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

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

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

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

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Speaker 1: us live on YouTube.

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Speaker 2: We're up on CPI. I can think of no major

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Speaker 2: economic report that I've ignored the last number of days

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Speaker 2: like this important inflation study. Greg Bottle of BMP, Perry

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Speaker 2: Bob will be with us. Tiffany Wild will really give

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Speaker 2: us direction her wonderful work at PIMCO. But first, with

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Speaker 2: his incredible schedule, we had to squeeze in your Patrick Armstrong,

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Speaker 2: He's plurring me wealth for years with Templeton in Toronto,

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Speaker 2: which is a magical place for me. Patrick Armstrong in

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Speaker 2: the United Kingdom, thank you so much for joining us today.

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Speaker 2: Are we at a point where the foreigners won't buy

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Speaker 2: American stocks and bonds? Is something radically changed here? I

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Speaker 2: don't you.

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Speaker 3: Say won't, but I do think the winds are pushing

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Speaker 3: against it, and Trump's tariffs are going to carve out

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Speaker 3: some economic winds in the short term because Europe isn't

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Speaker 3: going to respond immediately. To the tariffs that have been

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Speaker 3: put on them. But they it is a risk for

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Speaker 3: the United States that you've got global trade xus and

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Speaker 3: it turns into that kind of thing. And there's going

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Speaker 3: to be really strong rhetoric from the White House because

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Speaker 3: they know that's a real risk that they just get

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Speaker 3: basically disintermediated and their dollar becomes disintermediated. Is the global

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Speaker 3: reserve currency if you push things to extremes. So I

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Speaker 3: do think there's risks for this. I'm confident Trump is

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Speaker 3: going to carve oute some economic wins from this, but

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Speaker 3: I think the consequences maybe far greater, and it may

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Speaker 3: be a sort of backhanded win for Europe and the

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Speaker 3: rest of the world.

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Speaker 2: Even let's get out of the front of Tiffany Wilder.

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Speaker 2: We want to talk to you Patrick. After this inflation report,

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Speaker 2: the Jobs Economy analysis waits for May or June. Does

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Speaker 2: this CPI report a current measure of inflation?

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Speaker 3: Well, it's last month, and we're in a different world,

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Speaker 3: and some months go by and nothing happens. Some days

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Speaker 3: go by, and months and years happen, and that's where

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Speaker 3: it feels like we are right now. The one thing

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Speaker 3: the CPAI may be able to do is it may

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Speaker 3: give Powell an excuse to cut rates. He'll view transitory

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Speaker 3: inflation as transitory, and he does have inflation probably on

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Speaker 3: a downward trend with this print, so it may give

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Speaker 3: him the impetus if he wants to to cut a

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Speaker 3: little bit more aggressively, where his hands may be tied

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Speaker 3: later in the year if we do have stagflationary consequences.

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Speaker 4: Patrick, where are you on the risk profile here? We've

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Speaker 4: had just such a volatile number of days, capped by

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Speaker 4: yesterday's big, big rally, but boy, we had to vix

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Speaker 4: it close to sixty just a couple of days ago.

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Speaker 4: Where are you going to risk profile these days?

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Speaker 3: So I don't think it's a time to be a hero,

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Speaker 3: but it was the time to incrementally increase equities. We

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Speaker 3: decided on Monday, So we had a bad Tuesday when

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Speaker 3: we added it, but had a really nice bounce yesterday.

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Speaker 3: And anytime you're buying equities after a twenty percent sell off,

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Speaker 3: you're skewing the odds to your favor. And what we

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Speaker 3: looked at the VIX when it was at sixty, we said,

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Speaker 3: the only two times it's been like that before was

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Speaker 3: the COVID crash, and the financial crisis and the VIX

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Speaker 3: at sixty on Monday. This was a man made crisis

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Speaker 3: and we knew and about turn could be not the

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Speaker 3: end of the crisis, but really diminished the risks there.

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Speaker 3: And that's why we felt a little bit confident to

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Speaker 3: add risk. We actually started shorting a VIX in our

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Speaker 3: macro fund on Monday with that premise.

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Speaker 2: Patrick Armstrong with us here for one more good question, Patrick,

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Speaker 2: just to cut to the chase. If I see the

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Speaker 2: shock of a negative statistic ONCPI, is that China exporting

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Speaker 2: deflation there?

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Speaker 3: Actually I hadn't thought about it, but for that one

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Speaker 3: month there may have been a big jump in Chinese

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Speaker 3: imports at lower prices. Is China wanted to get them

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Speaker 3: into the US buyers wanted to get them in the

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Speaker 3: head of tariffs, and that may have been a bit

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Speaker 3: of a disinflationary and deflationary impact that's come out of it.

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Speaker 3: Powell's going to treat it how he wants to treat it.

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Speaker 3: It may give him the excuse to cut a little

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Speaker 3: bit more than he would have otherwise. So I think

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Speaker 3: if you are an equity bull, you'll welcome this news.

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Speaker 2: I mean, it's interesting see Patrick, one final question. We

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Speaker 2: can do this, folks when we're coming to your commercial

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Speaker 2: free has ede done at Tottenham? I mean Tottenham is

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Speaker 2: not going to be relegated, but I mean it's pretty ugly.

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Speaker 2: What do you think.

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Speaker 3: I'm a Man United fan and that's the only team

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Speaker 3: that's doing as poorly as we are, so right, yeah,

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Speaker 3: I can't throw stones when I live in a glasshouse.

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Speaker 2: Comfort is Man United and Tottenham go down in flames

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Speaker 2: this year. Patrick Armstrong, thank you so much from London.

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Speaker 2: We'll get him on again for a much longer discussion.

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Speaker 2: Now to the economics of the moment. Greg Bodill, be

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Speaker 2: MP Pariba with it, cinemam of a Tiffany wild of

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Speaker 2: Pimco was a Tiffany month over month? Is that negative statistic?

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Speaker 2: Simply this crazy tariff driven wall of unit import volume.

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Speaker 5: Well, just having a quick look at some of the details,

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Speaker 5: it actually looked like the services side of the goods basket,

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Speaker 5: or of the consumer price basket was was what was

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Speaker 5: weaker in this report. And I think that that just

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Speaker 5: really speaks to the broader uncertainty that we had, you know,

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Speaker 5: even before these latest news. This latest news, So travel

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Speaker 5: services categories hotels, airfares. You know, people are There's been

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Speaker 5: a lot of anecdotal reports about how you know, folks

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Speaker 5: that were thinking about traveling to the United States are

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Speaker 5: canceling those plans.

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Speaker 2: Yeah.

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Speaker 5: So I think it's it's a little bit of a

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Speaker 5: calm before the storm, and you had heighther uncertainty that

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Speaker 5: was reducing demand for services in the US.

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Speaker 2: The tape improves. The VIX was up three big figures

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Speaker 2: now up to thirty five point five to three. The

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Speaker 2: futures of negative seventy seven, they were a negative one

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Speaker 2: hundred here a bit agoes, So a little better tape.

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Speaker 2: Is that because Tiffany this gives talking points or chat

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Speaker 2: for Jerown Powell to ease rates without the pressure from

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Speaker 2: the president.

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Speaker 5: Yeah, well, I mean we still think there will be

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Speaker 5: a price level adjustment that will have to happen. On

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Speaker 5: the good side, you know, there will be some pass

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Speaker 5: through from this, and I think the question is just

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Speaker 5: how big will that be?

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Speaker 6: You know?

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Speaker 5: And then the other question on that is is how

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Speaker 5: much weakness do you see on the services side of

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Speaker 5: the economy as a result of these actions, you know

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Speaker 5: that are impacting the prices of goods and you know,

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Speaker 5: maybe what this CPI suggests is that you will have

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Speaker 5: a weakening economy on the services side that will contain

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Speaker 5: some of this inflationary pressure that obviously will allow the

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Speaker 5: Fed and make it less awkward for the Fed whenever

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Speaker 5: they're cutting interest rates.

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Speaker 4: Tiffany, have you guys over there go taking down your

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Speaker 4: GDP forecast for twenty twenty five.

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Speaker 5: And if so, why we think there's a fifty to

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Speaker 5: fifty chance of recession. You know, and even with this

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Speaker 5: latest reprieve. You know, if you just take a step back,

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Speaker 5: the effective tariff rate in the United States, just assuming

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Speaker 5: that imports stay unchanged, has gone back to levels that

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Speaker 5: we have not seen since the nineteen thirties. And that's

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Speaker 5: even with this ninety day reprieve. So you have a

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Speaker 5: very big tear off shock that is impacting the US economy.

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Speaker 5: And we do think there will be some disruption on that,

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Speaker 5: you know, over the near term, and that will slow

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Speaker 5: growth quite dramatically. And again we think there's kind of

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Speaker 5: a fifty to fifty chance of recession here. We think

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Speaker 5: growth grinds to a halt later this year.

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Speaker 2: One of the great distinction here, folks, and I think

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Speaker 2: in the chaos that we're living. I need to partition this.

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Speaker 2: Tiffany Wilding is with specific investment management company PIMCO, and

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Speaker 2: a responsibility is to a broad asset manager versus a

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Speaker 2: market economists and frankly, derivatives expert like Greg Boudele. So

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Speaker 2: we get two different not views, but two different mandates.

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Speaker 2: Here from BNP Perry Bay with us in a bit,

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Speaker 2: and right now we stay with Tiffany wild Here we

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Speaker 2: welcome all of you across the nation. Frankly, futures worsened

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Speaker 2: out off the joy of twenty of five minutes ago.

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Speaker 2: I got the vix out two point seven seven figures

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Speaker 2: thirty six point thirty nine. Tiffany, if you've seen it,

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Speaker 2: and I don't want you to give away the secrets

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Speaker 2: of PIMCOH But is it sort of steady as she

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Speaker 2: goes as they listen to you, the managers, or is

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Speaker 2: this a time for a radical reset of PIMCO.

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Speaker 5: Well, you know what I think that we have. You know,

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Speaker 5: we have been arguing. I think we've been on the

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Speaker 5: right side of the recent volatility, you know, because we

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Speaker 5: were arguing like late last year that the markets just

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Speaker 5: you know, weren't focused enough on the sort of radical

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Speaker 5: changes that the Trump administration was taught about, you know,

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Speaker 5: and I think that they've been actually quite clear about

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Speaker 5: what they're trying to do. And I think everybody was

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Speaker 5: just focused on various constraints, whether political, economic, or even

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Speaker 5: legal constraints that would maybe impin their ability to implement

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Speaker 5: their policy. But they've just blown through all those constraints

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Speaker 5: and you are seeing the president basically do what he

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Speaker 5: said he would do on the campaign trail. You know,

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Speaker 5: we think the ten percent tariff across the board, you know,

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Speaker 5: that's that's sticking, higher tariffs on China is sticking. I mean,

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Speaker 5: we are you know, they are very effectively trying to

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Speaker 5: decouple the US economy from China. And that's exactly what

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Speaker 5: they said they would do, you know, And so I think,

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Speaker 5: you know, take them literally.

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Speaker 4: So Tiffany, I mean, we report a lot of stuff

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Speaker 4: from China and a big tariff there. What does that

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Speaker 4: mean for inflation for the US?

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Speaker 2: Do you think?

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Speaker 4: Yeah?

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Speaker 5: I mean, we do think there's going to be a

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Speaker 5: big price level adjustment that happens as a result of this,

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Speaker 5: you know. Now, I think from the CPI report this morning,

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Speaker 5: you know, one thing that it does suggest is that

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Speaker 5: even if you're getting getting goods prices that are being

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Speaker 5: set higher as some of the cost at least is

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Speaker 5: passed on to consumers, the services side, you know, might

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Speaker 5: be weakening at the same time offsetting that. So I

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Speaker 5: think it's you know, again, how much price level adjustment

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Speaker 5: we get here? I think is the key question for

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Speaker 5: the next you know, call it six months and in.

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Speaker 2: Folks, unfair question Like if you asked me this question,

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Speaker 2: you saw me, you know, having a beverage of my choice,

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Speaker 2: and you said Tom when I'd say, I don't know.

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Speaker 2: So let's as Tiffany Wilding. When Tiffany Wilding, when does

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Speaker 2: the slow down of tariffs at Walmart, tariffs at Duke's bookstore?

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Speaker 2: When we got to we gotta text, somebody said, stop

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Speaker 2: talking about Duke. We're double in the Duke conversation right

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Speaker 2: now this morning, Tiffany Wilder, When for the consumer, does

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Speaker 2: all this agony click in?

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Speaker 7: Yeah?

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Speaker 5: I mean, you know, I think it's clicking in for

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Speaker 5: businesses already and they're trying to figure out what to do.

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Speaker 5: And I think that you will have, you know, you

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Speaker 5: will have to have businesses that are raising prices at

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Speaker 5: least somewhat. It will be you know, there will be

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Speaker 5: margin compression, there will be and there will be price

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Speaker 5: increases and that will hit the consumer because they will

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Speaker 5: their real incomes will just go down as a result

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Speaker 5: of that. So so I think you will see consumers

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Speaker 5: that are are getting hit from this. You know. The

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Speaker 5: other thing is just it's creating a lot of uncertainty.

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Speaker 5: You know, people could be more fearful of their jobs

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Speaker 5: and things like that, and that could just result in

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Speaker 5: more of a general pullback and consumption as well.

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Speaker 2: Good morning Montreal. Major shout out to Bears and the

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Speaker 2: team at Bank Credit Analyst. It's like ed your Danny CJ.

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Speaker 2: Lawrence with Edheiman years ago. B c A is venerable

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Speaker 2: and Paul they had a chart on labor yesterday yeh

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Speaker 2: out of BCA that was just shocking the rapid deterioration.

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Speaker 2: Tiffany Wild, thank you so much. Great to talk to

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Speaker 2: you on this day of CPI. The tape was a

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Speaker 2: VIX was up three big figures. We had a little

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Speaker 2: bit of a Paul would say, quiescent move here. We've

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Speaker 2: given it back a little bit. The VICS thirty six

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Speaker 2: point four or five future is now back negative one hundred.

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Speaker 2: This is standard in Poores futures negative one hundred. John

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Speaker 2: Farrell tells me the Dow futures negative six oh eight

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Speaker 2: are worth noting as well. Even bitdog down one thousand,

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Speaker 2: down twelve hundred points rather eighty one thousand. There's a

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Speaker 2: little bit of tension here to say the least. We

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Speaker 2: welcome all of you on YouTube worldwide, including in Paris

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Speaker 2: Bloomberg Surveillance. It's brought to you by ibk R. Well

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Speaker 2: the US consumer Sentiment Index. Will it exceed seventy in

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Speaker 2: April twenty twenty five at IBKR forecast Trader that yes,

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Speaker 2: was recently at twenty nine percent. Start predicting today at

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Speaker 2: ibkr dot com slash forecast. Last trading day for this

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Speaker 2: contract May thirteen. Thank you IBKR for your support this.

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Speaker 2: I've really anticipated this because Greg Battle takes equity strategy,

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Speaker 2: folds it into the derivative space, wraps it around a

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Speaker 2: true international view for the bank Pariba is that like

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Speaker 2: the French way to say it, They'll come closer.

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Speaker 8: My French isn't outstanding.

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Speaker 2: If I'm honest, they have the best lunch in Manhattan,

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Speaker 2: is what I know. Please advise us here how you

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Speaker 2: prepare for a Monday research note. A completely unfair question.

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Speaker 2: It could change three times. But how are you framing

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Speaker 2: the tone of your weekend note?

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Speaker 8: Well, I think you have to be prepared to write

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Speaker 8: to it and then rewrite it three times in between

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Speaker 8: now and then. So I think the thing that which

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Speaker 8: one I do is put in context some of the

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Speaker 8: moves around, some of the flows, and then think about

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Speaker 8: some of the headline risks. But then ultimately, how does

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Speaker 8: that translate into what we're going to see over earning season?

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Speaker 2: Okay, earning season, it's tomorrow, right, ye, indeed, come out.

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Speaker 2: We don't have I guess we sort of do on

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Speaker 2: this earning season, but there'll be no guidance.

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Speaker 8: Right, No, So I think like the backwards looking data,

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Speaker 8: whether it's this we've just seen payrolls from last week

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Speaker 8: or the earnings prints themselves, hold little value I.

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Speaker 2: Think at this point.

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Speaker 8: But any qualitative read commentary tone from management is going

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Speaker 8: to be looked at very closely.

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Speaker 4: So what did you see on your trading desk? What

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Speaker 4: did you hear from your clients over the last I

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Speaker 4: don't know twenty four to forty eight hours, because yesterday

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Speaker 4: it was just crazy. The bond market the night before

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Speaker 4: was just incredible.

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Speaker 2: Do you know you can't get hired at BMP Periba

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Speaker 2: unless you know all the Greek letters Gamma, that's what

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Speaker 2: I want, the row derivative, sam, the whole thing.

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Speaker 8: So we think some of those Greek letters were certainly

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Speaker 8: responsible for some of the magnitude of the moves yesterday.

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Speaker 8: So obviously the move itself is triggered by the headline

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Speaker 8: of the tweet, but the magnitude of that move is

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Speaker 8: driven by the fact that we do have a short

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Speaker 8: Gamma complex in the market. What this means is that

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Speaker 8: there's rehadging needs for when the market moved both lower

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Speaker 8: and hyer.

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Speaker 2: I opened the show this morning on this people got

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Speaker 2: to go out and rehatch folks. You and I are

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Speaker 2: not you know, and we're trying to pay the rent.

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Speaker 2: But in the institutional space, people are protecting themselves and

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Speaker 2: now it's so expensive to protect yourself you really can't

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Speaker 2: reheedge Kenya. How you doing that? Well?

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Speaker 8: I do you think there are opportunities to use the

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Speaker 8: optionality complex? We look at the headline levels of the

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Speaker 8: vics and certainly where it peaked and they got incredibly

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Speaker 8: elevated but one anecdote that I would give you, Please,

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Speaker 8: at the close yesterday, you could look at the Nasdaq

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Speaker 8: and the market options implied probability of it getting back

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Speaker 8: down to yesterday's lows by the end of next week

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Speaker 8: was more than a ten to one payout. So I

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Speaker 8: think there are interesting asymmetries that you can find.

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Speaker 4: So where where did you see on your desk yesterday

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Speaker 4: the buying or where did you see the activity yesterday?

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Speaker 8: There were different pockets, so we have an active positioning

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Speaker 8: indicated the tracks institutional positioning, and it got to absolutely

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Speaker 8: washed out levels before yesterday, So institutional position is very clean.

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Speaker 8: But what we have seen is just consistent dip buying

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Speaker 8: more from the retail complex. So if you look at

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Speaker 8: net ETF flows in the US yesterday, you saw more

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Speaker 8: than ten billion of inflows on the day. At the

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Speaker 8: same time, some of these rebalancing flows that we've talked

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Speaker 8: about have been a dominant force in the market. So

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Speaker 8: we think there was more than fifty five billion driven

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Speaker 8: purely from the short gamma complex yesterday.

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Speaker 4: Short gamma. We have seen institutional capitalization in positioning. I've

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Speaker 4: been trading for forty years. I have no idea what

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Speaker 4: that means? What does that mean?

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Speaker 8: Yeah, So in terms of capitulation in positioning, you know,

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Speaker 8: we track various metrics. Some of the systematic funds are

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Speaker 8: easier to track, things like CTAs. We know that those

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Speaker 8: funds moved to a net short position volatility target that

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Speaker 8: manage capital based on the levels of volatility have become

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Speaker 8: extremely de risked. But you can also look at things

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Speaker 8: like hedge fund positioning. You can use things like the

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Speaker 8: safetyc Future's data. You can see that there has been

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Speaker 8: a massive degrossing.

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Speaker 2: Okay, there's been a massive build degrossing. Okay, great, But

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Speaker 2: the answer is where's the blood in the streets? Without

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Speaker 2: getting it. I don't want to mention names here, that's

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Speaker 2: not appropriate. But when somebody has the cliche there's blood

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Speaker 2: in the streets, where do you and B ANDP Bury

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Speaker 2: boss suggest there's been some real DiMAGE.

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Speaker 8: Well, I would say that actually, like when we think

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Speaker 8: about the US equity market, and particularly the volatility market,

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Speaker 8: it has been maybe a little bit more orderly than

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Speaker 8: it seems on the surface. So when we look at

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Speaker 8: our positioning indicator, it had been trending down a long

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Speaker 8: way prior to the tariff announcements, and we think about

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Speaker 8: this announcement. Nobody was expecting the magnitude of the moves,

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Speaker 8: but this was an unknown in terms of a catalyst

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Speaker 8: that we do think people will hedged for. So when

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Speaker 8: you look at the Thursday move, I think that's quite

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Speaker 8: indicative of actually a calmer options market than you would expect.

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Speaker 8: We got a big move higher in the VIX Thursday,

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Speaker 8: but what we do is we look at the size

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Speaker 8: of the VIX move relative to the size of the

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Speaker 8: S and P move, And in normal calm markets, what

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Speaker 8: you see as the VIS go up one and a

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Speaker 8: half points for every one percent decline in US and

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Speaker 8: Peer and that's actually what we saw on Thursday. You

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Speaker 8: compare that to other pockets of risk, and that move

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Speaker 8: is much more explosive.

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Speaker 2: You and folks stay with us here on this. There's

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Speaker 2: a little bit of jargon we're doing here, but we're

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Speaker 2: thrilled bole bmp periba with us. You were cautious in

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Speaker 2: the bull market emotion of the recent year or two

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Speaker 2: or three, and now we've got the market back to

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Speaker 2: a Greg Boudle level. H do we now have an

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Speaker 2: equity value in the market where we're now where you

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Speaker 2: always thought we'd be, or do you need to see

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Speaker 2: some catharsis here to really step in long I.

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Speaker 8: Think it really depends on ultimately, what do you think

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Speaker 8: the growth outlook is. So if you believe that this

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Speaker 8: volatility and this newsflow in terms of tariff isn't going

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Speaker 8: to derail the growth outlook, then a twenty percent correction,

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Speaker 8: which is where we got kind of highs to lows,

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Speaker 8: is it the extreme of what you get without a recession. However,

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Speaker 8: when we start looking at where do we think earnings

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Speaker 8: could be this year, if you've got a two to

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Speaker 8: fifty five number four S ANDP earnings, that's a five

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Speaker 8: percent year of year growth that's not overly bearish. Put

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Speaker 8: that on an eighteen times multiple that would get you

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Speaker 8: around forty five hundred. So I'm not sure that there's

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Speaker 8: a really obvious value case to make for US equities here.

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Speaker 2: Do you have a belief in European equities?

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Speaker 8: So I think one of the things we saw at

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Speaker 8: the start of the year before this episode of volatility

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Speaker 8: was that there was undoubtedly rotation starting to happen from

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Speaker 8: US into the rest of the world. Now, clearly what

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Speaker 8: has happened in terms of trade and tariff has derailed

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Speaker 8: that in the short term. If we do get back

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Speaker 8: to a more stable market, then I do think there

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Speaker 8: is potential for that rotation to continue, but not whilst

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Speaker 8: we're in a volatility environment such as this.

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Speaker 4: All right, Greg, Tom, I if we take the Bloomberg

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Speaker 4: surveillance show over to London, do we do a day

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Speaker 4: trip to South End on Sea?

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Speaker 8: I think it would be extremely What do we do there?

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Speaker 8: I think you would take a walk down the seafront.

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Speaker 8: Maybe you go and try and catch a game, have

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Speaker 8: a bear a.

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Speaker 4: Great south it's on the estuary, Tom, it is on

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Speaker 4: the Thames yesterday, Thames River.

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Speaker 2: It's out past Charles Dickens place.

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Speaker 4: I think so. I mean it looks great. I'm look

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Speaker 4: at it right here and that's where it great's from.

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Speaker 4: So I figured we'd ask a local here, take a.

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Speaker 8: Walk down the pair.

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Speaker 2: You ever met to Dickens House? Righteous the one that

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Speaker 2: you haven't loved? I haven't. It's supposed to be magical.

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Speaker 2: It's over extent of what Dickens was when he was

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Speaker 2: there in eighteen sixty, eighteen seventy.

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Speaker 4: Okay, have you ever finished the castle park?

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Speaker 2: Have you ever finished a full Charles Dickens or did

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Speaker 2: you use the United Kingdom cliff notes?

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Speaker 8: Wow, maybe I listened to the audio book.

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Speaker 2: Yeah, Greg, thank you so much really, and congratulations on

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Speaker 2: the work the derivatives base her folks, the French and

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Speaker 2: this goes back hundreds of years. There's exquisite mathematical integrity

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Speaker 2: out of the French banks just gets them into trouble sometimes.

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Speaker 2: But good morning to the Paris banks for all that

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Speaker 2: they do, particularly using the Bloomberg and derivative equity measurement

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Speaker 2: as we did from mister Boutele as well.

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

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

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Speaker 1: Apple Karplay and Android Otto with the Bloomberg Business app,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Our interview of the day on fixed income with our question.

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Speaker 2: Ian Lingen is with Bemon Capital Market. He writes the densest, tightest,

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Speaker 2: most in depth. Note Paul and I were talking about it.

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Speaker 2: You get a paragraph from Ian Lingen and like you're

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Speaker 2: lucky you get through it at lunch. It's so intelligent.

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Speaker 2: He's won just in the II surveys, folks. I think

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Speaker 2: he won eleven consecutive years. It's like Juan Soto and

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Speaker 2: walks right. I mean, you know, Ian just keeps doing

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Speaker 2: it with Bemon capital markets. And on the inflation report,

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Speaker 2: you're brilliant quote this is the lowest in over four years.

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Speaker 2: Is it a one off pre Trump tariffs or can

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Speaker 2: this disinflation continue? Well?

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Speaker 6: I do think that what we're seeing is that they

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Speaker 6: FED was reasonably successful in finally getting inflation back to

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Speaker 6: or at least toward where they would like to see it.

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Speaker 6: It does set up a good departure point for absorbing

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Speaker 6: the incoming price increases that we are sure to see. So,

437
00:22:02,520 --> 00:22:06,800
Speaker 6: if anything, today's report suggests that we won't retest the

438
00:22:06,800 --> 00:22:10,960
Speaker 6: pandemic highs and inflation simply based on the trade war.

439
00:22:11,080 --> 00:22:13,600
Speaker 2: I can't say not, folks about the holistic work of

440
00:22:13,640 --> 00:22:18,080
Speaker 2: the Bank of Montreal within your entire team, Ian and

441
00:22:18,160 --> 00:22:22,360
Speaker 2: with your leadership here. How many FED rate cuts? What's

442
00:22:22,400 --> 00:22:25,240
Speaker 2: the degrees of freedom the chairman Powell has?

443
00:22:27,040 --> 00:22:30,080
Speaker 6: Well, the events of this week I bought him a

444
00:22:30,160 --> 00:22:33,480
Speaker 6: little bit more flexibility. I think that we are going

445
00:22:33,520 --> 00:22:36,480
Speaker 6: to see two rate cuts this year, one in September

446
00:22:36,600 --> 00:22:39,560
Speaker 6: and one in December. The only way that we actually

447
00:22:39,600 --> 00:22:43,000
Speaker 6: see something in June or earlier, is if we see

448
00:22:43,040 --> 00:22:46,520
Speaker 6: a re escalation of the trade war that pushes equity

449
00:22:46,560 --> 00:22:47,760
Speaker 6: prices even lower.

450
00:22:49,240 --> 00:22:52,200
Speaker 4: So I what did you see in the bond market

451
00:22:52,240 --> 00:22:54,520
Speaker 4: over the last thirty six hours, because boy, we had

452
00:22:54,560 --> 00:22:55,960
Speaker 4: some big moves there, And what did you see in

453
00:22:55,960 --> 00:22:56,760
Speaker 4: a treasury market?

454
00:22:58,080 --> 00:23:00,960
Speaker 6: So in the treasury market, we saw a very sharp

455
00:23:01,080 --> 00:23:03,119
Speaker 6: re steeping in of the yield curve because there was

456
00:23:03,160 --> 00:23:05,360
Speaker 6: a lot of concern that the trade war would lead

457
00:23:05,400 --> 00:23:08,560
Speaker 6: to a buyer's strike in the ten year auction. And

458
00:23:08,600 --> 00:23:11,720
Speaker 6: the fact that we had such a strong sponsorship for

459
00:23:11,800 --> 00:23:15,800
Speaker 6: the ten year auction really bodes well for the treasury

460
00:23:15,840 --> 00:23:18,320
Speaker 6: market as an asset class. And I think that that

461
00:23:18,520 --> 00:23:22,000
Speaker 6: speaks to why we are stabilizing here with ten year

462
00:23:22,119 --> 00:23:26,000
Speaker 6: yields well below four fifty and certainly no concern of

463
00:23:26,080 --> 00:23:28,000
Speaker 6: retesting five percent anytime soon.

464
00:23:28,040 --> 00:23:30,399
Speaker 2: We had a dash to the ian ling and lower

465
00:23:30,440 --> 00:23:32,960
Speaker 2: yields thee and you've been way out front on a

466
00:23:33,040 --> 00:23:37,800
Speaker 2: vector of lower yields with this turmoil in Washington. I

467
00:23:37,840 --> 00:23:44,639
Speaker 2: guess when it's over, do we reaffirm your disinflation, lower yield,

468
00:23:44,760 --> 00:23:46,119
Speaker 2: higher price environment.

469
00:23:47,960 --> 00:23:51,640
Speaker 6: Yes. I actually think if anything, the turmoil in Washington

470
00:23:51,840 --> 00:23:56,080
Speaker 6: increases the chances of a consumer led economic slowdown, and

471
00:23:56,480 --> 00:24:00,359
Speaker 6: a recession is disinflationary on a forward basis. Once we

472
00:24:00,440 --> 00:24:03,679
Speaker 6: absorb all the tariff increases, I think we'll have a

473
00:24:03,760 --> 00:24:08,119
Speaker 6: consumer that is in a much different, much less compelling

474
00:24:08,600 --> 00:24:11,120
Speaker 6: place than it was during the pandemic. And so I'm

475
00:24:11,160 --> 00:24:14,720
Speaker 6: worried about disinflation in two thousand and twenty six and

476
00:24:14,720 --> 00:24:16,800
Speaker 6: beyond recession?

477
00:24:16,840 --> 00:24:17,840
Speaker 4: Is that in your call in?

478
00:24:19,320 --> 00:24:22,520
Speaker 6: It's not our baseline scenario, but the events of the

479
00:24:22,600 --> 00:24:26,320
Speaker 6: last two weeks certainly have increased the probability from let's

480
00:24:26,359 --> 00:24:29,439
Speaker 6: call it ten percent to thirty five or forty percent.

481
00:24:29,600 --> 00:24:31,720
Speaker 2: You know, you know Belski once told me he reads

482
00:24:31,720 --> 00:24:33,920
Speaker 2: every word. I mean, it'll help us out here. I in,

483
00:24:34,040 --> 00:24:37,000
Speaker 2: if we get you know, a three percent ten years

484
00:24:37,040 --> 00:24:40,000
Speaker 2: three point x percent ten year yield, we get disinflation.

485
00:24:40,160 --> 00:24:43,600
Speaker 2: And that is that good for Brian Belski in equities

486
00:24:43,720 --> 00:24:43,919
Speaker 2: or not?

487
00:24:45,560 --> 00:24:49,399
Speaker 6: I think that it depends on the departure point for

488
00:24:49,480 --> 00:24:52,560
Speaker 6: the equity market at the moment. If we come into

489
00:24:52,600 --> 00:24:55,160
Speaker 6: the event with the S and P five hundred at

490
00:24:55,720 --> 00:24:59,320
Speaker 6: forty seven hundred, that's going to be a net positive

491
00:24:59,359 --> 00:25:02,080
Speaker 6: and stocks would rally into the end of the year,

492
00:25:02,600 --> 00:25:05,440
Speaker 6: if we're at the peaks and the market comes to

493
00:25:05,480 --> 00:25:08,000
Speaker 6: the realization that we're going to be facing an economic

494
00:25:08,040 --> 00:25:11,280
Speaker 6: slowdown of some magnitude, then that will initially be bad

495
00:25:11,320 --> 00:25:13,200
Speaker 6: for stocks until the FED gets involved.

496
00:25:14,040 --> 00:25:16,200
Speaker 4: And how do you think the FED kind of looks

497
00:25:16,240 --> 00:25:19,000
Speaker 4: at all the news coming out of Washington, DC, all

498
00:25:19,040 --> 00:25:22,840
Speaker 4: the tweets, all the the side press conferences, the little

499
00:25:22,840 --> 00:25:26,000
Speaker 4: gaggles and things like that, which kind of really really

500
00:25:26,040 --> 00:25:28,440
Speaker 4: move the market on an intra day basis. How does

501
00:25:28,480 --> 00:25:29,280
Speaker 4: a FED deal with that?

502
00:25:29,320 --> 00:25:29,720
Speaker 2: Do you think?

503
00:25:30,720 --> 00:25:33,359
Speaker 6: Well, it is a pretty challenging environment for the FED,

504
00:25:33,400 --> 00:25:35,800
Speaker 6: to be sure, but it's not the first time the

505
00:25:35,840 --> 00:25:40,679
Speaker 6: FED has had to absorb and react to social media

506
00:25:40,880 --> 00:25:44,560
Speaker 6: posts and announcements, so it isn't as dramatic as it

507
00:25:44,680 --> 00:25:48,560
Speaker 6: was during Trump's first presidency. However, I do think that

508
00:25:48,680 --> 00:25:52,879
Speaker 6: Powell's stance of wait and see has only been reinforced

509
00:25:53,000 --> 00:25:55,960
Speaker 6: by the developments this week, because if we don't know

510
00:25:56,000 --> 00:25:58,240
Speaker 6: what the tariffs are ultimately going to look like, it's

511
00:25:58,400 --> 00:26:01,560
Speaker 6: very difficult to base any money terry policy decisions on

512
00:26:01,840 --> 00:26:04,960
Speaker 6: the what ifs, And that's what Trump or Powell is

513
00:26:05,200 --> 00:26:06,359
Speaker 6: struggling with at the moment.

514
00:26:06,480 --> 00:26:08,800
Speaker 2: In its nine o'clock hour, with the market opening here

515
00:26:08,840 --> 00:26:11,080
Speaker 2: in twenty minutes. We welcome all of you on your

516
00:26:11,080 --> 00:26:14,800
Speaker 2: commute across the nation. We welcome you on YouTube. Thank

517
00:26:14,840 --> 00:26:18,159
Speaker 2: you so much in your office at your home, subscribing

518
00:26:18,240 --> 00:26:21,120
Speaker 2: to Bloomberg Podcast, your interest growing each and every day.

519
00:26:21,400 --> 00:26:24,280
Speaker 2: Good evening on the Pacific RIM and over to India

520
00:26:24,480 --> 00:26:27,800
Speaker 2: as well. Just humbled by the South, particularly Southern Asia.

521
00:26:28,320 --> 00:26:30,160
Speaker 2: You know, I mean in Japan as well. I've had

522
00:26:30,160 --> 00:26:32,879
Speaker 2: some anecdote, but really, thank you so much in the

523
00:26:32,960 --> 00:26:38,679
Speaker 2: South Asian India, in Malaysia, Singapore Evening greatly, greatly appreciate

524
00:26:39,480 --> 00:26:42,200
Speaker 2: your attendance. Paul Sweeney and Tom Can. We are commercial

525
00:26:42,320 --> 00:26:45,240
Speaker 2: free in this hour. Thrilled to bring you. Ian Lincoln

526
00:26:45,640 --> 00:26:47,080
Speaker 2: of BEMO Capital Markets.

527
00:26:47,240 --> 00:26:50,000
Speaker 4: Hey, Ian, you know, honestly, I don't pay attention to

528
00:26:50,040 --> 00:26:52,720
Speaker 4: these treasury auctions. They're smarter people that do that for

529
00:26:52,880 --> 00:26:57,040
Speaker 4: US Ira Jersey, Lisa Bromwitz for me, did what happened

530
00:26:57,119 --> 00:26:58,280
Speaker 4: yesterday with these auctions?

531
00:26:58,520 --> 00:26:59,600
Speaker 2: And why were they important?

532
00:27:01,400 --> 00:27:04,920
Speaker 6: So we had a strong takedown of the ten year auction.

533
00:27:05,200 --> 00:27:09,240
Speaker 6: The risk was that in retaliation for some of the

534
00:27:09,320 --> 00:27:13,199
Speaker 6: higher tariffs, that foreign buyers would step away from the

535
00:27:13,240 --> 00:27:16,959
Speaker 6: treasury auction and it would tail dramatically. In fact, we

536
00:27:17,040 --> 00:27:22,360
Speaker 6: saw a strong stop through which really reaffirmed the markets

537
00:27:22,400 --> 00:27:25,640
Speaker 6: perception that there are going to be buyers of treasuries,

538
00:27:26,160 --> 00:27:29,440
Speaker 6: particularly in an environment like this with so much uncertainty.

539
00:27:29,520 --> 00:27:32,080
Speaker 2: Ian Lingan, thank you so much for being my capital markets.

540
00:27:32,080 --> 00:27:34,520
Speaker 2: Of course, you can protect the copyright of all of

541
00:27:34,560 --> 00:27:37,800
Speaker 2: our guests. Look to his important research note at the

542
00:27:37,840 --> 00:27:38,919
Speaker 2: Bank of Montreal.

543
00:27:39,240 --> 00:27:43,120
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

544
00:27:43,160 --> 00:27:46,480
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

545
00:27:46,600 --> 00:27:49,560
Speaker 1: with the Bloomberg Business App. You can also listen live

546
00:27:49,640 --> 00:27:53,199
Speaker 1: on Amazon Alexa from our flagship New York station, Just

547
00:27:53,240 --> 00:27:55,720
Speaker 1: say Alexa Play Bloomberg eleven thirty.

548
00:27:55,920 --> 00:28:01,879
Speaker 2: Joining us now from Laffert Tangler Investments, Nancy Tangler. I

549
00:28:01,920 --> 00:28:05,720
Speaker 2: saw a Professor Laugher writing yesterday. Now maybe it was

550
00:28:05,720 --> 00:28:08,240
Speaker 2: a couple of days ago. Join out ed about we're

551
00:28:08,240 --> 00:28:09,760
Speaker 2: going to get through this, and we're going to get

552
00:28:09,800 --> 00:28:14,040
Speaker 2: through it with a budget responsibility. Nancy, were all exhausted.

553
00:28:14,720 --> 00:28:18,280
Speaker 2: Take us away from the politics, and when do we

554
00:28:18,400 --> 00:28:21,600
Speaker 2: get back to what we call a few years ago

555
00:28:21,960 --> 00:28:22,640
Speaker 2: is normal?

556
00:28:22,920 --> 00:28:23,760
Speaker 9: I know, Tom.

557
00:28:23,840 --> 00:28:25,560
Speaker 10: I went to bed at five point thirty last night,

558
00:28:26,080 --> 00:28:28,440
Speaker 10: and I slept all the way through you slept.

559
00:28:28,200 --> 00:28:31,560
Speaker 2: All the way through me. I'm going arethramatic. I had

560
00:28:31,560 --> 00:28:34,399
Speaker 2: two hours sleep than four hours sleep, and last night

561
00:28:34,440 --> 00:28:36,320
Speaker 2: it was like five and a half hours sleep. So

562
00:28:36,400 --> 00:28:38,600
Speaker 2: after your beauty rest, wait to see.

563
00:28:38,960 --> 00:28:41,720
Speaker 10: So I feel like this was an unforced error Ago

564
00:28:41,800 --> 00:28:45,080
Speaker 10: red SOX I was told to say how about this?

565
00:28:45,480 --> 00:28:47,920
Speaker 3: Ye with exact about it.

566
00:28:48,520 --> 00:28:53,400
Speaker 10: I think, look, you expected the president to come out

567
00:28:53,400 --> 00:28:57,160
Speaker 10: and declare victory. He did, All the proxies are declaring victory.

568
00:28:57,160 --> 00:28:59,880
Speaker 10: But really this was one of the sloppiest policy rollouts

569
00:29:00,360 --> 00:29:03,240
Speaker 10: I've ever witnessed in my forty plus your career. It

570
00:29:04,080 --> 00:29:06,920
Speaker 10: didn't I don't think advance the ball to the extent

571
00:29:06,960 --> 00:29:09,280
Speaker 10: that we wanted it to. And the repercussions will be

572
00:29:09,280 --> 00:29:12,880
Speaker 10: felt for some time. So if you look at Google

573
00:29:13,200 --> 00:29:15,960
Speaker 10: reinforced or restated, Yes, we're going to use our you know,

574
00:29:16,000 --> 00:29:19,760
Speaker 10: we're going to implement our CAPEX budget. Microsoft pulled the factory.

575
00:29:20,760 --> 00:29:25,320
Speaker 10: These are very long, as you know, time horizons to

576
00:29:25,360 --> 00:29:28,800
Speaker 10: build a factory and to get parts. Sixty eight percent

577
00:29:28,920 --> 00:29:34,479
Speaker 10: of industrial I'm sorry of manufacturing GDP is imported parts.

578
00:29:34,760 --> 00:29:36,760
Speaker 10: You can't fix that overnight. So I think we're going

579
00:29:36,840 --> 00:29:39,960
Speaker 10: to continue to see this ripple through the markets, and

580
00:29:40,000 --> 00:29:43,400
Speaker 10: I wouldn't jump in quickly. I take my time and

581
00:29:43,600 --> 00:29:45,240
Speaker 10: add to names. I do think we come out the

582
00:29:45,240 --> 00:29:45,720
Speaker 10: other side.

583
00:29:45,960 --> 00:29:48,320
Speaker 2: Laugh For Tangler is the most interesting. I've been a

584
00:29:48,360 --> 00:29:50,560
Speaker 2: defender of Arthur laugh where a lot of critics going

585
00:29:50,640 --> 00:29:53,360
Speaker 2: after Emie and I will argue about the calculus of

586
00:29:53,400 --> 00:29:55,440
Speaker 2: the laugh For curve and where the tangent is in

587
00:29:55,520 --> 00:29:59,000
Speaker 2: the curve. Forget about that. You got Yale and Stanford

588
00:29:59,040 --> 00:30:04,479
Speaker 2: economics on your creative writing and psychology. It's a really

589
00:30:04,520 --> 00:30:07,720
Speaker 2: interesting mix out there. And when you say you don't

590
00:30:07,760 --> 00:30:11,080
Speaker 2: get what they're doing in a white house, that's important.

591
00:30:11,440 --> 00:30:13,840
Speaker 2: What's our laughless say? He's got to be as appalled

592
00:30:13,840 --> 00:30:14,200
Speaker 2: as you.

593
00:30:14,600 --> 00:30:16,600
Speaker 10: I mean, I can't speak for him, but I can

594
00:30:16,760 --> 00:30:18,400
Speaker 10: say he's pretty annoyed.

595
00:30:19,160 --> 00:30:19,800
Speaker 9: So I just spoke.

596
00:30:20,000 --> 00:30:24,280
Speaker 2: Okay, we're missing an action. Where's the Secretary Treasury, Where's

597
00:30:24,280 --> 00:30:26,920
Speaker 2: the Secretary of Commerce? Where in God's name is a

598
00:30:27,000 --> 00:30:31,920
Speaker 2: Penn PhD. Kevin Hassett to advise them within the prism

599
00:30:32,280 --> 00:30:34,280
Speaker 2: of Laffler Tangler economics.

600
00:30:34,280 --> 00:30:37,120
Speaker 10: They have to get through Peter Navarro has been the problem.

601
00:30:37,280 --> 00:30:40,400
Speaker 10: Come on, I mean it I mean I do, and

602
00:30:40,440 --> 00:30:43,000
Speaker 10: I'm I'm I think it's really interesting how he's been

603
00:30:43,160 --> 00:30:46,160
Speaker 10: m I A from the media, and that's a good thing.

604
00:30:46,240 --> 00:30:48,360
Speaker 10: And now they just need to get Howard Lutnik off

605
00:30:48,360 --> 00:30:51,479
Speaker 10: the air and put out Bessett, put out Hassett, and

606
00:30:51,560 --> 00:30:55,120
Speaker 10: have the president speak to his own to his own policy.

607
00:30:55,200 --> 00:30:57,840
Speaker 10: But I think it was so poorly rolled down. I

608
00:30:57,840 --> 00:30:59,280
Speaker 10: don't think they knew what they were doing until the

609
00:30:59,360 --> 00:31:01,960
Speaker 10: day before. And I was told they used chat GPT

610
00:31:02,160 --> 00:31:05,960
Speaker 10: to generate that chart, which was ridiculous. All of us

611
00:31:05,960 --> 00:31:08,360
Speaker 10: were going, what the no, we.

612
00:31:08,320 --> 00:31:10,560
Speaker 2: Can't say that at radio. You can say that over

613
00:31:10,640 --> 00:31:13,880
Speaker 2: on Bloomberg TV and the gakire on radio you go

614
00:31:13,920 --> 00:31:16,480
Speaker 2: to jail. So be careful, Paul. Let me get one

615
00:31:16,480 --> 00:31:18,800
Speaker 2: more in here, because I think this is just absolutely critical.

616
00:31:19,400 --> 00:31:24,800
Speaker 2: What does the president have to do with comfortable conservative economists,

617
00:31:25,040 --> 00:31:29,720
Speaker 2: the giant Glenn Hubbard of Columbia University, exquisite Cudlow, it

618
00:31:29,840 --> 00:31:30,680
Speaker 2: was a legit.

619
00:31:30,440 --> 00:31:36,200
Speaker 7: Economist over at Fox, all of them. What does the Tangler, Lafler, Coudlow,

620
00:31:36,560 --> 00:31:39,400
Speaker 7: Hubbard crew, the great Ed Lazir who we miss every

621
00:31:39,440 --> 00:31:42,600
Speaker 7: day at Stanford. What does your cadre have to do

622
00:31:43,040 --> 00:31:45,320
Speaker 7: to get past Navarro to the President.

623
00:31:45,880 --> 00:31:47,720
Speaker 10: I think we've sort of done it in the media.

624
00:31:47,760 --> 00:31:49,880
Speaker 10: I think there's been a drum beat, and you know,

625
00:31:49,920 --> 00:31:55,240
Speaker 10: ten percent isn't as troublesome as these arbitrary slapped on tariffs.

626
00:31:55,240 --> 00:31:58,040
Speaker 10: But I actually think that the President believes a lot

627
00:31:58,080 --> 00:32:00,440
Speaker 10: of this, and just like he believes the trade deficit

628
00:32:00,520 --> 00:32:02,640
Speaker 10: is bad, and those of us who have been around

629
00:32:02,720 --> 00:32:05,719
Speaker 10: for a while would say trade deficits are good if

630
00:32:05,760 --> 00:32:08,960
Speaker 10: it's driven by prosperity. So ten percent would be more

631
00:32:09,040 --> 00:32:11,280
Speaker 10: like a flat tax, and I think that would at

632
00:32:11,320 --> 00:32:13,560
Speaker 10: least stop distorting behavior.

633
00:32:13,680 --> 00:32:17,640
Speaker 2: Down negative seven under surveillance. Apology. I'm sorry, Paul, it

634
00:32:17,680 --> 00:32:20,120
Speaker 2: took too much time there. I was all wound up

635
00:32:20,200 --> 00:32:24,280
Speaker 2: about the moment there, about the bodies at the White House.

636
00:32:24,920 --> 00:32:27,440
Speaker 2: Nancy knows them all. That's what Nancy.

637
00:32:27,480 --> 00:32:30,480
Speaker 4: Have you guys changed your risk outlook over the last

638
00:32:30,840 --> 00:32:32,760
Speaker 4: several days year, as we've had to deal with a

639
00:32:32,760 --> 00:32:34,760
Speaker 4: lot of this tariff volatility.

640
00:32:35,120 --> 00:32:38,200
Speaker 10: We started changing it, Paul, after the market peaked and

641
00:32:38,200 --> 00:32:40,240
Speaker 10: we started getting sell off, so we moved a little

642
00:32:40,240 --> 00:32:44,080
Speaker 10: bit more defensively. We're still selectively buying tech names, mostly

643
00:32:44,120 --> 00:32:48,120
Speaker 10: focused on the software side of things, less focused on

644
00:32:48,160 --> 00:32:51,680
Speaker 10: the hardware side. We still believe AI is instrumental. You

645
00:32:51,720 --> 00:32:55,360
Speaker 10: saw Spotify headline that said, no more new jobs unless

646
00:32:55,360 --> 00:32:57,560
Speaker 10: you can prove it can't be done with AI. So

647
00:32:57,600 --> 00:32:59,880
Speaker 10: I think those are important. Walmart came out and re

648
00:33:00,040 --> 00:33:03,000
Speaker 10: affirmed the full year guidance they're going to generate fifth

649
00:33:03,040 --> 00:33:05,360
Speaker 10: They're our poster child of an old economy company that

650
00:33:05,440 --> 00:33:08,520
Speaker 10: is pivoted to the new names. So we've added names

651
00:33:08,560 --> 00:33:13,280
Speaker 10: like eccentric, or added two names like accenture in Netflix, Spotify.

652
00:33:13,400 --> 00:33:16,400
Speaker 10: These these could be more defensive names if we do

653
00:33:16,480 --> 00:33:20,680
Speaker 10: go into recession, but I think we're into economic deceleration

654
00:33:21,120 --> 00:33:23,000
Speaker 10: as opposed to a potential recession.

655
00:33:23,760 --> 00:33:26,040
Speaker 4: What do you expect to hear from the c suite

656
00:33:26,040 --> 00:33:27,600
Speaker 4: this earning season? I mean, I think a lot of

657
00:33:27,640 --> 00:33:30,720
Speaker 4: folks are concerned that there's headwind and there's really earnings

658
00:33:30,880 --> 00:33:32,720
Speaker 4: risk out there, that the essens that are out on

659
00:33:32,720 --> 00:33:34,480
Speaker 4: the street need to come down, and maybe come down

660
00:33:34,520 --> 00:33:37,520
Speaker 4: pretty significantly. Maybe that's already priced in. I don't know,

661
00:33:37,600 --> 00:33:40,480
Speaker 4: but are you concerned about the earnings season coming out?

662
00:33:40,520 --> 00:33:41,920
Speaker 10: I don't think we're gonna hear much. I think we're

663
00:33:41,920 --> 00:33:44,240
Speaker 10: gonna hear delayed guidance. Why I mean I would do

664
00:33:44,280 --> 00:33:45,920
Speaker 10: that if I was in the c suite? Why would

665
00:33:45,960 --> 00:33:48,760
Speaker 10: you give guidance? But Walmart was interesting at their investor

666
00:33:48,840 --> 00:33:52,840
Speaker 10: day because they did reaffirm the year, they just kind

667
00:33:52,840 --> 00:33:55,440
Speaker 10: of gave a wider range on the quarter. So I

668
00:33:55,480 --> 00:33:58,480
Speaker 10: think what we heard last earning season around tariffs was

669
00:33:58,520 --> 00:34:01,040
Speaker 10: that the CEOs were confident they knew how to navigate.

670
00:34:01,400 --> 00:34:04,320
Speaker 10: I don't think they were expecting maybe some of what

671
00:34:04,360 --> 00:34:06,880
Speaker 10: we got, but they could be, you know, expecting what

672
00:34:07,200 --> 00:34:10,080
Speaker 10: now what we've got now. So but it is a

673
00:34:10,160 --> 00:34:11,880
Speaker 10: ninety day pause, and I think we have to be

674
00:34:11,880 --> 00:34:12,359
Speaker 10: aware of that.

675
00:34:12,560 --> 00:34:16,400
Speaker 2: I'm focused on the labor economy. It's maybe the greatest

676
00:34:16,400 --> 00:34:19,799
Speaker 2: disagreement I've had with the supply side crew. I think

677
00:34:19,840 --> 00:34:22,520
Speaker 2: of you know, folks, this is esoteric but real business

678
00:34:22,920 --> 00:34:26,719
Speaker 2: economic Carnegie Mail in Freshwater, Charles plots Er, Philadelphia. I've

679
00:34:26,760 --> 00:34:30,439
Speaker 2: got some real issues with a job generation. A guy

680
00:34:30,520 --> 00:34:34,680
Speaker 2: named Summers who's from the dark side, and Olivier Blanchard

681
00:34:34,800 --> 00:34:38,720
Speaker 2: the Giant. We'll talk about hysteresis where just the labor

682
00:34:38,760 --> 00:34:42,960
Speaker 2: economy just falls apart. Do we risk a new permanent

683
00:34:43,360 --> 00:34:46,759
Speaker 2: higher unemployment rate with all this carnage?

684
00:34:47,000 --> 00:34:48,960
Speaker 10: I think we could Tom I mean so far that

685
00:34:49,040 --> 00:34:49,680
Speaker 10: you know we've seen here.

686
00:34:49,719 --> 00:34:53,120
Speaker 2: Now that's a headline for the day. Tangler and Summers

687
00:34:53,200 --> 00:34:54,280
Speaker 2: on the same page.

688
00:34:54,800 --> 00:34:55,400
Speaker 3: Continue.

689
00:34:56,200 --> 00:34:59,000
Speaker 10: I found myself agreeing with Elizabeth Warren the other day,

690
00:34:59,320 --> 00:35:02,480
Speaker 10: what please on maybe Congress should be a little more

691
00:35:02,480 --> 00:35:07,400
Speaker 10: involved in tariff policy. Yeah, but I think we could,

692
00:35:07,440 --> 00:35:09,840
Speaker 10: and I think it could be accelerated by AI because

693
00:35:09,880 --> 00:35:12,520
Speaker 10: we are seeing, like at our firm, we're using AI

694
00:35:12,880 --> 00:35:15,600
Speaker 10: software to listen to the calls for us and then

695
00:35:15,600 --> 00:35:17,600
Speaker 10: we can go in the earnings calls that is, and

696
00:35:17,600 --> 00:35:19,000
Speaker 10: then we can go in and focus on when we

697
00:35:19,040 --> 00:35:21,720
Speaker 10: want to. So that saves hours and hours a quarter,

698
00:35:22,120 --> 00:35:23,920
Speaker 10: and I think you'll start to see more of that

699
00:35:24,800 --> 00:35:29,080
Speaker 10: more in our firm. It's more thinking, less just analyzing headlines,

700
00:35:29,400 --> 00:35:32,480
Speaker 10: and I think that's important. So I think we're hearing

701
00:35:32,520 --> 00:35:35,800
Speaker 10: that we're hearing AI. Last quarter we heard the theme

702
00:35:36,000 --> 00:35:40,279
Speaker 10: was we're hiring less on the low end or entry level,

703
00:35:40,320 --> 00:35:43,800
Speaker 10: and we're hiring less or keeping less middle management people

704
00:35:44,040 --> 00:35:47,399
Speaker 10: and that spanned across sectors. So I do think it's

705
00:35:47,400 --> 00:35:51,000
Speaker 10: a risk, but I also see in expanding growing economy,

706
00:35:51,360 --> 00:35:55,000
Speaker 10: if we get deregulation or once we realize the effects

707
00:35:55,000 --> 00:35:57,919
Speaker 10: of deregulation and the tax cuts if we get them.

708
00:35:58,239 --> 00:35:59,759
Speaker 4: What are we doing in the bond market these days?

709
00:36:00,000 --> 00:36:02,120
Speaker 4: See come are we taking credit risk? Are we sitting

710
00:36:02,400 --> 00:36:04,160
Speaker 4: in the treasury market where we're going?

711
00:36:04,440 --> 00:36:07,360
Speaker 10: So we've done so in our uni portfolios. We've built

712
00:36:07,360 --> 00:36:11,319
Speaker 10: callable portfolios and kept the duration below a year, so

713
00:36:11,360 --> 00:36:14,040
Speaker 10: we've been getting a little over four percent. As you know,

714
00:36:14,080 --> 00:36:16,239
Speaker 10: the muni market melted down a couple of days back,

715
00:36:16,480 --> 00:36:19,160
Speaker 10: but it started to come back on credit. We're not

716
00:36:19,200 --> 00:36:22,960
Speaker 10: taking credit risk at this particular point. Although the credit

717
00:36:23,080 --> 00:36:26,520
Speaker 10: the spreads have expanded, they're still not in danger zone.

718
00:36:26,640 --> 00:36:28,360
Speaker 10: So we've been parking in the short end of the

719
00:36:28,400 --> 00:36:32,520
Speaker 10: treasury market for clients where we're expecting to extend duration later.

720
00:36:33,120 --> 00:36:36,440
Speaker 2: To finish up here with a broad philosophy, and this

721
00:36:36,520 --> 00:36:40,040
Speaker 2: goes back to I remember sitting. I was in the

722
00:36:40,080 --> 00:36:43,120
Speaker 2: hanover in in Dartmouth with a guy named Nut Gingrich

723
00:36:43,600 --> 00:36:46,239
Speaker 2: and we were talking about that night in nineteen ninety four.

724
00:36:46,239 --> 00:36:48,000
Speaker 10: I'm sitting in the current remember it well.

725
00:36:47,840 --> 00:36:51,080
Speaker 2: Dan rathers talking to me. He was CDs. Nobody's prepared

726
00:36:51,120 --> 00:36:54,520
Speaker 2: for this, and all of a sudden, folks, supply side

727
00:36:54,600 --> 00:36:59,279
Speaker 2: was run in Congress. Where is your movement Doctor Laffer's

728
00:36:59,280 --> 00:37:03,640
Speaker 2: movement in ten or twenty years. I can't figure it out.

729
00:37:04,400 --> 00:37:08,840
Speaker 10: I mean, let's hope that it's not forgotten. I know

730
00:37:08,840 --> 00:37:11,239
Speaker 10: he has the Laffer Center and he continues to put

731
00:37:11,239 --> 00:37:14,440
Speaker 10: forward his policies through the Laffer Center. Got Young of

732
00:37:14,960 --> 00:37:18,279
Speaker 10: Americans or Foundation for Young Americans that focuses on it

733
00:37:18,320 --> 00:37:22,480
Speaker 10: and is teaching young college students about the movement. But

734
00:37:23,200 --> 00:37:25,520
Speaker 10: I do think at some level it is common sense

735
00:37:25,719 --> 00:37:29,839
Speaker 10: and it will continue if we get congressmen who can

736
00:37:30,040 --> 00:37:32,719
Speaker 10: stand a position. And I think that's what's been so

737
00:37:32,840 --> 00:37:36,360
Speaker 10: disappointing for me, the falling in line on either side

738
00:37:36,520 --> 00:37:39,400
Speaker 10: all the time, like we need fresh thinking and supply

739
00:37:39,480 --> 00:37:41,880
Speaker 10: side economics worked and it could work again.

740
00:37:42,000 --> 00:37:44,720
Speaker 2: This has been wonderful. Don't be a stranger. Nancy Tangler

741
00:37:44,760 --> 00:37:52,160
Speaker 2: folks Iconic with Laffler Tangler.

742
00:37:53,400 --> 00:37:57,320
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

743
00:37:57,360 --> 00:38:00,880
Speaker 1: starting at seven am Eastern on Applecarplay, Android Otto with

744
00:38:00,920 --> 00:38:03,839
Speaker 1: the Bloomberg Business app. You can also watch us live

745
00:38:04,000 --> 00:38:07,600
Speaker 1: every weekday on YouTube and always on the Bloomberg Terminal to.

746
00:38:07,680 --> 00:38:09,920
Speaker 2: Short visit right now with Jordan Rochester, We're gonna have

747
00:38:09,960 --> 00:38:12,040
Speaker 2: the mind for a longer visit here in the coming days.

748
00:38:12,040 --> 00:38:14,160
Speaker 2: But we just had to get them in writing with

749
00:38:14,239 --> 00:38:19,240
Speaker 2: the Missuo their fic macro strategy Jordan. In the currency

750
00:38:19,280 --> 00:38:23,040
Speaker 2: market right now, it appears that China's affecting some form

751
00:38:23,080 --> 00:38:28,680
Speaker 2: of depreciation if they do. You want remember depreciation, what

752
00:38:28,719 --> 00:38:30,399
Speaker 2: does that mean for the dollar and.

753
00:38:30,360 --> 00:38:34,440
Speaker 9: For America, Typically it would mean a stronger doll It

754
00:38:34,760 --> 00:38:37,840
Speaker 9: usually would mean therefore you offset the impact of tarifs.

755
00:38:37,920 --> 00:38:41,000
Speaker 9: But the tricky thing is is that we've not really

756
00:38:41,040 --> 00:38:44,760
Speaker 9: seen broad dollar strength after tarifs were announced. It actually

757
00:38:44,760 --> 00:38:48,160
Speaker 9: breaks most of the textbooks in terms of tariffs usually

758
00:38:48,160 --> 00:38:50,479
Speaker 9: mean that the dollar has to appreciate because the terms

759
00:38:50,480 --> 00:38:53,000
Speaker 9: of trade of Europe and everybody else's wee can. But

760
00:38:53,120 --> 00:38:56,360
Speaker 9: what we've seen is it's just laid. This whole situation

761
00:38:56,440 --> 00:38:59,480
Speaker 9: led to a seizing up of the financial markets. Dollar

762
00:38:59,520 --> 00:39:03,680
Speaker 9: export received usually in Asia weren't being received as now.

763
00:39:03,719 --> 00:39:06,759
Speaker 9: Everyone's been trying to wait out the tariffs and try

764
00:39:06,760 --> 00:39:08,759
Speaker 9: and hopefully get a better deal down the line, and

765
00:39:08,800 --> 00:39:11,600
Speaker 9: so you've not had the same recycling into US treasuries

766
00:39:11,640 --> 00:39:14,320
Speaker 9: and into US equities, so you've seen broad dollar selling.

767
00:39:14,360 --> 00:39:17,359
Speaker 9: As a result, you've seen much less dollar buying on

768
00:39:17,400 --> 00:39:20,640
Speaker 9: the equities and the fixed income signed from foreign investors

769
00:39:20,880 --> 00:39:21,799
Speaker 9: thanks to all of this.

770
00:39:23,800 --> 00:39:25,840
Speaker 4: Jordan, What does it one hundred and twenty five percent

771
00:39:25,920 --> 00:39:29,879
Speaker 4: tariff on Chinese goods mean for the US economy? Everything

772
00:39:30,120 --> 00:39:33,520
Speaker 4: it seems like we use comes from China at some point.

773
00:39:34,120 --> 00:39:35,280
Speaker 4: What does that mean for the economy?

774
00:39:35,280 --> 00:39:38,040
Speaker 9: Do you think it's a level of tariff that I

775
00:39:38,120 --> 00:39:42,080
Speaker 9: think is so high that it makes it very difficult

776
00:39:42,080 --> 00:39:44,480
Speaker 9: to say that you're going to continue to imput from

777
00:39:44,560 --> 00:39:48,000
Speaker 9: China at the same rate. But really what's going to

778
00:39:48,080 --> 00:39:51,640
Speaker 9: happen is a lot of rerouting of trade from China

779
00:39:51,960 --> 00:39:55,120
Speaker 9: to Vietnam, to Cambodia to Singapore, and it's going to

780
00:39:55,120 --> 00:39:58,000
Speaker 9: have the lower tariff rates than one hundred and twenty five.

781
00:39:58,280 --> 00:40:00,600
Speaker 9: So the US is still going to import from China,

782
00:40:00,960 --> 00:40:02,399
Speaker 9: it's just going to have a bit of a sight

783
00:40:02,440 --> 00:40:05,520
Speaker 9: seeing trip along the way. And so for the US economy,

784
00:40:05,560 --> 00:40:08,759
Speaker 9: this is still way on growth. It's still a tax

785
00:40:08,840 --> 00:40:10,960
Speaker 9: hike on the economy, but it's not as bad as

786
00:40:10,960 --> 00:40:11,640
Speaker 9: the sticker price.

787
00:40:11,960 --> 00:40:14,520
Speaker 2: Is that cheating? I mean, what we're going to hear

788
00:40:14,560 --> 00:40:17,319
Speaker 2: in the house is China's cheating because they're running the

789
00:40:17,400 --> 00:40:21,439
Speaker 2: Jordan Rochester missul merch Yes, through Vietnam. By the way,

790
00:40:22,000 --> 00:40:24,440
Speaker 2: is that like that's just to me, that's like normal

791
00:40:24,920 --> 00:40:27,960
Speaker 2: decision making a trade. Or do you buy the idea

792
00:40:28,080 --> 00:40:29,760
Speaker 2: during Rochester that it's cheating.

793
00:40:31,239 --> 00:40:33,200
Speaker 9: I don't know if the word cheating, it's just what

794
00:40:33,320 --> 00:40:36,200
Speaker 9: happens in business. I do you think about oil sanctions

795
00:40:36,239 --> 00:40:38,680
Speaker 9: as well, there's lots of you know, the EU still

796
00:40:38,680 --> 00:40:40,760
Speaker 9: buys a lot of natural gas and oil from Russia

797
00:40:40,800 --> 00:40:43,399
Speaker 9: despite the being sanctioned. So there is lots of these

798
00:40:43,440 --> 00:40:47,080
Speaker 9: examples into an international trade where the aim seems right

799
00:40:47,160 --> 00:40:50,000
Speaker 9: but the actual outcome is different. I think really the

800
00:40:50,400 --> 00:40:53,080
Speaker 9: sort of ten percent flaw that Donald Trump is set

801
00:40:53,120 --> 00:40:56,120
Speaker 9: for everybody is a better example of how to avoid

802
00:40:56,160 --> 00:40:58,800
Speaker 9: that problem of rerouting. There is no one to reroot

803
00:40:58,840 --> 00:41:01,160
Speaker 9: through that is actual zero And I think this applies

804
00:41:01,200 --> 00:41:04,000
Speaker 9: to the trade talks with the UK, Japan and everybody else.

805
00:41:04,480 --> 00:41:06,760
Speaker 9: I don't know how they go get them below ten percent,

806
00:41:07,080 --> 00:41:10,680
Speaker 9: because then you'll just have rerouting through Belfast from Dublin.

807
00:41:10,800 --> 00:41:12,960
Speaker 9: That's the sort of thing that will happen if we

808
00:41:13,040 --> 00:41:13,760
Speaker 9: go any lower.

809
00:41:14,480 --> 00:41:19,040
Speaker 4: So Jordan, what is the fixed income commodities credit macro

810
00:41:19,080 --> 00:41:22,360
Speaker 4: strategy call out on Zuho today after what we learned yesterday.

811
00:41:23,480 --> 00:41:25,680
Speaker 9: Every day is a new day. If you asked me yesterday,

812
00:41:25,800 --> 00:41:28,000
Speaker 9: I would have said flattening is the best trade. And

813
00:41:28,040 --> 00:41:30,759
Speaker 9: I didn't expect to thirty basis points flattener in just

814
00:41:31,080 --> 00:41:33,640
Speaker 9: thirty minutes after I said it in two tens for

815
00:41:33,640 --> 00:41:36,040
Speaker 9: the US. So I think what you're likely to see

816
00:41:36,120 --> 00:41:37,800
Speaker 9: is you're a dollar is going to be quite range

817
00:41:37,840 --> 00:41:40,160
Speaker 9: bound because the ECB is probably going to cut rates

818
00:41:40,200 --> 00:41:42,879
Speaker 9: more aggressively than the market prices, and the FED will

819
00:41:42,920 --> 00:41:45,160
Speaker 9: not cut rates as aggressively as the market prices. We

820
00:41:45,200 --> 00:41:47,680
Speaker 9: have about eighty five basis points priced by the year

821
00:41:47,800 --> 00:41:49,560
Speaker 9: end for the Fed. We don't think they're going to

822
00:41:49,600 --> 00:41:51,479
Speaker 9: cut at all. So I think that we could see

823
00:41:51,520 --> 00:41:53,560
Speaker 9: some dollar strength at some point when the Fed makes

824
00:41:53,600 --> 00:41:56,319
Speaker 9: their reaction function more clear. But I think the better

825
00:41:56,360 --> 00:41:58,319
Speaker 9: trade if you want to be short the dollar is

826
00:41:58,360 --> 00:42:01,200
Speaker 9: short dollar m because I think the the Japanese will

827
00:42:01,200 --> 00:42:04,719
Speaker 9: continue to raise rates this year slowly. The market completely

828
00:42:04,719 --> 00:42:07,440
Speaker 9: whacked that lower yesterday before the good news, and we

829
00:42:07,520 --> 00:42:10,080
Speaker 9: had no hikes at all. Price for Japan. We started

830
00:42:10,120 --> 00:42:13,200
Speaker 9: to creep back in for higher rates in Japan. That's

831
00:42:13,239 --> 00:42:15,120
Speaker 9: going to continue, I think, and I think the US

832
00:42:15,120 --> 00:42:17,479
Speaker 9: will put pressure on the Japanese to raise their rates

833
00:42:17,480 --> 00:42:19,800
Speaker 9: as well and to have a stronger currency. So Dolly

834
00:42:19,840 --> 00:42:22,200
Speaker 9: end to one forty is another view, and the US

835
00:42:22,239 --> 00:42:24,440
Speaker 9: ten year five percent by year end.

836
00:42:24,560 --> 00:42:27,799
Speaker 2: Oh oh okay, Jordan sets us up. We need to

837
00:42:27,800 --> 00:42:29,160
Speaker 2: get you out in the next couple of days for

838
00:42:29,440 --> 00:42:31,880
Speaker 2: much much longer than you York even a two blocker.

839
00:42:32,280 --> 00:42:34,640
Speaker 2: If he's in New York City, we'll steptured Rochester and

840
00:42:34,760 --> 00:42:37,520
Speaker 2: studio as well. He is with Maszua.

841
00:42:37,920 --> 00:42:41,840
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

842
00:42:41,880 --> 00:42:45,200
Speaker 1: starting at seven am Eastern on Applecarplay and Android Otto

843
00:42:45,320 --> 00:42:48,279
Speaker 1: with the Bloomberg Business app. You can also listen live

844
00:42:48,360 --> 00:42:51,920
Speaker 1: on Amazon Alexa from our flagship New York station. Just

845
00:42:51,960 --> 00:42:55,680
Speaker 1: say Alexa play Bloomberg eleven thirty joining us now, Kona.

846
00:42:55,520 --> 00:42:58,320
Speaker 2: Haiks so happy that she could be with us today,

847
00:42:58,480 --> 00:43:01,440
Speaker 2: Kona in this crisis, I should say, with Ed and

848
00:43:01,600 --> 00:43:06,040
Speaker 2: f Man iconic in commodities, which soft commodity is of

849
00:43:06,080 --> 00:43:08,160
Speaker 2: the greatest study for you this morning.

850
00:43:11,239 --> 00:43:13,879
Speaker 11: Because it seems to be a US China trade war

851
00:43:14,000 --> 00:43:16,719
Speaker 11: focus right now, I guess it would have to be

852
00:43:16,880 --> 00:43:23,439
Speaker 11: soybeans China imports heavily from the US. Well, it had been.

853
00:43:24,320 --> 00:43:27,920
Speaker 11: It managed to divert away from the US market in

854
00:43:28,160 --> 00:43:31,279
Speaker 11: Trump's first term during the first trade war. So I

855
00:43:31,320 --> 00:43:34,480
Speaker 11: guess it's less reliant on the US as it was before,

856
00:43:34,600 --> 00:43:37,920
Speaker 11: but it's still very it's still big imports. Today it

857
00:43:37,960 --> 00:43:40,160
Speaker 11: gets a lot more from Brazil. So I think that's

858
00:43:40,200 --> 00:43:42,560
Speaker 11: going to be the big trade flow move that we're

859
00:43:42,600 --> 00:43:45,080
Speaker 11: going to see as a result of these retaliations.

860
00:43:45,120 --> 00:43:47,400
Speaker 2: For all of you across the Great Midwest of America,

861
00:43:47,520 --> 00:43:51,280
Speaker 2: this is the conversation of the day, COONa Haik. How

862
00:43:51,360 --> 00:43:55,600
Speaker 2: easy is it for Beijing to say, Donald Trump Sia,

863
00:43:55,840 --> 00:44:01,839
Speaker 2: We're going to Brazil for the marginal soybean pretty easily.

864
00:44:01,920 --> 00:44:07,080
Speaker 11: Actually, In fact, right now most of it's coming from Brazil,

865
00:44:07,360 --> 00:44:10,360
Speaker 11: and I think that shipment is going to have to

866
00:44:10,440 --> 00:44:14,399
Speaker 11: happen in a more rapid force. The seasonality is such

867
00:44:14,440 --> 00:44:16,400
Speaker 11: that that's going to happen right now as we speak.

868
00:44:16,400 --> 00:44:19,880
Speaker 11: The US season export season doesn't happen until later in

869
00:44:19,920 --> 00:44:22,439
Speaker 11: the year, in September, so we have a long time

870
00:44:22,480 --> 00:44:25,239
Speaker 11: to go before we actually decide we actually see how

871
00:44:25,280 --> 00:44:27,080
Speaker 11: this time spent out, because you know, six months is

872
00:44:27,120 --> 00:44:29,239
Speaker 11: a long time in this trade war. Right, things could

873
00:44:29,280 --> 00:44:32,920
Speaker 11: create completely different by then. So until now, China is

874
00:44:32,920 --> 00:44:35,920
Speaker 11: getting most of it soybeans from Brazil. Brazil stands to

875
00:44:35,920 --> 00:44:39,960
Speaker 11: be a massive beneficiary of any trade war arising from

876
00:44:40,080 --> 00:44:44,000
Speaker 11: US and China, and they're taking advantage of it. So yeah,

877
00:44:44,040 --> 00:44:46,520
Speaker 11: I think that China has managed to diversify our fair

878
00:44:46,520 --> 00:44:47,760
Speaker 11: amount already.

879
00:44:48,480 --> 00:44:51,080
Speaker 4: So kind of you know, we're not really sure where

880
00:44:51,080 --> 00:44:52,680
Speaker 4: we are with this trade war here. We had a

881
00:44:52,719 --> 00:44:55,399
Speaker 4: little bit of a pause yesterday, the presidents stepping back

882
00:44:55,400 --> 00:44:58,759
Speaker 4: a little bit on rest of world. Here, what's the

883
00:44:58,760 --> 00:45:02,799
Speaker 4: commodities play here in a world where trade tensions are

884
00:45:02,840 --> 00:45:04,759
Speaker 4: so high? Where do you go?

885
00:45:07,000 --> 00:45:09,440
Speaker 11: Oh, it's not good. I mean, commodities ultimately is a

886
00:45:09,560 --> 00:45:13,480
Speaker 11: risk asset. So whenever you have macro risk of commodities

887
00:45:13,480 --> 00:45:15,160
Speaker 11: will be sold off. As we have seen in this

888
00:45:15,320 --> 00:45:19,480
Speaker 11: last week which was on presidental volatility, crude oil is tanking,

889
00:45:19,560 --> 00:45:21,839
Speaker 11: as it should be because the economic outlook in any

890
00:45:21,880 --> 00:45:24,719
Speaker 11: trade war is always so negative. The first thing that

891
00:45:24,760 --> 00:45:27,840
Speaker 11: he gets impacted is negative energy demands, So that's impacting

892
00:45:27,880 --> 00:45:33,520
Speaker 11: all the energy commodities. Metals, likewise, softs and agricultural commodities

893
00:45:33,600 --> 00:45:37,040
Speaker 11: have weather the storm better than the other three. I guess,

894
00:45:37,480 --> 00:45:39,319
Speaker 11: particularly because I think that you know, at the end

895
00:45:39,320 --> 00:45:41,640
Speaker 11: of the day, inputs will still have to happen. It's

896
00:45:41,680 --> 00:45:44,839
Speaker 11: just a question of trade dislocation. The one thing that

897
00:45:44,880 --> 00:45:47,560
Speaker 11: tends to win always is gold. It is the classic

898
00:45:47,680 --> 00:45:50,240
Speaker 11: safe haven, and it has reached record highs. It probably

899
00:45:50,239 --> 00:45:53,640
Speaker 11: will go higher again. So I think, you know, long

900
00:45:53,680 --> 00:45:57,200
Speaker 11: gold all the way, but crude oil at some point

901
00:45:57,239 --> 00:46:00,000
Speaker 11: it starts getting very cheap. I worry about Donald Trump

902
00:46:00,520 --> 00:46:03,600
Speaker 11: plans to for drill, baby drill, because he's you know,

903
00:46:03,640 --> 00:46:06,560
Speaker 11: you need, you need, you need seventy dollars all to

904
00:46:06,600 --> 00:46:09,040
Speaker 11: get any kind of investment in the US for shale oil.

905
00:46:09,280 --> 00:46:14,160
Speaker 2: Paul's up sixty three dollars, thirty one forty three. Yep,

906
00:46:14,200 --> 00:46:15,480
Speaker 2: that's a wow statistic.

907
00:46:16,160 --> 00:46:19,040
Speaker 4: Wow statistics. So Connor, when you think about gold, is

908
00:46:19,040 --> 00:46:22,399
Speaker 4: there is there a valuation call here for gold and all?

909
00:46:22,880 --> 00:46:25,359
Speaker 4: Is there a way you look at gold and think

910
00:46:25,400 --> 00:46:27,960
Speaker 4: about a relative to maybe other commodities, whether it's a

911
00:46:28,000 --> 00:46:29,759
Speaker 4: stock market, the bond market. How do you think about

912
00:46:30,600 --> 00:46:35,200
Speaker 4: evaluation here or is it just buy it?

913
00:46:35,200 --> 00:46:37,560
Speaker 11: It's you buy it, you buy it. It's one of

914
00:46:37,600 --> 00:46:42,040
Speaker 11: your diversification portfolios, alongside other safe havens like the Swiss,

915
00:46:42,040 --> 00:46:46,239
Speaker 11: frank and the Japanese. Yeah, traditionally US bonds and the

916
00:46:46,360 --> 00:46:48,520
Speaker 11: US dollar would have been in that basket, but today

917
00:46:48,960 --> 00:46:53,360
Speaker 11: arguably it's less in favor. So gold still has that

918
00:46:53,680 --> 00:46:57,480
Speaker 11: instrinsic value that people like, so I think it definitely

919
00:46:57,520 --> 00:47:00,680
Speaker 11: has more upside to go. But you know, at some point,

920
00:47:00,880 --> 00:47:02,800
Speaker 11: once we start getting a more of a feel for

921
00:47:02,920 --> 00:47:07,560
Speaker 11: where negotiations are going with bilateral negotiations, and eventually, and

922
00:47:07,600 --> 00:47:09,520
Speaker 11: I do believe at some point China and the US

923
00:47:09,560 --> 00:47:11,960
Speaker 11: will come back to the table. At some point you

924
00:47:12,440 --> 00:47:14,360
Speaker 11: start looking at the metals and energy again.

925
00:47:15,080 --> 00:47:17,759
Speaker 2: One final question con ed n f Man. With just

926
00:47:17,800 --> 00:47:21,719
Speaker 2: the heritage that you have, if you are in Beijing today,

927
00:47:22,320 --> 00:47:28,520
Speaker 2: what's the commodity where China has power or leverage over America.

928
00:47:28,960 --> 00:47:32,239
Speaker 2: It's I'm sure it's some odd commodity. I don't know

929
00:47:32,600 --> 00:47:34,480
Speaker 2: which is it.

930
00:47:34,480 --> 00:47:39,120
Speaker 11: It's a critical minerals, it's the rarer. It's they have

931
00:47:39,320 --> 00:47:43,160
Speaker 11: complete ownership and control over that. And that's that is

932
00:47:43,200 --> 00:47:46,480
Speaker 11: one thing that the USA needs badly if they want

933
00:47:46,520 --> 00:47:50,120
Speaker 11: to build this whole electrification and transition energy side of things,

934
00:47:50,120 --> 00:47:53,720
Speaker 11: which we clearly trun Donald Trump wants, because those minerals

935
00:47:53,760 --> 00:47:57,600
Speaker 11: have been actually exempt in these tariff tariffs. So yeah,

936
00:47:57,640 --> 00:48:01,640
Speaker 11: I think that's something where China definitely has leverage. And

937
00:48:01,680 --> 00:48:05,200
Speaker 11: then the sheer population. China has been a very export

938
00:48:05,239 --> 00:48:08,840
Speaker 11: oriented economy. Today China is going to have to shift

939
00:48:08,880 --> 00:48:13,520
Speaker 11: into more domestic consumption led economy. So that's been forced

940
00:48:13,560 --> 00:48:15,920
Speaker 11: upon them, becoming a bit more like the US GDP.

941
00:48:16,280 --> 00:48:19,279
Speaker 11: And once that happens, that doesn't reverse rapidly. So I

942
00:48:19,360 --> 00:48:22,600
Speaker 11: think then this is structure and it's going to be

943
00:48:22,600 --> 00:48:26,680
Speaker 11: forced upon. We'll have dramatic changes on the way the

944
00:48:26,680 --> 00:48:30,399
Speaker 11: world second largest economic power starts behaving with the rest

945
00:48:30,400 --> 00:48:33,160
Speaker 11: of the world. I think really interesting times.

946
00:48:33,200 --> 00:48:35,920
Speaker 2: Just brilliant Colin. Thank you so much, particularly on soybeans.

947
00:48:35,920 --> 00:48:36,080
Speaker 6: There.

948
00:48:36,120 --> 00:48:40,040
Speaker 2: Good morning to Brazil. Listening on YouTube. Subscribe to Bloomberg

949
00:48:40,120 --> 00:48:45,160
Speaker 2: Podcast in South America, Kona ache Ed and f Man.

950
00:48:45,480 --> 00:48:50,320
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951
00:48:50,440 --> 00:48:54,239
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952
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