir
Speaker 2: on recess, they shut down for Friday, Saturday, Sunday, OMG,
Speaker 2: Monday morning they reopen.
Speaker 3: Is that the scenario here, Innrietta?
Speaker 11: Nope, They're also on re us the next week, so
Speaker 11: it would be a shutdown of you know, at a minimum.
Speaker 2: Does an adult in the room say hey, everybody on
Speaker 2: recess and get back to work?
Speaker 3: Does that? Has that ever happened?
Speaker 11: I'm sure it has happened in history, but it's not
Speaker 11: something that usually does occur. That's sort of why my
Speaker 11: odds are relatively low that we see a shutdown is
Speaker 11: because they usually develop a last minute solution. But as
Speaker 11: for strategy, right now, Republicans are not in the room
Speaker 11: with Democrats. They're in the room with themselves trying to
Speaker 11: jam Democrats. And that's going to come into a math
Speaker 11: problem when we get over the Senate and they need
Speaker 11: seven Democratic votes to keep the government open.
Speaker 8: So it's sort of the run up to the eleventh hour.
Speaker 5: Right now, what have we heard from the White House
Speaker 5: in this whole process?
Speaker 3: Here?
Speaker 11: The White House, and by that I mean Elon Musk,
Speaker 11: who was with House Republicans yesterday and really trying to
Speaker 11: figure out how to get the DOGE cuts implemented into
Speaker 11: any kind of a permanency. You know, we're seeing cuts
Speaker 11: across all kinds of agencies. Trump is planning to announce
Speaker 11: who's shuttering the Department of Education later on today, as
Speaker 11: I think y'all reported, you know, they're they're working just
Speaker 11: with Republicans and really enjoying this situation where Democrats are
Speaker 11: just being whipsawed back and forth with no clear direction
Speaker 11: on how to combat them.
Speaker 5: So talk to us about you've mentioned in the past, Henrietta,
Speaker 5: about the Democrats in this budget process may be the
Speaker 5: time when they can actually step up and be heard
Speaker 5: here because it seems like President Trump and to a
Speaker 5: lesser extent, Elon must take all the oxygen out of
Speaker 5: the room. Is this an opportunity for the Democrats to
Speaker 5: step up and assert some leadership or at least their position.
Speaker 11: It's definitely an opportunity, but as yet they do not
Speaker 11: have a clear and unified path forward. So right now
Speaker 11: their ire is all focused on DOGE, and it seems
Speaker 11: like the main concessions they're asking for is cuts to Doge.
Speaker 11: But as we saw in the week of the State
Speaker 11: of the Union address earlier this week, the Republican voter
Speaker 11: base really supports the idea of dog even if they
Speaker 11: don't support the actual cuts that are coming. So Democrats
Speaker 11: are having a hard time coalescing around how exactly to
Speaker 11: ran doje in and get the voters behind it. They
Speaker 11: don't like the cuts, but they haven't identified, you know,
Speaker 11: a clear flag that they can weave that can get
Speaker 11: Trump to move off in this position.
Speaker 2: And all you're Henrietta Tray's brilliance. I mean, you said,
Speaker 2: I believe the Senate seven Democrats have to vote with
Speaker 2: the Republicans.
Speaker 3: Is that what you said?
Speaker 2: Yep?
Speaker 8: But this has to get sixty votes in the Senate side.
Speaker 2: Yes, why would any Democrat now vote with the Republicans?
Speaker 8: I completely agree with that assessment.
Speaker 11: The question is whether they can stomach shutting the government
Speaker 11: down and the way that Trump is going into this.
Speaker 2: But to be cynical about it, isn't that what sixteen
Speaker 2: hundred Pennsylvania Avenue ultimately.
Speaker 8: Would like exactly?
Speaker 11: And so this is sort of plying right into Trump's hand,
Speaker 11: and Democrats threat is to say, if you don't negotiate
Speaker 11: with us, we will shut it down.
Speaker 8: And Trump's effectively saying and so I don't care.
Speaker 3: Jeez, that's how that's where we are.
Speaker 5: Hey, let's just switch gears a little bit, Henrietta Beda Partners.
Speaker 5: You guys have any tariff odds tractor A?
Speaker 9: What is it?
Speaker 3: And B?
Speaker 5: What's it telling me of these days?
Speaker 8: Oh? Sure?
Speaker 11: You know, our clients are all hedge funds and they
Speaker 11: want the you know, quick and dirty of how things
Speaker 11: are working and what we're expecting. Everybody's just trying to
Speaker 11: wrap their arms around the realm of the possible. And
Speaker 11: so when we put our odds tracker out, we cover
Speaker 11: a whole host of different components. Odds of tariffs on China,
Speaker 11: you know, virtually one hundred percent. Obviously those are going
Speaker 11: into effect. We're at twenty percent now. Odds on Canada
Speaker 11: VERSUS Mexico are slightly lower. I think the odds of
Speaker 11: EU auto tariffs have been and continue to be very high,
Speaker 11: and I want that to be really clear cut every
Speaker 11: time we talk to clients. You know, EU auto tariffs
Speaker 11: I think are coming. There's a per catalyst for that.
Speaker 11: On April first, the March thirty first deal that Ambassador
Speaker 11: Tie negotiated with the EU, and the under the Biden
Speaker 11: administration expires on March thirty first, So April first is
Speaker 11: the date that Trump used in his America First trade agenda,
Speaker 11: and it's not coincidental, it's exactly in line with the
Speaker 11: expiration there. So our hotstracker really just tries to get
Speaker 11: to the heart of the matter. Tariffs are coming. They
Speaker 11: are in place. There might be some staggered effects, but
Speaker 11: they are coming.
Speaker 3: Henrietta, thank you so much.
Speaker 2: Just Treasure the frequent visit tendri outa Trey's expert on
Speaker 2: all this with ATA partners.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
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Speaker 1: watch us live on YouTube.
Speaker 2: The newspapers, the headlines, she reads twenty of them. To
Speaker 2: get ready for this, Lisa Mintaio joins us.
Speaker 3: What do you have this one?
Speaker 11: All right?
Speaker 9: We'll starting with the Wall Street Journal because it has
Speaker 9: a look into how more Americans are relying on their
Speaker 9: four to one k as like this Rainy Day fund,
Speaker 9: and they're using it to avoid things like big things foreclosure,
Speaker 9: to pay medical bills. This was according to Vanguard. So
Speaker 9: the number is four point eight percent of account holders
Speaker 9: took early withdrawals last year just for those reasons. So
Speaker 9: it was a record high. But they say why it's
Speaker 9: happening more is because more employers are automatically enrolling their workers,
Speaker 9: and some of them, I mean have little savings to
Speaker 9: begin with. So now part of their paycheck is going
Speaker 9: into this other savings and now they need to use
Speaker 9: that to help pay for these like other things.
Speaker 2: A high ground on this. He and I have argued
Speaker 2: about it. I'm pretty firm here and there should be
Speaker 2: no withdrawals. It's it's a sireene call. Everybody does it
Speaker 2: and it makes no sense in terms of the actual
Speaker 2: assumption and the failure of our retirement SYS.
Speaker 3: What do you think?
Speaker 9: But then where do you go?
Speaker 5: Yeah, I mean I don't know. I mean it's it's
Speaker 5: it's you have to do for one K because there's
Speaker 5: no such intension anymore. So all the swinging offspring works,
Speaker 5: they're putting their max into four and just having to
Speaker 5: deal with it.
Speaker 3: In the mat. At least folks get the map.
Speaker 2: But Lisa it's a huge deal for the contribution.
Speaker 9: It is because people are a strapped for cash and
Speaker 9: if you want to do something buy a home, you
Speaker 9: need something, like you really want to do it, you
Speaker 9: don't have the money. So where are you going to go?
Speaker 9: You go where you actually do have it, and you
Speaker 9: were tired.
Speaker 3: People are living longer.
Speaker 2: Yeah, Boston College has great work on this. There's a
Speaker 2: tip point forty two years old. Yeah, after forty two
Speaker 2: years old, people are like, oh, I'm getting older, Lisa,
Speaker 2: you wouldn't understand this. But those under forty two like
Speaker 2: you are just like, I don't care. I'll take a
Speaker 2: loan out. Nobody cares.
Speaker 9: Next, Okay, this one, okay, I'm fine.
Speaker 3: I go before I get a gluten free coffee. Don't
Speaker 3: it thrown at me?
Speaker 9: Yes, thank you. I'm a little biased on this next one.
Speaker 9: So Duayne the Rock Johnson is back on top as
Speaker 9: Hollywood's highest paid actor. Okay, get this twenty twenty four
Speaker 9: eighty eight million dollars. This was in boardroom. If you
Speaker 9: go on their Instagram page, it's all rotten down. So
Speaker 9: why Okay, he pulled in fifty million from Red One.
Speaker 9: Red One.
Speaker 3: Watched the Mississippi.
Speaker 5: He's a voice actor.
Speaker 3: It's a voice thing.
Speaker 9: No, that was a lot like he was actually an
Speaker 9: actor for that. That was for the Red One. So
Speaker 9: it was like the biggest fee plus by ideal streaming history. Okay,
Speaker 9: so put it there. Then we get to Mwana I.
Speaker 9: I mean that's where the big money was too. It
Speaker 9: switched from the TV series theatrical. He got a big
Speaker 9: cut of the box office as an executive producer and
Speaker 9: that doesn't really happen. So that's how it came down
Speaker 9: to a two money.
Speaker 5: He past one billion dollars. Oh yeah, you saw that coming.
Speaker 9: Most definitely he can buy me like fifty. And finally,
Speaker 9: this one, I'm pulling an audible audible, I'm moving this
Speaker 9: one up for you. Tom the CEO of Air France.
Speaker 9: He sat down with the Financial Times right and he
Speaker 9: said that they are banking on wealthy American tourists who
Speaker 9: spend on fashion brands hotels in Paris to help them
Speaker 9: recover from this tough year. Okay. He said they're shifting
Speaker 9: their business model to focus on this premium and market.
Speaker 9: So he gave an example. He said some Americans are
Speaker 9: paying as much as fifty thousand dollars a night for
Speaker 9: the biggest suite of the Bristol Hotel. Yeah, right there
Speaker 9: you get the If you want the cheaper option, it's
Speaker 9: two thousand a night, Tom, So that's a bargain.
Speaker 2: I just booked the last week of the year two
Speaker 2: weeks ago, and I was lucky.
Speaker 3: I got a run.
Speaker 2: That's how bad it is. Of course, Paul is is
Speaker 2: is this about the European planes, not just near France,
Speaker 2: or is it about how uneven the services on the
Speaker 2: American place?
Speaker 3: Which is I don't have an opinion.
Speaker 9: I don't know, but interesting I think.
Speaker 5: That, you know, the business class over Europe is from
Speaker 5: the American airlines is good. They got the life flat beds.
Speaker 5: Have to get that, a boy, they charged for that.
Speaker 9: Yeah, and what about the airline tickets, because Tom, do
Speaker 9: you know Air Francis they're charging twenty four thousand dollars
Speaker 9: for a return first class ticket between New York and Paris.
Speaker 9: That's in April. Can you believe that?
Speaker 2: Thank you, Lisa Matteo, I hate you, missus the rock
Speaker 2: I mean eighty eight million.
Speaker 5: Sure he can afford it. He's not flying commercial.
Speaker 3: Lisa Matteo, thank you so much.
Speaker 1: On the newspapers, this is the Bloomberg Surveillance podcast, available
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