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Speaker 2: Kelsey Beryl she joins us today from JP Morgan asset management. Tariffs.
Speaker 2: Everybody's worried about substituting. I'm going to substitute for my
Speaker 2: overpriced tomatoes from Mexico, I would suggest, and I'm seeing
Speaker 2: it percolating that far more. Here is the income effect
Speaker 2: of tariffs slowing economy, damp and wage growth. And that
Speaker 2: what do bonds do? Bill's notes and bonds given a
Speaker 2: slowing income effect, a dampened income.
Speaker 3: Effect, right, So, I mean, the data that we've been
Speaker 3: seeing suggests that the US economy is moderating, and maybe
Speaker 3: even slowing a little bit more aggressively than the term moderating.
Speaker 3: So if I look at real consumption spending over the
Speaker 3: first six months of the year, it's annualized negative for
Speaker 3: the first time since twenty ten.
Speaker 2: Is that price up yield down?
Speaker 4: I would say, so?
Speaker 3: I mean, I think that is the reaction in the
Speaker 3: bond market that you're seeing, which is that yields have
Speaker 3: been somewhat range bound this year. But you know, when
Speaker 3: data does come in weaker than expected, like the payrolls
Speaker 3: report we got on Friday, you see an aggressive move
Speaker 3: lower in yields. And that's been a function of this low, higher,
Speaker 3: low fire labor market the way that we've been describing it,
Speaker 3: which is not necessarily that companies are laying people off,
Speaker 3: but they are having them work less hours, and they
Speaker 3: are holding off on investment plans until they get more certainty.
Speaker 3: And I think the question is going forward, we do
Speaker 3: have a bit more clarity on the future outlook. We
Speaker 3: have the one big beautiful Bell Act. We also have
Speaker 3: some sense of tariffs, right, they're not going away.
Speaker 4: Maybe the average.
Speaker 3: Effective tariff rate is going to end up being around
Speaker 3: fifteen percent, between fifteen and twenty percent. Yeah, it's not great,
Speaker 3: but at least we know what it is. The question
Speaker 3: is do you see a reacceleration in some of this
Speaker 3: activity now that things are slightly more stable, or is
Speaker 3: there actually more damage to come from the tariffs.
Speaker 4: And we've been complacent because.
Speaker 3: It's just a very or longer lag than people anticipated
Speaker 3: between higher costs and slower demand and the impact on
Speaker 3: the economy.
Speaker 5: You're right, I mean, I think some of the earnings
Speaker 5: outlooks we've seen from some of these companies are there's
Speaker 5: still cautiously optimistic, but that I think that's kind of
Speaker 5: a win. I mean, because you don't really know what
Speaker 5: a fifteen to twenty percent tariff's going to do to
Speaker 5: your bound sheet.
Speaker 6: So do we take credit risk out there?
Speaker 5: Are you guys sensing that it's time to take some
Speaker 5: credit risk or taking credit risk is okay?
Speaker 4: Yeah, I mean we have been taking credit risk.
Speaker 3: We have been stress testing all of the companies that
Speaker 3: we own, assessing how they would handle ten percent tariffs
Speaker 3: twenty percent tariffs, and the credit analysts have all come
Speaker 3: back to us and they've said, you know, it's.
Speaker 4: Not great for earnings, it's not great for revenue.
Speaker 3: We're projecting a slowdown, but we're not projecting our earnings
Speaker 3: or revenue turn negative, and we're not projecting that this
Speaker 3: is necessarily going to cause a recession. And I will say,
Speaker 3: at the same time, expectations have been lowered, and so
Speaker 3: when Q two earnings have come out, it's been a
Speaker 3: clear beat and now we're refocusing from the negative impacts
Speaker 3: of tariffs to the potential positive impacts associated with one
Speaker 3: big beautiful bill.
Speaker 4: So a lot more companies are talking about.
Speaker 3: Upgrading free cash flow estimates because of expensing of R
Speaker 3: and D or interest deductibility, or lower emission standards for
Speaker 3: auto companies.
Speaker 5: So, I mean, I guess one of the questions here is,
Speaker 5: I'm how does that balance out because kind of maybe
Speaker 5: the dampening effects of terrorists, but maybe the pro.
Speaker 2: Growth effects of some of this one big beautiful bill
Speaker 2: that you mentioned.
Speaker 5: So net is you look at the twenty twenty six
Speaker 5: kind of how's how's the outlook out there for you?
Speaker 3: Yeah, I mean, net net, our base case has been
Speaker 3: subtrend growth, and I think that our confidence around that
Speaker 3: sub trend base case has grown.
Speaker 4: Because of a lot of these offsets.
Speaker 2: Yep.
Speaker 4: You know, you have the tariffs, but you have the
Speaker 4: one big beautiful bill.
Speaker 3: You know, you also think about the concerns earlier in
Speaker 3: the year with the deficits, right, there was a lot
Speaker 3: of concerns about expanding deficits. Now we have the trajectory
Speaker 3: for debt growth based on the new tax legislation, but
Speaker 3: we also know that we have a lot of tariff
Speaker 3: revenue coming in.
Speaker 4: So what have we gotten and fixed incomes so far
Speaker 4: this year?
Speaker 3: Well, stimulus maybe, but it's a it's a carry environment,
Speaker 3: so one where we started with high all in yields
Speaker 3: within fixed income at the start of the year, and
Speaker 3: with yield range of bound and spreads range bound. I
Speaker 3: look at returns you're to date on the USAG four
Speaker 3: point seven percent. That's essentially that carry environment that we
Speaker 3: were kind of expecting.
Speaker 2: When we went into hit your twelve months forward view
Speaker 2: on IG paper, Then can you make six to seven
Speaker 2: percent in fixed income?
Speaker 3: It will obviously depend how much risk free rates fall
Speaker 3: and how much spreads narrow from here, But even if
Speaker 3: we just stay range bound, you can expect the twelve
Speaker 3: month board return on your investment grade portfolio to look
Speaker 3: similar to your starting yield.
Speaker 2: I'm so glad I don't have a real job with
Speaker 2: a real job Kelsey burrowchip a real job. This morning,
Speaker 2: I just kicked the cross curds that my head's spinning.
Speaker 1: Folks, you're listening to the Bloomberg Surveillance podcast. Catch us
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Speaker 2: John stolf he's with Oppenheimer and Company. He is the
Speaker 2: one who said you have courage stay in the market
Speaker 2: in October two times ago, three times ago, four times ago,
Speaker 2: April passed. Paul, I just framed it out. You can
Speaker 2: do this on the Bloomberg terminal. Thank you, mister Secunda.
Speaker 2: And it's simple. The Stolfus call from here is up
Speaker 2: eleven point seven percent out one year, and that gets
Speaker 2: you out to seventy one hundred. So I interpolated. That's
Speaker 2: all we do that for John, I interpolated down forty
Speaker 2: seven thousand plus on that. It's a double digit lift,
Speaker 2: but not too double digity. You're seventy one hundred. People
Speaker 2: think you're nuts. Explain why you're not nuts.
Speaker 6: Well, thanks Tom.
Speaker 7: It always great to be on Bloomberg Radio Surveillance with
Speaker 7: you and.
Speaker 6: Paul and Lisa. I just want to say that where
Speaker 6: we are, the fundamentals look good. You know, it's in
Speaker 6: spite of everything. It would appear that when you think about.
Speaker 7: It, it's almost about it's about seventeen eighteen years ago
Speaker 7: since the financial crisis, and corporations aided by technology significantly,
Speaker 7: as well as the Federal Reserve, the ben bernanking legacy
Speaker 7: as we call it, have been able to manage a
Speaker 7: lot of situations, including so far this tariff regime as
Speaker 7: it comes in.
Speaker 2: But the bear people, the guys that say stolefus is nuts,
Speaker 2: They're going to say, Okay, it's great, but at some
Speaker 2: point it ends, and we have a correction done ten percent,
Speaker 2: a bear market down eighteen percent, or a normal collapse
Speaker 2: down thirty five percent. Where is that emotion out there?
Speaker 6: Well, that's a good question, you know.
Speaker 7: I think what it is is that bearishness always exists.
Speaker 7: There's a lot of people who feel that the Fed
Speaker 7: has maintained rates too high, their benchmark rate too high
Speaker 7: for too long. On the other hand, you know, when
Speaker 7: we look at it, what we say is they raised
Speaker 7: eleven times and they paused I think about fourteen or
Speaker 7: fifteen times now and no recession, so remarkably sensitive to
Speaker 7: their dual mandate, which is accessionally essentially giving us what
Speaker 7: we would have to say is an economic growth at
Speaker 7: a sustainable pace without untoward levels of inflation, with also
Speaker 7: not disrupting the job market.
Speaker 6: Although we're seeing jobs slow, but you.
Speaker 7: Know, Tom, it just looks like it's it really is
Speaker 7: a mid cycle.
Speaker 6: Extension by monetary.
Speaker 7: Policy that makes you know when you look at the
Speaker 7: economic cycle, it's as wide as the Amazon, not the
Speaker 7: outfit that delivers the boxes to your home, but rather
Speaker 7: the Amazon river. And this has been going on for
Speaker 7: quite a while.
Speaker 2: And this is the underestimation of American productivity an American.
Speaker 6: And we saw a nice pick up there today.
Speaker 7: You've got AI that appears to be and what we
Speaker 7: would say is a watershed period in terms.
Speaker 2: Of two enthusiastic for the showing.
Speaker 5: John, reading through your notes, something jumped out of me.
Speaker 5: Sometimes it seems to us that quite a few folks
Speaker 5: probably don't know what the best performing SMP five sector
Speaker 5: is year to date. I happen to know because I
Speaker 5: have a Bloomberg terminine front.
Speaker 6: Me no industrials.
Speaker 5: What does that tell you about this market?
Speaker 7: Oh?
Speaker 2: What it tells us is.
Speaker 7: That you've got you've got a broadening in the rally,
Speaker 7: which we began to look at and expect last year.
Speaker 7: In the fourth quarter and even earlier in that we
Speaker 7: were saying this rally is broadening.
Speaker 6: A lot of denial about that.
Speaker 7: Everyone, Oh it's just bag seven and it's just ooh,
Speaker 7: it's just so narrow. But you've got if you look
Speaker 7: at it on a year to date, industrials is up
Speaker 7: fourteen point.
Speaker 6: Four percent, outperforming the benchmark. That's up seven.
Speaker 7: The underlying bench Wroin goes up seven point eight, communications
Speaker 7: services up thirteen point nine, info Tech up thirteen point
Speaker 7: seven eight.
Speaker 6: And then utilities up twelve point eight. That's a defensive.
Speaker 7: After that, you've got financials really quite a bit of
Speaker 7: a value sector seven point three.
Speaker 6: Materials my gosh, five point it.
Speaker 7: Really this is Staples up five percent, real estate limpied
Speaker 7: along up one point five seven.
Speaker 2: Energy's negative.
Speaker 7: Consumer discretionary is down nearly two percent, health tears down
Speaker 7: five But those are understandable at least at this point.
Speaker 7: With yet we think consumer discretionary is improving in performance considerably.
Speaker 7: I mean, you look at this, you also think, has
Speaker 7: this been a dramatic overbought kind of rally? And we
Speaker 7: will say from the low of April eighth of this year,
Speaker 7: you know, info tech is up fifty over fifty percent
Speaker 7: as a sector, Communication services up thirty three point six,
Speaker 7: but industrials up twenty nine point five four and consumer
Speaker 7: discretionary up twenty seven. I won't belabor going.
Speaker 6: Through all of these, but my point is that looks wild.
Speaker 7: But then take it from the February nineteenth peak and
Speaker 7: the S and p's own up three point twenty seven percent,
Speaker 7: infotech's up eleven, and change industrials up eight point seven again.
Speaker 7: Second best performed utilities, third best performing ZECHERP six.
Speaker 2: So what we.
Speaker 7: Say is you're beginning to see this broadening in the rally.
Speaker 7: Small and mids are still pretty brutally traded. On a
Speaker 7: given day when the traders are just getting taking some profits,
Speaker 7: and large caps if things, if if the news flow
Speaker 7: isn't worrying, they go into smalls and mids and bid
Speaker 7: them up a little bit. We think that requires the
Speaker 7: FED cut, and we think that's that's more likely than
Speaker 7: not in September as a result of those jobs numbers
Speaker 7: and Powell has talked about for a long time the
Speaker 7: importance of the dual mandate and the sensitivity towards that
Speaker 7: dual mandate would tell us, you know, probably about a
Speaker 7: twenty five BIPs, maybe even a fifty BIPs.
Speaker 5: Got what have you seen from corporate American terms of
Speaker 5: earnings so far this.
Speaker 7: Squad gosh when it comes to Ernie's I was just
Speaker 7: I was just looking at the EA page and I
Speaker 7: think it's up nearly twelve percent earnings growth.
Speaker 6: You've got three sectors that are double digit.
Speaker 7: Returns. That's off the top of my head. That's tech, communications, services.
Speaker 2: And financials.
Speaker 7: You've only got one negative, and I think that's a
Speaker 7: negative double digit earnings growth. I think that's energy and
Speaker 7: effectively You've got eight positive earnings growth, three negative.
Speaker 6: This is remarkably healthy.
Speaker 7: But we really think a lot of it has to
Speaker 7: do like Jimi Hendrix used to say, are you experienced. Indeed,
Speaker 7: managements of corporations and the US consumer are more experienced
Speaker 7: to dealing with waters that need attention to navigate and
Speaker 7: have the tools through technology.
Speaker 6: Just think of the communications. I've been to this business right.
Speaker 7: Since nineteen eighty three, So I remember when there wasn't
Speaker 7: a Bloomberg, when there wasn't a Bloomberg News, there wasn't
Speaker 7: all these different we have day people know, let.
Speaker 2: Me reintroduce John Stolphus with US. He has an acclaimed
Speaker 2: bullmarket call. He has nailed what we've seen over the
Speaker 2: last number of years. He's with the venerable Oppenheimer and
Speaker 2: Company's chief investment strategists. You mentioned James Hendrix and all
Speaker 2: of this. Were we better off when we were in
Speaker 2: the office looking at the back section of the Wall
Speaker 2: Street Journal in earnings's revenue, net income shares, and when
Speaker 2: you went to get a cup of senka or post
Speaker 2: him or escafe, you risk tripping over the value line
Speaker 2: on the floor. Were we better back then in terms
Speaker 2: of having the knowledge and conviction to stay in the market.
Speaker 6: I don't think so. And in fact, the change that
Speaker 6: we have seen very.
Speaker 7: Much, especially amongst private investors, is private investors used to
Speaker 7: get into the bullmarket usually after it was up. This
Speaker 7: is just anecdotal ratecall, but probably ten or fifteen percent.
Speaker 6: Everybody's talking about it. If you don't own stocks.
Speaker 2: One day, okay. Let the bottom line is everybody's managing
Speaker 2: their own retirement, got it? And that's the sea change here.
Speaker 6: I think that's what it is. It's serious investing by
Speaker 6: the private investor.
Speaker 7: It doesn't mean they still don't have plays that they do,
Speaker 7: whether it's a you know, the mag seven or God
Speaker 7: helps the memes, But when you look at it, it
Speaker 7: is it adds support to this bull market in that
Speaker 7: you've got intermediate and long term investors who are looking
Speaker 7: for the babies that get get tossed out with the
Speaker 7: bathwater on pullbacks rather than buying dips blindly.
Speaker 6: And they're in it for the longer haul because multi.
Speaker 7: Generations now from from the boomers all the way to
Speaker 7: the newer younger generations, have.
Speaker 6: A realization that social security.
Speaker 7: Is not likely to give anywhere near the retirement percentage
Speaker 7: of income, and as it once did for their great grandparents,
Speaker 7: their grandparents, and certainly for their and for their parents,
Speaker 7: and so people need to provide for themselves, and the
Speaker 7: market offers an opportunity.
Speaker 5: John Tom has his focus on the VIX and right
Speaker 5: now it's pretty quiescent around sixteen times. But boy, this
Speaker 5: year's been anything but. In the s and P five
Speaker 5: hundred with it twenty percent declined there in April with
Speaker 5: the terroriffs, but then boy, nearly a thirty percent rebound
Speaker 5: off that low, all in seven months.
Speaker 6: We don't see that very often, do we No?
Speaker 7: And I think once again, I think that is the
Speaker 7: It is the ability of the market to discount data
Speaker 7: that crosses the proverbial transom on any given day, whether
Speaker 7: it's it's economic data, whether it has to do with
Speaker 7: a report related to the management of a corporation, or
Speaker 7: policy change or considerations upont all this stuff happens relatively fast.
Speaker 7: And if you look at the if you look at
Speaker 7: the chart, it just looks like whenever the VIX gets
Speaker 7: too sleepy, you know, you get your you become vulnerable
Speaker 7: to see a bit of a spike somewhere along the line.
Speaker 7: But the reality is the spikes have been lower of
Speaker 7: late the pattern. I'm not a technical strategist and a
Speaker 7: fundamental strategist, but we look at the vics because when
Speaker 7: it gets too sleepy, get ready, you know, and then
Speaker 7: be prepared to instead of running for the hills based
Speaker 7: on the fundamentals, look for good quality stocks and cassis.
Speaker 2: To do with MAG seven now, I mean it, I
Speaker 2: own MAG seven. I don't want to sell it. What
Speaker 2: does John stolf To say, I don't own them? Should I?
Speaker 2: I mean, what do you do with MEG seven for
Speaker 2: the flavors of regret out there?
Speaker 7: Now? Well, we do say we think you do need
Speaker 7: to own them because we think they are an intermediate
Speaker 7: to longer term story because of the deeply embedded nature
Speaker 7: of technology in the lives of both consumers and business.
Speaker 7: But it also means if you look at just our
Speaker 7: little box that we put every week at our piece,
Speaker 7: where we look at the S and P five hundred,
Speaker 7: we don't rate our sectors either overweight or underweight, but
Speaker 7: we rate them outperform, market perform or a below or
Speaker 7: you know, underperformed. Rather at when we look at technology itself,
Speaker 7: what we say on infotech, it's about thirty percent waiting
Speaker 7: I think in the benchmark, so we say twenty five percent.
Speaker 6: As a conversation point. For an advisor and their client,
Speaker 6: they may want much less, they may have more. It
Speaker 6: depends upon their tolerance to risk.
Speaker 2: One thing you mentioned the economist James Hendrix. Yes, okay,
Speaker 2: I don't think people know his history that this guy
Speaker 2: came up with foundational blues. I mean everybody knows what's
Speaker 2: stock and all that, but he came up foundational blues.
Speaker 2: Literally he was the opening band as a kid for
Speaker 2: the Isisley Brothers a million years ago. I mean the
Speaker 2: blues foundation.
Speaker 7: Was something oh spectacular. And when you consider his not
Speaker 7: only his lead guitar playing, but the comping the.
Speaker 6: Cops O Rich, I mean it was.
Speaker 7: It was like very very central to what would be
Speaker 7: the Memphis kind of sound.
Speaker 2: He was part of that.
Speaker 7: I mean the cross you know, whether you consider James
Speaker 7: Burton or Jimmy Hendricks.
Speaker 6: The comping just fabulous, just fabulous.
Speaker 2: It's great. Is that enough? Guitar, John John Stolphus, thank
Speaker 2: you so much. Congratulations and really one of the great calls.
Speaker 2: I pull it in with Ralph and Kompora ed Yardnny
Speaker 2: has been brilliant. Out of Bullmark, it's been. Bolski's been okay.
Speaker 2: I mean I don't sun no, he's you know he
Speaker 2: likes the Vikings well you know it's an asterisk, but okay,
Speaker 2: he's been okay, and John storph has killed it. App
Speaker 2: go as well.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: This is the conversation of the day for people worried
Speaker 2: about Transatlantic confidence. Mark doubting is with Blue Bay Asset
Speaker 2: Management in the heart of COVID. They did an agreement
Speaker 2: with the Royal Bank of Canada. It is OURBC Blue
Speaker 2: Bay asset Management. He has been a student of our
Speaker 2: greater opinion, our economics, our finance, our investment around credit
Speaker 2: for decades. Mark, what's the level of confidence in the
Speaker 2: city this morning that we can get beyond this tariff?
Speaker 2: This tariff Thursday? What's the confidence level forward?
Speaker 8: So I'd say that we're actually in a reasonable position
Speaker 8: at the moment stateside, when we look towards the coming
Speaker 8: year in twenty twenty six, I think in this respect
Speaker 8: that there's a real sense that into the year ahead
Speaker 8: we're probably going to see lower taxes, lower rates, less regulation,
Speaker 8: and that's speaks to a better outcome for.
Speaker 9: The coming year. Albeit in the short term.
Speaker 8: We think that in the short term there could be
Speaker 8: some softness in data, as we saw with the payrolls
Speaker 8: numbers last week, as some of these sort of tariffs
Speaker 8: and the past uncertainty impacts the data in the second
Speaker 8: half of the year. So short term i'd say things
Speaker 8: look a bit bumpy. Further out, it looks a lot better.
Speaker 8: Right by and large, I'd say that markets are looking
Speaker 8: pretty pretty cheerful.
Speaker 2: Yeah, part to the observation you had that all of
Speaker 2: a sudden, August has a certain pace to it for
Speaker 2: New York.
Speaker 5: M and A sure, and we're starting to see some
Speaker 5: animal spirits a little bit, and also in the IPO market. So, Mark,
Speaker 5: as you think about it, how are you surprised that
Speaker 5: despite all the tariff headwinds, crosswinds, I'm not sure kind
Speaker 5: of whip they are depending on what country you are,
Speaker 5: that markets are performing relatively well here servely with the
Speaker 5: stock markets hitting all time highs here.
Speaker 6: Yeah.
Speaker 8: Well, I think in terms of the US stop market,
Speaker 8: it comes back to earnings and earnings growth have been solid,
Speaker 8: hasn't it.
Speaker 9: I mean, it's looking pretty good.
Speaker 8: And from that perspective, it also feels like all through
Speaker 8: the year the stock market has been climbing a wall
Speaker 8: of worry. I think some of the fears that were
Speaker 8: being expressed back in April have really melted into the background.
Speaker 8: And having got the budget done, having got the tariffs
Speaker 8: through without a big sort of pushback in a retaliatory sense, effectively,
Speaker 8: what the US has done here is it's effectively managed
Speaker 8: to raise taxes pretty materially. We think that the tax
Speaker 8: take on revenues from tariffs will about four hundred and
Speaker 8: fifty billion, which is up three hundred and seventy billion
Speaker 8: year over year.
Speaker 9: That's around one point two percent of GDP.
Speaker 8: So this has been a decent outcome for the US
Speaker 8: and so in many respects, I don't think it should
Speaker 8: be a big surprise that US stops have been performing
Speaker 8: reasonably well.
Speaker 2: I can see you in your class with Skidelski at work.
Speaker 2: I can just see it right now. What does this
Speaker 2: do to the income generation of our trade allies? I mean,
Speaker 2: do we see slowness in Europe, the United Kingdom, in
Speaker 2: Asia off of these trade agreements?
Speaker 8: So ostensibly yes, we should see a bit of a
Speaker 8: I mean, in as much as the US is having
Speaker 8: a win, here is a relatively speaking, a trade war
Speaker 8: loss for other countries elsewhere in the world. I think
Speaker 8: the big question though, and this is the big question
Speaker 8: that the FED is also asking, is that if you've
Speaker 8: raised tariffs by one point two percent of GDP, who's
Speaker 8: footing the bill than Are you going to be US
Speaker 8: consumers or is it going to see overseas producers? And
Speaker 8: the mix of that, I think is really going to
Speaker 8: determine where Mark is go in the months ahead.
Speaker 2: We're going to continue here with Mark Dodding, RBC Blue
Speaker 2: Bay thrillly could be with us today with just wonderful
Speaker 2: Transatlantic perspective, really gets perspective on economics right now. A
Speaker 2: productivity series coming out unit labor costs has my attention.
Speaker 2: And also we see claims that two two two is
Speaker 2: a survey two hundred twenty two thousand. Of course a
Speaker 2: revision will be important, made more important by the jobs
Speaker 2: report that we saw today. Further data at ten o'clock
Speaker 2: this morning. Let's go to it. The economic data coming
Speaker 2: out right now. We use e CEO go, which is
Speaker 2: a good thing to do. Unit labor costs come in
Speaker 2: and tick higher than the survey one point five percent
Speaker 2: is one point six percent non firm productivity shows a
Speaker 2: productive America. Two percent statistic comes in at two point
Speaker 2: four percent. Revisions on claims flat in a more difficult
Speaker 2: claims slightly, ever so slightly. Two two two comes in
Speaker 2: with a two twenty six claims as well. I don't
Speaker 2: see a lot of you know, a lot of meat
Speaker 2: there for anybody, Paul, No, I don't.
Speaker 5: Know any initial jobas claims a little bit higher than
Speaker 5: expectations and a little bit of a vision higher last time.
Speaker 5: We'll keep an eye on that. Continuing claims a little
Speaker 5: bit higher than expectations, but we had a revision downward
Speaker 5: last month.
Speaker 2: So there surveillance data check audible gold up twenty five
Speaker 2: dollars three four five sixty dollars to a record ee
Speaker 2: on gold. Had no idea what that has to do
Speaker 2: with economics Commonwealth going, Tom, why are you doing gold
Speaker 2: during our economics? Commonwealth? We thank them for our for
Speaker 2: all of Bloomberg's surveillance. Bloomberg surveillance. This morning brought you
Speaker 2: by Commonwealth, supporting more than two thousand independent financial advisors
Speaker 2: with a two to one advisor to staff ratio, small
Speaker 2: firm Attenatus, big Advisor Impact. Go to Commonwealth dot com
Speaker 2: Commonwealth dot com to learn about their consultative support and technology. Paul,
Speaker 2: why don't you bring in mister Dowding in London?
Speaker 5: Sure absolutely, Marked Outing stays with the CIO of RBC
Speaker 5: Blue Bay Asset Management. Hey Mark, The Bank of England
Speaker 5: cut interest rates to the lowest level today in over
Speaker 5: two years. What do you make of that and how
Speaker 5: do you think that may or may not influence the
Speaker 5: US Federal Reserve.
Speaker 8: So I think the picture in the UK is rather
Speaker 8: different to that in the US. The economy here is
Speaker 8: rather limping along. We've really been sort of struggling for
Speaker 8: a few years in economic terms.
Speaker 9: It's interesting just hearing that sort.
Speaker 8: Of productivity data that we hear in the US productivity
Speaker 8: at two point four, because we see strong investment in
Speaker 8: the US, because we see those productivity gains in technology.
Speaker 8: By contrasts, in the UK we have next to no
Speaker 8: productivity growth whatsoever. So that's why UK rates are coming
Speaker 8: down because the economy is slow. At the same time
Speaker 8: here in the UK actually our worries that inflation is
Speaker 8: too high. I think in the US it's a very
Speaker 8: different situation. We've actually gone an economy that has been
Speaker 8: very healthy for an extended period of time. Is more
Speaker 8: question of whether the FED ease rates, because the economy
Speaker 8: could go faster than it currently is if there isn't
Speaker 8: any inflation to worry about.
Speaker 2: Mark, when you were at Warwick and I don't know
Speaker 2: if you you know you served under Skadelski and work economics,
Speaker 2: did you actually read the one twenty one pages of Skidelski,
Speaker 2: John Maynard Keynes.
Speaker 8: Oh, hell, no, I mean I was an active a
Speaker 8: student right hetos to anyone he did.
Speaker 9: He made it through all of that.
Speaker 8: I think my back in the days when I had
Speaker 8: hair on my head, I was probably too interested in
Speaker 8: the parties more than the elections, but it certainly gave me.
Speaker 9: A good grounding that pace. It's a fine institution.
Speaker 2: Mark Downing, thank you so much. I bring that up
Speaker 2: for Lord Skadelski was just hugely supportive of the advent
Speaker 2: of all of this, and we thank him in the
Speaker 2: University of Work for their support in our early years.
Speaker 2: Markdowning see Blue Bay at Capitol.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also watch us
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.
Speaker 2: Joining us now foundational. You know it's Stolfhsen. It's sort
Speaker 2: of the same thing as John Stolfus. Joe Carson has
Speaker 2: pretty much seen it all. He's a former chief economist
Speaker 2: Alliance Bernstein, publisher of The Carson Report. I don't, Joe,
Speaker 2: are you retired? You're not retired, are you?
Speaker 10: Uh? Semi retired.
Speaker 2: Semi he's only working seventy hours a week. He's cut
Speaker 2: it back from eighty. Joe, let's do this with you.
Speaker 2: You're the first one I've talked to. I got an
Speaker 2: inflation report next week, Okay, I got a labor economy struggling.
Speaker 2: The consensus is inflation is I think you called his persistent.
Speaker 2: Which is more important the inflation report next week or
Speaker 2: the next claims number on labor.
Speaker 10: Well, they're both connected in some ways. Certainly, the terriff
Speaker 10: related the impact on goods prices are starting to come through,
Speaker 10: and it'll come through even more over the next seven months.
Speaker 10: It takes time to show up on the shelves and
Speaker 10: what people pay and what companies pay. But the I
Speaker 10: think the labor data that you've seen recently, particularly the
Speaker 10: small job gains, as a reflection that companies are very
Speaker 10: hard having a hard time to plan how to operate
Speaker 10: in this environment where tariffs go in and out or
Speaker 10: up and down, and they're not knowing where they're going
Speaker 10: to go next.
Speaker 5: So putting it all together here, I mean Tom likes
Speaker 5: to talk about the resilience of the US consumer, the
Speaker 5: resilience of companies in general, is are these tariffs something
Speaker 5: that we all can kind of deal with and get
Speaker 5: through and get past without seeing any significant economic slowdown
Speaker 5: or pick up an inflation.
Speaker 10: Well, that's very unlikely. I think you've already seen a
Speaker 10: significant slowdown in hiring. That means companies are not investing
Speaker 10: or planning to grow their companies because they increased costs.
Speaker 10: You know, one thing that's being missed is that in
Speaker 10: the first nine months of this fiscal year, corporate tax
Speaker 10: collections were off thirty billion from a year ago based
Speaker 10: on higher expenses, and that's tied to the tariffs. The
Speaker 10: inflation rate will pick up and that's going to hurt
Speaker 10: consumer spending and make consumers more cautious on what they do.
Speaker 10: So it's not a zero sum game. When you raise terraffts,
Speaker 10: it's like putting the tax on the consumer and businesses.
Speaker 10: And also keep in mind the initial intent of terrafts
Speaker 10: was to bring back many factoring or increased manufacturing relative
Speaker 10: to where it was before. But the problem is that
Speaker 10: many of our companies operate on a global basis, not
Speaker 10: with a national footprint. So putting cost increases on a
Speaker 10: lot of materials and supply raises the cost of production
Speaker 10: for them. It makes them uncompetitive in the world. So
Speaker 10: it's it's a really odd policy and I think it's
Speaker 10: going to have bad consequences down the road.
Speaker 5: We had some week labor data last week, and then
Speaker 5: we had the year of labor systics as commissioner effectively
Speaker 5: fired by the president. What did you make of all
Speaker 5: that noise last week?
Speaker 10: Well, let me say three things in this The politics
Speaker 10: around labor market data or economic data has been around
Speaker 10: a long time. Presidents have always complained about the interpretation
Speaker 10: of data, but never the actual data itself. Okay, one thing. Second,
Speaker 10: the fact that the Treasurer Secretary Vesent and the National
Speaker 10: Economic Council Director Hassett did not defend the BLS and
Speaker 10: this is shocking, Okay, I've never seen that before in
Speaker 10: my long career. And the third point is what the
Speaker 10: administration was able to do is flip the switch.
Speaker 2: Here.
Speaker 10: How many reports have been on the firing of the
Speaker 10: BLS commissioner and how many reports on what the actual
Speaker 10: data says. They don't want you to talk about the
Speaker 10: data because the data shows labor markets are struggling and
Speaker 10: companies are struggling. That was a message there, But it's
Speaker 10: been blunted, so the financial press, you guys in particular,
Speaker 10: have a big job to tell the truth going forward.
Speaker 2: Joe, thank you so much, Joe Carson with us formula
Speaker 2: with the Lions Bernstein there and the comments that mister
Speaker 2: Hassett are clearly out in the zeitgeist. We'll be addressing
Speaker 2: that on the coming days. Here.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android
Speaker 1: Atto with the Bloomberg Business app. You can also listen
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Speaker 1: Just say Alexa play Bloomberg eleven thirty.
Speaker 2: Right now to the newspapers, Lisa Matteo, Okay, I.
Speaker 11: Want to start with the New York Times, because sorcerer
Speaker 11: saying that President Trump weighing getting involved in the New
Speaker 11: York City mayor's race to help try and stop Zora Mundami.
Speaker 11: So what he's reportedly done, this is according to the
Speaker 11: Times who've spoke to people. They said, he's picked the
Speaker 11: brain of a Republican congressman, New York businessman about the
Speaker 11: crowded field, right, who has the best chance of beating Mamdami.
Speaker 11: He also was briefed by Mark Penn. He's a poster
Speaker 11: who worked with Alexa Bill and Hillary Clinton.
Speaker 2: Right.
Speaker 11: He also Andrew Stein, a former New York City Council president,
Speaker 11: a range of polling that's showing that actually for former
Speaker 11: Governor Cuomo could still be a competitive factor as an independent.
Speaker 6: So what the article does.
Speaker 11: It really raises questions about what the president's involvement in
Speaker 11: the race would do, saying it could bring like this
Speaker 11: new element of unpredictability to something that's already wild, crazy chromo.
Speaker 2: And then the last seventy two hours he established the
Speaker 2: timeline and he was heated that nothing happens till after
Speaker 2: Labor Day. Everybody now is jockeying positioning. It's gonna be fascinating.
Speaker 2: I'll make it up, Paul. The second week of September, Yeah,
Speaker 2: when this thing really gets serious.
Speaker 5: Yeah, and you know, we kind of keep hearing that
Speaker 5: either Mayor Adams or former Governor Cuomo, somebody needs to
Speaker 5: maybe bow out so called les the Democratic Party around
Speaker 5: that remaining candidate. So say how that plays out?
Speaker 2: What do you got next?
Speaker 11: Okay, this is kind of thinking about what's in your cupboards,
Speaker 11: what's in your refrigerator. What's in all that stuff?
Speaker 5: Captain crunches.
Speaker 6: No, see, that's the problem.
Speaker 11: So this is according to the CDC's Nutrition Survey, sixty
Speaker 11: two percent of childhood diets come from highly processed foods.
Speaker 11: So we're talking about burgers, pastry, snack, pizza, thing like that.
Speaker 11: For adults it was fifty three percent, not as much
Speaker 11: but still high. It's it's it's still a dip though
Speaker 11: from about five years ago when the survey was taken.
Speaker 11: But what they're saying is that how you can avoid
Speaker 11: these highly processed food is you go to the store
Speaker 11: and you look at the label. If there are ingredients
Speaker 11: there that are not in your kitchen, then it's probably
Speaker 11: highly processed. This is what I do when I go
Speaker 11: to the supermarket.
Speaker 2: Yes you do.
Speaker 11: People hate me in the supermarket.
Speaker 9: Because I'm the one.
Speaker 5: I think we're crowding hate at home. I mean people
Speaker 5: are like mom brought home. Some more like are we
Speaker 5: supposed to eat this stuff?
Speaker 2: Kind of thing?
Speaker 11: But some of the okay, so what are some of
Speaker 11: like the top ultra process foods? They don't think of sandwiches. Actually,
Speaker 11: I love cold cuts, followed by sweet bake goods. Savory snacks.
Speaker 11: Those were some of the high things. But it's you know,
Speaker 11: it's a serious because doctor's link those ultra processed food
Speaker 11: and modern diabetes and stuff. Right, I'm waking. So that's
Speaker 11: the story of this still coming out. No, this next
Speaker 11: one's a good one.
Speaker 6: Okay.
Speaker 11: College kids they love their Google calendar, right, they call it,
Speaker 11: that's the slang for it. Okay, So they're using it
Speaker 11: to schedule everything like what time to go to sleep,
Speaker 11: what time they eat, if they want.
Speaker 6: To go for a walk.
Speaker 11: But what they're also scheduling is to do is asking
Speaker 11: someone on a date. That's actually a new thing hooking up.
Speaker 11: You send someone a Google calendar invite. That's the way
Speaker 11: the kids are doing it nowadays.
Speaker 4: Who knew.
Speaker 11: I mean, they're sending screenshots of their entire calendar, you know,
Speaker 11: color coded and everything, and they're saying, well, if you
Speaker 11: can fit into my schedule, then then maybe we can
Speaker 11: make something work.
Speaker 2: Again, just go to a bar.
Speaker 9: That's how you do it, kids.
Speaker 11: But I mean it's kind of impressive or how organized
Speaker 11: they are, but it's a bit much. Quickly, Okay, Top Golf,
Speaker 11: callaway brands, they came out with earnings, right, It was
Speaker 11: an earnings beat.
Speaker 4: You know what was a big.
Speaker 11: Thing for them. The big thing was their promotions. They
Speaker 11: had frozen margaritas and half off golf during the week,
Speaker 11: so half price during the week. People love that. They
Speaker 11: come out, they have a margarita, they're happy.
Speaker 5: Yeah, I'm working for them, I mean, but I've heard
Speaker 5: great things about it.
Speaker 6: Top Golf.
Speaker 5: I love it.
Speaker 2: Yeah.
Speaker 8: It's a fun.
Speaker 11: Yeah, I have it's very fun. You have food, drinks.
Speaker 6: If you're like sas Hour and you need No I'm
Speaker 6: not a Gulf.
Speaker 2: Top Golf.
Speaker 5: Oh yeah, but it's a fun time.
Speaker 2: Thank you, Alsato, thank you, Thank you so much for
Speaker 2: the newspapers. Greatly appreciated.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
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