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Speaker 2: Now with Steve Chicago. Lindsay Pigs joins us. Lindsay, how
Speaker 2: do you define recession if it is an NBER, what's
Speaker 2: a Piegsa recession look like?
Speaker 3: Well, I think we're looking for two consecutive quarters of
Speaker 3: negative growth. But frankly, when we get to a non
Speaker 3: accelerating economy, it was growth falling anywhere near less than
Speaker 3: one percent, you're kind of flitting hairs at that point,
Speaker 3: thank you. The economy would clearly be struggling with inflation
Speaker 3: still very elevated.
Speaker 2: At this point, you nailed the elevation. How do you
Speaker 2: feel about economic growth? Can you even look out three months,
Speaker 2: nine months, a year and a half, given everything hinged
Speaker 2: on policy?
Speaker 3: Well, it is very difficult at this point. When we
Speaker 3: look at in hindsight, we see that the footing for
Speaker 3: the US economy is still very solid, consumer spending, businesses
Speaker 3: still investing, but there's an incredible amount of uncertainty and
Speaker 3: volatility coming down the pipeline, which could very easily shake
Speaker 3: away that solid putting that we've seen in the economy
Speaker 3: for quite some time now.
Speaker 4: So, Lindsay, is stagflation a concern?
Speaker 3: Actually, staglation is the biggest concern. I don't think a
Speaker 3: recession or an outright decline is really my primary focus.
Speaker 3: But a period of stagflation, as the FED lack of
Speaker 3: commitment to rating in price pressures could eventually choke off
Speaker 3: the upside potential for the US economy, leaving us again
Speaker 3: we're splitting hair is whether or not we fall into
Speaker 3: negative territory. The risk is that we could grow slow
Speaker 3: from this two percent take to one percent to less
Speaker 3: than one percent, with nominal price pressures still up at
Speaker 3: three ish percent. Of slow growth, elevated prices the very
Speaker 3: definition of sagsulation.
Speaker 4: So what are you seeing in the labor market here today, lindsay,
Speaker 4: because that's kind of the front lines for how people
Speaker 4: are feeling about the economy.
Speaker 3: Well, the labor market is still somewhat solid, but showing
Speaker 3: signs of volatility and uncertainty. Now, most of the weakness
Speaker 3: that we have seen has been the result of treasic
Speaker 3: weather events, the fires in California, unfavorable weather scenarios, and
Speaker 3: the mid Atlantic and the East Coast. But there was
Speaker 3: also a sizeable decline in services hiring as of late,
Speaker 3: which could in part reflect the fact that the federal
Speaker 3: government has made moves to shrink the size of government,
Speaker 3: reduce federal employees, several government contracts, and so this could
Speaker 3: be the tip of the iceberg in terms of that
Speaker 3: downward pressure on the labor market as a result of
Speaker 3: these new initiatives.
Speaker 2: I mean, Lindsay pigs with us with STIFA for a
Speaker 2: lengthy conversation here this morning. She was fabulous last year
Speaker 2: in gaming out a feed that would stay higher on
Speaker 2: their rate because of Inflation's Paul mentioned stagflation really front
Speaker 2: and center. What do you observe from the distance of
Speaker 2: the Midwest. I mean when we say slow down or
Speaker 2: and I totally take your point, Lindsay, on one percent
Speaker 2: is a recession for two thirds of America, three quarters, whatever,
Speaker 2: But is it a good slowdown or a service sector slowdown?
Speaker 3: It would be a servant sector slow down, which has
Speaker 3: really been the engine of the economy at this point.
Speaker 3: So I do think that if we saw that precipitous
Speaker 3: decline in activity broad based activity. It would primarily be
Speaker 3: a reflection of that pullback in services, both on the
Speaker 3: hiring side but also the expenditure side. And we've already
Speaker 3: seen consumers exhibit this rising level of concern amid a
Speaker 3: very uncertain outlook, pulling back on what they're purchasing over
Speaker 3: the course of the past two months. So really setting
Speaker 3: us up for a potential self inflicted, if you will,
Speaker 3: downturn in terms of consumer activity being sidelined as a
Speaker 3: result of this tremendous amount of uncertainty coming from fiscal policy.
Speaker 4: So lindsay, have you guys changed your GDP forecast here recently?
Speaker 3: We haven't necessarily changed our forecast, but we have added
Speaker 3: to the downside risks to our forecast. It's still too
Speaker 3: soon to say exactly what the impact is going to
Speaker 3: be of the latest initiatives from the Trump administration, but
Speaker 3: I do think that the downside risk to growth, the
Speaker 3: upside risk to inflation, we're starting to see that spread increase,
Speaker 3: which could compound a less favorable outlook for the economy,
Speaker 3: at least in the near term.
Speaker 2: How does the stock market fit in if you look
Speaker 2: at any core first term economics, major non economics, major
Speaker 2: text the stock market, Lindsay Biggs shows up about chapter
Speaker 2: twenty three. How do you fold a declining stock market
Speaker 2: futures now negative eighty down, futures negative forty one, the
Speaker 2: vix out almost three big figures. How does that fold
Speaker 2: into confidence in the animal spirit?
Speaker 3: Well, I think that reinforces the concern and the lack
Speaker 3: of optimism that the market has right now for the
Speaker 3: US economy broadly to continue to perform without this ongoing
Speaker 3: rank propelled by the consumer, which again really propped up
Speaker 3: the economy over the past couple of years. So this
Speaker 3: underscores the uncertainty and the volatility and the lack of
Speaker 3: confidence that investors and consumers have looking forward over the
Speaker 3: next couple of quarters.
Speaker 4: All right, so lindsay, what do you think we'll see
Speaker 4: some of this? I guess just uncertainty in the marketplace
Speaker 4: caused by in part by some of this talk on tariffs,
Speaker 4: talks on change of immigration policy. Will it be in
Speaker 4: growth GDP numbers or will be in an inflation? Where
Speaker 4: do you think we'll see it first, if at all?
Speaker 3: Well, it's going to take some time to filter into
Speaker 3: the inflation numbers. So the tariffs that are enacted today
Speaker 3: are going to take probably two to three months to
Speaker 3: filter into the inflation numbers. So there is a sizeable
Speaker 3: lack in terms of the growth aspects. We would expect
Speaker 3: that more of a near term reaction, consumers reacting in
Speaker 3: anticipation of those potential increases. We would also see businesses
Speaker 3: at the start of the year already increasing inventories, again
Speaker 3: in anticipation of that potential implementation and potential impact of Paris.
Speaker 3: So I think we're going to see that in the
Speaker 3: growth numbers first and foremost before we actually see the
Speaker 3: realized impact on prices.
Speaker 2: Lindsay Northwestern University in Chicago. They have their acclaimed transportation
Speaker 2: center right now. The transportation center between whoever wins a
Speaker 2: Canadian election and President Trump is a bridge between Detroit
Speaker 2: and Windsor, Ontario. You've got a visceral knowledge of that.
Speaker 2: How do you describe de mere mortals the trade tension
Speaker 2: across that frozen river.
Speaker 3: Oh, it's quite intense. But remember it was not long
Speaker 3: after that traff was announced that the Jump administration did
Speaker 3: grant an exemption for the auto sector for a period
Speaker 3: of one month amid massive pleas from several large automakers
Speaker 3: that these tariffs would cause severe supply chain disruptions, could
Speaker 3: result in significant price increases. So the sense of immediacy
Speaker 3: in terms of that rollback that exemption period really underscores
Speaker 3: the sensitivity and importance of that relationship.
Speaker 2: Okay, the really side, we get to April. I mean
Speaker 2: the Red Sox are winning the first week of April.
Speaker 2: Season's over by fourth week of April, Lindsey Piegs, are
Speaker 2: we going to see? Do you just assume with the
Speaker 2: dynamics and knowledge and facts you have right now that
Speaker 2: you know Ford or GM or Stilantis Chrysler's get un
Speaker 2: dial one eight hundred Trump and say we're laying off
Speaker 2: X thousands of people on Tuesday. Is that what we're
Speaker 2: going to see in May or June.
Speaker 3: Well, we certainly could be, and it could be used
Speaker 3: as a negotiating tactic. But at the same time, the
Speaker 3: Trump administration has been clear that a period of adjustment
Speaker 3: is expected, that that temporary disruptions are expected, And the
Speaker 3: bottom line comes down to the Trump administration wants to
Speaker 3: be able to level the playing field, and if that
Speaker 3: comes at the consequence of the auto sector, I think
Speaker 3: the administration may be willing to sacrifice that, at least
Speaker 3: in the near term, to ensure a better, longer term
Speaker 3: trade agreement with our neighbor.
Speaker 2: I'm making the number up, folks. I'm not qualified they're
Speaker 2: going to sacrifice twenty thousand jobs in the greater pigs
Speaker 2: of Midwest to get some national thing done. I see
Speaker 2: no history that that's occurred.
Speaker 3: I don't think that we have to go to the
Speaker 3: extreme where we see a complete shutdown of the industry.
Speaker 3: But maybe there's some room for negotiation. That the tariffs
Speaker 3: that were put in place, the twenty five percent, maybe
Speaker 3: that's too elevated for the auto sector. Maybe we see
Speaker 3: some sort of exclusion as we saw with Canadian energy,
Speaker 3: which will have a lower tariff of ten percent. Maybe
Speaker 3: the Trump administration that would be willing to negotiate lower.
Speaker 3: But again, it comes down to the resolve of the
Speaker 3: administration to enforce these tariffs to ensure a longer term,
Speaker 3: more even playing field with our international trading partners. And
Speaker 3: I think that if some jobs are lost, if some
Speaker 3: uncomfortability for the economy occurs, I think the administration is
Speaker 3: willing to take that medicine.
Speaker 2: To the editorialize yeah, my head, Yes exactly.
Speaker 4: Hey, lindsay, given all this backdrop here that we've been
Speaker 4: talking about, how's the US consumer these days?
Speaker 3: Well, the US consumer is on relatively solid putting if
Speaker 3: we look at their financial condition, when we look at
Speaker 3: the amount of debt accumulation, yes, it has rammed up massively,
Speaker 3: particularly with credit cards, at one point to trillion dollars
Speaker 3: in terms of outstanding balances. But when we put that
Speaker 3: in the perspective of the health of the balance sheet,
Speaker 3: so the ratio of debt payments relative to disposable income,
Speaker 3: we're still talking about a multi decade low. So the
Speaker 3: ability for the consumer to continue to spend and borrow
Speaker 3: is certainly there, but the willingness is beginning to get
Speaker 3: shipped away again amid all of this uncertainty of these
Speaker 3: different policies coming down the pipeline.
Speaker 2: Doctor Piegs, thank you so much. My Economist of the
Speaker 2: Year last year. She absolutely nailed a FED reticent to
Speaker 2: cut interest rates.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us Live
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Speaker 2: Hendriet of trades with us right now, She's spend with
Speaker 2: us almost daily, wicked intelligence with VEDA partners on what's
Speaker 2: going on in Washington. Henrietta, I got any ways to go,
Speaker 2: and folks, I'm not going to mince words. The tape
Speaker 2: is terrible. This morning, Jeff steined Dan Diamond the Washington
Speaker 2: Post top story. Everybody in Washington reads it. Trump touted
Speaker 2: sweeping tariff DOGE plans, then watered down how long can
Speaker 2: the White House sustain action, and then watered.
Speaker 5: Down apparently in perpetuity. It's happened effectively since January twentieth,
Speaker 5: when he front ran his trade team in the Oval
Speaker 5: Office that night, said tariffs were coming February first, immediately
Speaker 5: pushed that out to February fourth, kicked it to March,
Speaker 5: kicked it to later in March, and now here we
Speaker 5: are on the cost of the week where we're going
Speaker 5: to get stealed aluminum tariffs both at twenty five percent.
Speaker 5: Tyreff's on dairy and lumbar coming in from Canada, which
Speaker 5: you're going to be massively disruptive and get huge pushback
Speaker 5: from the home builder industry. I think there's going to
Speaker 5: be a continued probably four year long fits and starts
Speaker 5: on the trade front, four year long.
Speaker 2: She's depressing, So I need something.
Speaker 4: So, I mean, Henrietta, should we expect any type of discussion,
Speaker 4: rhetoric commentary from our good friends in Congress about global trade.
Speaker 5: Yeah, I think that that's gonna tick up. One of
Speaker 5: the things that's really noticeable to me in this Republican bill.
Speaker 5: You were talking about the prospects for a shutdown earlier.
Speaker 5: There's no bailout for farmers in this package, and if
Speaker 5: this bill passes, that effectively means there won't be any
Speaker 5: further subsidization of the US agriculture industry until late September.
Speaker 5: That's a really long time to weather what is about
Speaker 5: to be a fifteen percent tire from China on all
Speaker 5: of our agriculture sector, and then tariffs on eighty six
Speaker 5: billion dollars worth of goods, mostly pork and beef, fruits
Speaker 5: and vegetables, orange juice, things like that from Canada as
Speaker 5: soon as March twenty fifth. So there's a big headwind
Speaker 5: come in the agriculture sector's way, and that's going to
Speaker 5: start to spur members to start talking that what.
Speaker 2: Is the response of Henrietta TRACE's Washington to economic slow
Speaker 2: down sort of kind of like recession or actual National
Speaker 2: Bureau of Economic Research recession.
Speaker 5: Man, this was incredible data sets from President Trump over
Speaker 5: the weekend, effectively acknowledging that the five trillion dollars in
Speaker 5: tax preferences that the Republican Party is going to write
Speaker 5: is writing right now, will not be stimulative, will not
Speaker 5: be enough to offset the potentiality of a recession driven
Speaker 5: by global tariffs for the first time since the nineteen thirties.
Speaker 5: So I think that was a real showing of President
Speaker 5: Trump's hands and the cards that he's hearing from his
Speaker 5: economic advisors behind the scenes. The problem is that Ambassador
Speaker 5: Lthheiser and his current Trade and Commerce secretaries and Treasury
Speaker 5: secretaries support the tyreff for agen to support this whole
Speaker 5: idea the tariffs are the way to get everything that
Speaker 5: we want. So I think that's really striking and everybody
Speaker 5: should sit with that for a little while.
Speaker 4: And you know, over the weekend, Henriette, I was thinking
Speaker 4: about just the political calculus associated with terrorists. If I'm
Speaker 4: in des Moines, Iowa, Okay, maybe I'm not a farmer,
Speaker 4: and there's maybe you know a handful of big farming
Speaker 4: conglomerates in Des Moines, Iowa, but everybody in Des Moines, Iowa,
Speaker 4: in some way, shape or form, is kind of impacted
Speaker 4: by the health of the of the farms in Des Moines, Iowa.
Speaker 4: How is this politically doable for President Trump and his administration?
Speaker 4: It would I would think it would be very difficult
Speaker 4: for them.
Speaker 5: You know what's interesting. I feel like it's doable for
Speaker 5: Trump and the administration because he personally is so popular.
Speaker 5: Who it's not doable for is the House and Senate Republicans.
Speaker 5: So I would take Alaska as a perfect example. You
Speaker 5: have states like Alaska that are heavily federally subsidized whose
Speaker 5: you know, veterans are being fired three hundred and thirty
Speaker 5: one veterans just in Alaska alone already from DOGE before
Speaker 5: they even get to this big swap of eighty thousand
Speaker 5: veterans they're planning to fire, and the big sweep of
Speaker 5: federal employees they're planning to fire over the summer. You
Speaker 5: have these individual Senators and individual House members in swing
Speaker 5: districts or those votes that have gone back and forth,
Speaker 5: and those members are already illustrating that they can't whether
Speaker 5: it's storm they've canceled town halls. Democrats are sort of
Speaker 5: gleefully pointing that out and holding their own so that
Speaker 5: those disaffected boats come and speak. I don't think that
Speaker 5: it's a problem for Trump. I think it's a problem
Speaker 5: for the rest of the Republican conference. And that means
Speaker 5: they have a year to get their legislation enacted, and
Speaker 5: then they'll get shall act in the midterms, which is normal.
Speaker 2: Hendriada quickly here. The Washington Post talks about firefighter training
Speaker 2: at FEMA canceled. Bloomberg's got stories of this, that and
Speaker 2: the other canceled this INFORBS aviation safety at risk among
Speaker 2: those cuts. Is that true? Do you perceive that the
Speaker 2: cuts are drifting into airplanes landing at Denver?
Speaker 5: That is absolutely true. It's definitely the FA. I mean
Speaker 5: they're cutting everything from that to the Weather Service. So yes,
Speaker 5: across the board, indiscriminate, completely ad hoc and inconsistent. And
Speaker 5: then even adding to the uncertainty, there's reporting out this
Speaker 5: morning saying, hey, yo, give us your your personal email
Speaker 5: address and your personal cell phone address, and we can
Speaker 5: call you if we mistakenly fired you. So I think
Speaker 5: there's just a lot of disruption. The jobs reports numbers
Speaker 5: to be a real up and down for the next
Speaker 5: couple months.
Speaker 2: I got that email from Bloomberg this weekend. Hend here
Speaker 2: to trace. Thank you so much our Most Valuable Guests
Speaker 2: Most Valuable Player award Yes for Early two thousand twenty five.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 1: Just say Alexa Play Bloomberg. Eleven thirty oh Canada.
Speaker 2: Derektor Kluitt joins us now Executive veteror Managing editor of
Speaker 2: Bloomberg News in Toronto. Here on the path forward, Okay, Derek,
Speaker 2: the Democrats the Liberals won. It's Mark Carney, ex Governor
Speaker 2: Financial Monetary Guy England, Canada. The Conservatives are there if
Speaker 2: there's an election. Who's ahead in the polls?
Speaker 6: Well, currently the Conservatives still have a lead, but it
Speaker 6: has narrowed a lot. When Trudeau was kind of, you know,
Speaker 6: on his way out, very unpopular Prime minister at the
Speaker 6: end of last year. The Conservatives led in most polls
Speaker 6: by more than twenty points. And now if you look
Speaker 6: at the polling that takes into account, this is prior
Speaker 6: to yesterday's vote that made Carney the Liberal leader. But
Speaker 6: where pollsters were asking theoretically, who would you vote for
Speaker 6: if Carney was in the race, Conservatives have kind of
Speaker 6: a narrow lead, about thirty three percent of decided voters,
Speaker 6: and the Liberals would under Carney have about twenty eight
Speaker 6: percent of voters. So it's going to be tight, and
Speaker 6: there's going to be, you know, probably an election campaign
Speaker 6: coming soon.
Speaker 2: I can just see us up in Autawa, Toronto and
Speaker 2: now and now we go to the key swing state whatever,
Speaker 2: what's the Ohio of Canada? Like like Carneie and excuse me,
Speaker 2: I don't know how to pronounce it because I'm an
Speaker 2: ugly American. Who's the Conservative Canadate again? Derek Pierre, Pouliev, Pauliev,
Speaker 2: Paulijev and Carney where's their Ohio? Where's the swing state?
Speaker 2: Among the provinces?
Speaker 6: I mean, this gets this gets decided really in the
Speaker 6: suburbs of Toronto, the suburbs of Montreal, and the suburbs
Speaker 6: of Vancouver. The Conservatives have more or less a lock
Speaker 6: on most of rural Canada and much of the West.
Speaker 6: The Liberals, you know, historically and certainly under Justin Trudeau,
Speaker 6: were extremely strong, and you know in the core centers
Speaker 6: like day on downtown Toronto and and you know in
Speaker 6: certainly large parts of Quebec. So this is this is
Speaker 6: the way to think about this is more like it's
Speaker 6: it's the suburbs of Philadelphia. That's the Ohio of Canada.
Speaker 2: Bucks County, Don Mills is the Bucks County.
Speaker 6: That's right, That's right, Derek.
Speaker 4: What's the feeling amongst the average Canadian about what's happening
Speaker 4: here in the US and how we're kind of interacting
Speaker 4: with you guys in terms of tariffs and rhetoric and
Speaker 4: out of this administration.
Speaker 6: The first word that comes to mind is anger, and
Speaker 6: I mean that it's outright anger. There was a poll
Speaker 6: last week that was published asking Canadians how they view
Speaker 6: the United States, whether it's an ally country and enemy
Speaker 6: country or a neutral. But the first time, I think
Speaker 6: ever ally and enemy are equal. Thirty percent of Canadians
Speaker 6: believe the US is an ally thirty percent say enemy,
Speaker 6: and most of the rest say neutral. And that is
Speaker 6: you know, I think a year ago those numbers would
Speaker 6: not have looked anything like that. That is entirely because
Speaker 6: of the trade war and the fifty first state taunts
Speaker 6: and justin Trudeau. I mean, every poll that you see
Speaker 6: shows just a huge level of opposition to anything like
Speaker 6: a fifty first state idea. It's an eighty to ninety
Speaker 6: percent range. It's similar across the country. There is there
Speaker 6: is no political appetit up here for discussion about any
Speaker 6: type of union union with the US.
Speaker 2: Good morning on your community across Canada in America. Derek
Speaker 2: Kluette with us right now from Bloomberg News in Toronto.
Speaker 4: Puskre what do we expect to hear from mister Carney
Speaker 4: here in the coming days and weeks and months of
Speaker 4: his you know, going forward.
Speaker 6: It's going to be a really fast transition from Trudeau
Speaker 6: to Karney. The two men will meet today. We expect
Speaker 6: Carney will be sworn in probably by the end of
Speaker 6: the week, and that he's really going to try to
Speaker 6: drag the Liberals from the left much more to the center,
Speaker 6: to be a more business friendly face, more focused on growth,
Speaker 6: and that he sees a sort of his you know,
Speaker 6: his pathway because because he you know he won the
Speaker 6: race because he's seen as the economic guy and we're
Speaker 6: if not in an economic crisis, then on the precipice
Speaker 6: of one.
Speaker 2: What is the nature of the election. I mean, you've
Speaker 2: got tenure at the Globe and Mail, which I read
Speaker 2: pretty much every day. Good morning to David Shrimman writing
Speaker 2: for the Globe and Mail and the Boston Globe. Is well, Derek.
Speaker 2: How does the election differ from in America? Like does
Speaker 2: Celine Dion show up the Wednesday before the election? I mean,
Speaker 2: how does it work?
Speaker 6: It's an extremely quick election. Yeah, when we get when
Speaker 6: when we get into a general election, it'll be about
Speaker 6: six six weeks long. Uses the British parliamentary system and
Speaker 6: you can have, as as Justin Trudeau had for most
Speaker 6: of his time, a sort of semi coalition government where
Speaker 6: you have to where you have to pull together neo
Speaker 6: multiple parties if one party does not get fifty percent
Speaker 6: of the seats in the House. So it'll be quick,
Speaker 6: and I think this one will be will be quite
Speaker 6: personal and nasty because there is a lot of animus
Speaker 6: built up between between Pierre Pouliev and the Liberal side.
Speaker 2: Michael Barr wants to know do They campaign by like saying,
Speaker 2: if I'm elected, I'll save the Toronto maple leafs. I mean,
Speaker 2: you know, how does Derek could Carney or the other
Speaker 2: guy say I'm going to fix the Toronto maple leafs
Speaker 2: or is that the un remarxible.
Speaker 6: Mark Carney is a huge Edmonton Oilers fan, so I
Speaker 6: don't think he has any interest in saving the Toronto
Speaker 6: maple leafs.
Speaker 2: Are there any liberals in Edmonton?
Speaker 6: Actually Edmonton is Vonton is the most liberal part of
Speaker 6: Alberta by far. They do, they do have one one
Speaker 6: seat out there.
Speaker 2: Did they trot out like does Bobby or get trotted out?
Speaker 2: I mean, I mean I saw the Gretzky up war
Speaker 2: with Canada in the series in that but you know,
Speaker 2: what should we look for in the election? Kissing babies
Speaker 2: at hockey games or is there a different approach?
Speaker 6: Well there will be some of that, but you know,
Speaker 6: Canadian politics is a more understated affair, you know, compared
Speaker 6: with with US politics. I mean, what what what what
Speaker 6: you will see is you will see the Canada. It's
Speaker 6: just over and over, just like they were over and
Speaker 6: over again in the seventh Swing States. They will be
Speaker 6: over and over again in you know, in Mississauga, Ontario,
Speaker 6: and you know, and and the suburbs north of Montreal,
Speaker 6: and in Richmond, British Columbia. You know, because most of
Speaker 6: the three hundred and forty or so House seats are
Speaker 6: kind of already decided. It's going to come down to,
Speaker 6: you know, probably sixty or sixty or seventy swing seats.
Speaker 6: But Canadian politics is also volatile. Stuff can move really quickly.
Speaker 2: I got twenty seconds. Derek Sparta wants to know if
Speaker 2: he does a road trip sending Lisa, Michael bar Paul
Speaker 2: Sweedey and Media Canada. Should we go to Toronto or Ottawa
Speaker 2: to do our show up there?
Speaker 6: You should one hundred percent come to Toronto and we'd
Speaker 6: love to have you.
Speaker 2: See.
Speaker 4: We love Canada.
Speaker 2: It's amazing. And then with the we didn't even ask
Speaker 2: him what Looney's going to do. Derek, thank you so much.
Speaker 2: Derek de Claude was just huge journalism experience.
Speaker 4: One person in my life that has anything ever negative
Speaker 4: to say about Canada.
Speaker 2: No, we love Kenneday we're talking. I'm not on speaking
Speaker 2: terms of Lusia, but I am a.
Speaker 4: US at a big portion of Canada viewing US as
Speaker 4: enemy it's just so disappointing.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: Right now, mister bitterly with us with a city group
Speaker 2: out of Notre Dame. Just exquisite academics out of Notre Dame,
Speaker 2: and we're thrilled she could join us this morning. We
Speaker 2: have a taxware investment up twenty percent two years in
Speaker 2: a row. Now we have all this emotion as well.
Speaker 2: Are you taking profits? I mean that's in the old
Speaker 2: days what we used to do. Now we have wealth. Man,
Speaker 2: what are you doing about the tax situation? If everybody's
Speaker 2: got ginormous gains on their portfolio.
Speaker 7: Well, I think the really interesting thing for US investors
Speaker 7: is that there's plenty of strategies that are tax aware
Speaker 7: where you can actually do that rebalancing without necessarily having
Speaker 7: to take the gain.
Speaker 2: Probably do that.
Speaker 7: So basically, what you can do is generate passive losses
Speaker 7: within portfolios such that if you want to rebalance, you're
Speaker 7: not actually penalized for rebalancing and then following the benchmark index.
Speaker 7: And there's even more innovative strategies because in a bull market,
Speaker 7: it's going to be difficult to actually continue to generate
Speaker 7: those losses unless you're adding capital every single month, and
Speaker 7: so what some of the more innovative strategies are doing
Speaker 7: are using futures and options to be able to do
Speaker 7: that as well. But that being said, Tom, I think
Speaker 7: your question is more around looking at the market that
Speaker 7: we're in and actually saying where should you have exposure,
Speaker 7: and that is something we did some substantial rebalancing in
Speaker 7: Q four of last year when we were just looking
Speaker 7: at we couldn't have predicted deep seek or anything like that.
Speaker 7: We're just looking at the outsized representation of the mag
Speaker 7: seven and saying we see earnings broadening out this year,
Speaker 7: so let's be a little bit more balanced in terms
Speaker 7: of our equity exposure. And we also diversified internationally. So
Speaker 7: if you are someone who came into this year where
Speaker 7: you have fixed income exposure, you have international exposure, you
Speaker 7: weren't overly exposed to those megacap names. Well, you're not
Speaker 7: happy right now seeing some of the uncertainty and volatility.
Speaker 7: You're pretty well positioned in terms of being able to
Speaker 7: weather this storm.
Speaker 4: What are you hearing from your clients just in the
Speaker 4: last several weeks with this sell off in the markets,
Speaker 4: We're off in the s and P of five hundred,
Speaker 4: you know, seven eight percent from the recent highs. What
Speaker 4: are you hearing from your clients? Is there a level
Speaker 4: of concern panic? What are you hearing well?
Speaker 7: When you look at how the market is reacting, I
Speaker 7: think very simply, it's been a pretty orderly selloff. You
Speaker 7: can even see that in levels of the vics. I
Speaker 7: think our investors in wealth management we are lucky because
Speaker 7: they're long term capital and so they're really playing the
Speaker 7: long game here. But I think the big question on
Speaker 7: the table right now is we started this year from
Speaker 7: a position of strength. You could talk about the broadening
Speaker 7: out story in US equity earnings, you could talk about
Speaker 7: the six and a half trillion dollars in cash on
Speaker 7: the sidelines, inflation coming down, even the fact that FED
Speaker 7: funds have peaked. And now the question is looking at
Speaker 7: this economic data that's coming in, particularly when it comes
Speaker 7: to sentiment, consumer confidence, as well as the employment backdrop.
Speaker 7: People are wondering all of these details are they telling
Speaker 7: us a different economic story?
Speaker 2: Forty eight seconds before we go to the market opening.
Speaker 2: What does buy the dip mean?
Speaker 7: To Kristin Bitterley, I think by the dip means we
Speaker 7: have not yet capitulated. However, there are opportunities, especially right now,
Speaker 7: large cap quality free cash flow generating names. If I'm
Speaker 7: buying the dip and actually not just picking a moment
Speaker 7: from market timing, but going on the way down, I
Speaker 7: would lean into quality free cash flow.
Speaker 4: So there you go, quality free cash flowing.
Speaker 2: Are you allowed to give us a name? Or do
Speaker 2: you go in the time out here?
Speaker 7: If you do that, well, I mean single stocks, Unfortunately,
Speaker 7: I would go into the timeout chair.
Speaker 6: Tom.
Speaker 7: What I will say from a sector perspective is you
Speaker 7: can look at some of the just go From a
Speaker 7: size perspective, large cat, profitable free cash flow, even some
Speaker 7: of the dividend grower type names would be beneficial as well.
Speaker 2: Kristi Bitterley with us here on managing emotions. Is cash
Speaker 2: a constructive holding right now?
Speaker 7: I think it's part of a portfolio in terms of
Speaker 7: maintaining liquidity and being able to buy into some of
Speaker 7: these opportunities. I think the thing that you always run into,
Speaker 7: going back to this concept of market timing is for
Speaker 7: investors who believe they're either all in or all out,
Speaker 7: that is not productive.
Speaker 2: She's killing me. You're a Notre Dame. You're killing it.
Speaker 2: Show me one minute in economics at Notre Dame where
Speaker 2: quote market timing unquote worked.
Speaker 7: It never worked market timing. That's the thing is if
Speaker 7: the stats are actually on average, if you miss the
Speaker 7: two best days in a given calendar year, you erode
Speaker 7: your perannum gains by nearly eighty percent. And so the
Speaker 7: reason for that is you tend to have clustered volatility
Speaker 7: in the market, where essentially the sell offs are followed
Speaker 7: by some of the best days. And so what we
Speaker 7: tend to see is if in this type of environment,
Speaker 7: if you're very nervous, if you go all out and
Speaker 7: you're in cash, yes there's some attractive yields there, but
Speaker 7: those are temporary. Your long term earnings are certainly going
Speaker 7: to suffer.
Speaker 2: Shout out Ryan Detrick today out on Twitter had a
Speaker 2: great tweet on this Paul Sweeney about the x number
Speaker 2: of days single days like the day's duke loses in basketball,
Speaker 2: The single days if you're not in the market when
Speaker 2: it moves. Miss Bitterley's number is eighty percent of your
Speaker 2: gain eeveroration.
Speaker 4: So we've heard that before. So we've seen a lot
Speaker 4: of policy driven uncertainty in the marketplace over the last
Speaker 4: couple of months. Are you suggesting to your clients look
Speaker 4: past that focus on the long because you can make
Speaker 4: short term recession calls, you can make inflation calls, stagflation.
Speaker 4: There's a lot of concerns short term, but you make
Speaker 4: the call to look past it.
Speaker 7: So what I would say is the number one concern
Speaker 7: that our investors and the number one question that they
Speaker 7: really have is I think coming into this year, there
Speaker 7: was comfort in terms of when President Trump won the election.
Speaker 7: There was this overarching concept of pro market that SMP
Speaker 7: five hundred is a barometer for success and the ten
Speaker 7: year below five percent. I think some of the most
Speaker 7: recent commentary where taking a victory lap because yields have
Speaker 7: come down and what that means for mortgages and other
Speaker 7: parts of the market are causing people to question a
Speaker 7: little bit. But going back to what I said earlier,
Speaker 7: asset allocation has worked in these markets. That actually is
Speaker 7: something healthy and it's something that we haven't really seen
Speaker 7: over the past couple of years. So correlation fixed income equity,
Speaker 7: the lack of correlation there is actually working in your favor.
Speaker 7: So diversification, asset allocation are where to be.
Speaker 2: Do you own a tesla like a car?
Speaker 7: Do I actually own a Tesla myself?
Speaker 2: No?
Speaker 3: I do not.
Speaker 2: I do not. It's painful. Missus Keane was on the
Speaker 2: phone with somebody that owns a Tesla. Wow. Yeah, it's
Speaker 2: like depreciation city. Tesla down fourteen, it was like a
Speaker 2: two fifty three indication. I didn't even mention it to
Speaker 2: forty eight on Tesla right now? Is it five?
Speaker 4: And I still bak you baby baq function Bloomberg quote.
Speaker 2: Five zero percent. Yeah, it's working out.
Speaker 7: But even if you look at that, the rally post
Speaker 7: the election was so extreme, so that volatility to the upside,
Speaker 7: you're gonna have to have some of it to the
Speaker 7: downside as well.
Speaker 2: Well. Back to September exactly, That's how I look. We're
Speaker 2: back to September twenty twenty four. Notre Dame March madness.
Speaker 2: Come on, no, I.
Speaker 7: Know, I was just at Notre Dame last week. I was,
Speaker 7: I was Our women are faring better than are men.
Speaker 2: So yes, football season, Christy there is better than good.
Speaker 2: Kristin Bidderley, thank you so much. She is with Sidney Group.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: We need some joy. The newspapers Lisa Monteo, Lisa make
Speaker 2: us last.
Speaker 8: Well, see now, I'm gonna make you not last. It's
Speaker 8: not such an upfeat story, Okay, It's a look into
Speaker 8: the job market. It's just showing how more older Americans
Speaker 8: are turning down to blue collar jobs and side hustles
Speaker 8: because they're getting squeezed out of the white collar jobs.
Speaker 8: They're saying their age salary expectations, they are being beat out,
Speaker 8: you know, for my younger workers. So they're going into
Speaker 8: truck driving custodians. Some are taking part work as security
Speaker 8: guards uber uber eats on the side because a lot
Speaker 8: of them actually still have debt from getting their masters,
Speaker 8: so they still have to pay off longer.
Speaker 2: Yeah, retiring it.
Speaker 4: Somebody might do it at sixty one back for example,
Speaker 4: somebody might try to retire at sixty one. Yeah, no,
Speaker 4: they can't.
Speaker 8: They can't, just because you have to save up more.
Speaker 8: And look at how much you have left.
Speaker 2: And now we're getting out to work. Long sitting in Prague,
Speaker 2: the Czech Republic, having a lovely like moonlit dinner out
Speaker 2: on all by myself, out in a little cafe, and
Speaker 2: everyone around me was older than American. This has got
Speaker 2: to be pushing twenty five years ago when Matt Winkler
Speaker 2: sent me over there, and the answer is, I predict
Speaker 2: thousands of retires in America will go abroad. Tip of
Speaker 2: the iceberg here right now, it's just brutal. And I
Speaker 2: make no bones about it, folks, I can't afford to retire,
Speaker 2: like you know, fossils like me are like you're kidding me.
Speaker 2: Mister Bohmberg, good morning, how are you, sir?
Speaker 8: Next? Have you ever had beef?
Speaker 2: Yes, there's a little place on your duff Fien, right
Speaker 2: by a hotel Dabisson. Of course, the best beef burgunna
Speaker 2: I'll take. And it's they use costco utensils. It's like cheap.
Speaker 2: It's like it's the rooster it's called but that's.
Speaker 8: The point because it's cheap. Okay. So there's this restaurant
Speaker 8: in Paris. It's called stick with me here Le bon chartel.
Speaker 8: I'm going in Paris. It's been this destination for like
Speaker 8: cheap French food since like eighteen ninety six. It was
Speaker 8: on the Netflix show Emily in Paris, so it became
Speaker 8: popular again. But theirs is in American dollars ten dollars
Speaker 8: and eighty cents, and they've kept it that way for
Speaker 8: four years because they want to make it more affordable
Speaker 8: to people. But they're saying it's harder for them to
Speaker 8: keep that price because everything is getting expensive, the electricity
Speaker 8: for their restaurant, you know, the wages for the staff,
Speaker 8: the price of the beef. So what they're doing instead,
Speaker 8: it is when prices soar too much, they'll drop certain
Speaker 8: items from the menu, like the beef.
Speaker 2: You know.
Speaker 1: It is.
Speaker 8: Sometimes they'll take it off for like a week, and
Speaker 8: then they'll bring it back, you know, because if it
Speaker 8: gets too expensive. But I need to try this, it
Speaker 8: sounds delicious.
Speaker 4: I haven't been in Parison a long time.
Speaker 2: I need to get I mean, I.
Speaker 4: Got it, but where's the Europe now? One a wayste
Speaker 4: I missed my.
Speaker 2: Want to trust Europe. Yeah.
Speaker 8: And finally, Tom, I think I'm gonna have to go
Speaker 8: for the super big card at Costco because usually I
Speaker 8: keep mine to like a one cart.
Speaker 2: Maybe I'll have another, but they I've seen you two cards.
Speaker 8: But they have the big trolleys, and I think I
Speaker 8: have to go for it because they're massive one hundred
Speaker 8: inch TVs. They're hundred hits one hundred inch. Do you
Speaker 8: need a TV that big? I don't know. But they're
Speaker 8: about fifteen hundred to about thirty five hundred dollars that's
Speaker 8: the range for them, and they're so much hotcakes and
Speaker 8: they're suddenly like crazy, people are buying them up one
Speaker 8: because social media made them popular and people started boxing
Speaker 8: these because the box is like ungodly, like it's huge,
Speaker 8: and so people started posting this. But they're saying, which
Speaker 8: interesting is that the shift in Costco, Like the people
Speaker 8: who come through the store are now wealthier, so they're
Speaker 8: putting in a lot more of these higher end products
Speaker 8: into Costco now, like a four hundred thousand dollars diamond ring.
Speaker 4: They get TV's everywhere at the shop rate on Root
Speaker 4: thirty five on wall Tonship. They have yeah, those big
Speaker 4: massive TVs to stay there by the checkout.
Speaker 2: Oh yeah, I'll take that.
Speaker 3: I don't get it.
Speaker 2: Yeah crazy, It's fascinating. Lisa wan Tello, thank you so
Speaker 2: much the newspapers this morning.
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