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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and a Marie Hordern. Join us each

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Speaker 2: day for insight from the best in markets, economics, and

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Speaker 2: geopolitics from our global headquarters in New York City. We

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Speaker 2: are live on Bloomberg Television weekday mornings from six to

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Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify,

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Speaker 2: or anywhere else you listen, and as always, on the

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Speaker 2: Bloomberg Terminal and the Bloomberg Business App for.

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Speaker 3: Those of you just joining us. Looking at the markets,

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Speaker 3: equity futures doing okay. We begin this out with stocks

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Speaker 3: relatively higher as we get results from both Meta and

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Speaker 3: a bullish outlook from Tesla, supporting equities. Mike Wilson and

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Speaker 3: Morgan Stanley saying in the near term, the best outcome

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Speaker 3: for equities is that rates continued to decline. In the

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Speaker 3: longer term, the best outcome for stocks is a reacceleration

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Speaker 3: in earnings, growth and macro indicators. Mike joins us now

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Speaker 3: for more. Mike, good morning to you, sir.

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Speaker 4: Good morning.

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Speaker 3: Let's try and put those two points together. Shall we

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Speaker 3: yeos need to come down the wise impultan. But in

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Speaker 3: the longest term, we need economic growth to performance wound

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Speaker 3: for earnings to re accelerrate. Does that come with higher

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Speaker 3: and just rights with high yields, with hot sound premium.

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Speaker 4: Well, this is the game.

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Speaker 5: I mean, you know four point fifty is that we're

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Speaker 5: right at it right now as we speak, which is

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Speaker 5: kind of interesting. I mean, that's the kind of line

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Speaker 5: in the sand where you know, if rates go higher,

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Speaker 5: even if growth is better, it's going to restrain multiples.

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Speaker 5: So what we really need is that sort of that

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Speaker 5: sweet spot between four four and a half where growth

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Speaker 5: is not falling off a cliff.

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Speaker 4: The FED is doing their thing.

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Speaker 5: It's you know, I think people are talking about what

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Speaker 5: the Fed's not cutting. Well, they cut one hundred basis

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Speaker 5: points and back end rates one up. So I'm not

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Speaker 5: so sure that pausing is really all that bad for

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Speaker 5: stocks in the short term. And now, of course we're

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Speaker 5: an earning season, right, so it's all about idiosyncratic behavior

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Speaker 5: in the short term.

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Speaker 1: Well, you say earnings, they need to show, they need

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Speaker 1: to deliver. What does that mean at a time where

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Speaker 1: storytelling is so important and it's not just the actual numbers.

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Speaker 1: It's what you say about them, your tone, how many

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Speaker 1: exclamation points you use.

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Speaker 5: Well, it's showed me time, right, So there has been

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Speaker 5: a lot of storytelling going on and I think we're

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Speaker 5: seeing a separation of the winners and losers even last night, right,

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Speaker 5: And that's good. I mean that creates opportunity for stock picking.

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Speaker 5: And like one theme we've had is sort of the

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Speaker 5: you know, adopters versus the enablers within AI and very

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Speaker 5: simplistically don't want to oversimplify it, but that's basically software

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Speaker 5: over semiconductors. And that's been working, not just since Monday,

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Speaker 5: that's been working for three to six months.

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Speaker 4: So as usual, the market's gotten ahead of it.

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Speaker 5: There's going to be themes I think that pop new

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Speaker 5: themes that pop up this year, and that's really our job.

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Speaker 1: Has that pivot happened? Can you say that essentially the

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Speaker 1: tipping point at least in the market zeitgeist was on Monday,

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Speaker 1: where really the adopters are now going to absolutely rip

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Speaker 1: while the videos and the Microsofts, the enablers are going

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Speaker 1: to take a leg behind.

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Speaker 4: Well, like I said, it's already happened.

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Speaker 5: So the question is is it does it persist, Well,

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Speaker 5: we're really excited about it is not even that trade.

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Speaker 5: But when does the technology get diffused into the broader economy.

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Speaker 5: That's the true broadening out story where you can get

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Speaker 5: small MidCap companies performing. We're not there yet, okay, because

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Speaker 5: we don't have the solutions right. That's what the application

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Speaker 5: layer is, where the solutions are going to be built

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Speaker 5: on the compute platforms, so that that could take a

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Speaker 5: year or two, you know what I'm saying. Now markets

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Speaker 5: will get ahead of that, but in our view, that's

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Speaker 5: really a second half story, or a twenty six twenty

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Speaker 5: seven story. So that's why our view on the index

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Speaker 5: has been We're probably going to be choppy here for

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Speaker 5: the next three to six months. A lot of anasma's

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Speaker 5: coming out, Fed's on pause, still about uncertainty around you know,

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Speaker 5: the implication of these policies, both globally and domestically.

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Speaker 4: So we take a break here.

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Speaker 1: This is curious to me. Tesla actually warned about the

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Speaker 1: potential for tariffs and the potential for that to hamper

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Speaker 1: some of their revenues. Didn't seem to dent their stock

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Speaker 1: at all. GM talked about it.

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Speaker 3: That was it.

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Speaker 1: I mean, they basically delivered. They had the forecast, but

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Speaker 1: shares tanked.

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Speaker 4: What did you learn from that?

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Speaker 5: Well confirmed what we already knew, which is the retail

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Speaker 5: community is very active right now, very active, and we

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Speaker 5: see it in our data. And they just love these

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Speaker 5: stocks test Law. You know, you can name, you can

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Speaker 5: name a bunch of stocks that they just buy every day.

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Speaker 5: Not just not because they're dumb or they don't know

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Speaker 5: what they're doing. It's just they're buying into these themes

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Speaker 5: and and and then of course that you know, creates

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Speaker 5: demand from institutional investors too, So don't I don't think

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Speaker 5: it teaches anything new. Last night, that's a that's a

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Speaker 5: continuation of something that's been going on for six months.

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Speaker 3: But these are things you would site down fight because

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Speaker 3: the towl wents behind them, at least the buying behind

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Speaker 3: them is that powerful.

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Speaker 4: It's very consistent.

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Speaker 5: I mean, you come in every day and the same

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Speaker 5: names are kind of are you swooped up? And I

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Speaker 5: don't see that changing unless there's a real, a real

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Speaker 5: you know kind of event.

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Speaker 4: So if rates were go to.

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Speaker 5: Five percent, I think that would change. Okay, if we

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Speaker 5: were to get you know, some sort of an indication

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Speaker 5: that oh my goodness, unemployment's going up again and the

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Speaker 5: recession risks come back on to the table, or there's

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Speaker 5: an international event, a geopolitical event, something like that. But

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Speaker 5: in the absence of something a real gross shock, I

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Speaker 5: don't see the demand for those types of stocks waning

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Speaker 5: in a short term.

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Speaker 3: What if a Chinese ai lap comes out and says

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Speaker 3: we can do something that you've spent Indians on five

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Speaker 3: minion talis.

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Speaker 5: Right, So what happened is that what happened is some

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Speaker 5: stocks got punished and then the money, but the money

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Speaker 5: moved back into the kind of fan favorites. And look,

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Speaker 5: this is the theme for twenty twenty five. I think

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Speaker 5: this is a good thing. We're going to see this

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Speaker 5: capital concentration, right, that money can now go to other places. Right,

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Speaker 5: So financials have done extremely well. That's a new area

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Speaker 5: where there seems to be a perpetual bid. Software is

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Speaker 5: a new area. Consumer services have done extremely well. And

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Speaker 5: then even areas like media and entertainment. Those have been

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Speaker 5: our four sectors that have shown the relative earnings. Your

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Speaker 5: vision breath, there's some thematics in there as well, and

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Speaker 5: we think that probably continues just to broaden out.

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Speaker 1: And I understand it's a stock pickers market, But do

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Speaker 1: you think that you've seen enough to say that the

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Speaker 1: equal weight will significantly outperform the market cap weight S

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Speaker 1: and P five hundred this year?

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Speaker 5: Not yet, And I won't I want to caveat this

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Speaker 5: because typically when you go from a period of market

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Speaker 5: cap outperformance market cap weighted out performance, you usually get

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Speaker 5: the relative outperformance in a down tape. Right, So if

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Speaker 5: you get if you get the S and P market

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Speaker 5: cap waited to go down, then you can see that

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Speaker 5: spreading of wealth if you will, to other areas. Now,

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Speaker 5: I don't want to compare us to two thousand completely,

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Speaker 5: but it's that's the most similar period. In two thousand,

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Speaker 5: we had a you know, a lot of these text

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Speaker 5: stacks came off in the SMP equal way was basically flat,

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Speaker 5: a lot of indices were you know, a lot of

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Speaker 5: sub indicies were actually up.

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Speaker 4: So that's what we're looking for.

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Speaker 5: I think in the first half of this year is

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Speaker 5: the best chance that I can say that could happen,

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Speaker 5: you know, and since twenty twenty two, I like.

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Speaker 4: To bring this up to people.

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Speaker 5: Twenty twenty two, right, everybody you know, you know, thinks

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Speaker 5: it was a terrible year for the market. A lot

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Speaker 5: of stacks were up in twenty twenty two. That was

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Speaker 5: the best breaths that we had. So it's a similar

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Speaker 5: setup where I don't think the market's went on twenty

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Speaker 5: five percent. But the point is if the index can

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Speaker 5: give it up, then that capital can allocate to other areas.

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Speaker 3: They rustle right now by point nine percent on the

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Speaker 3: small caps might good to say it. Good to say

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Speaker 3: always thank you, buddy, Mike Wilson that alf Mulkin standard

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Speaker 3: in the markets this morning, Equities are pretty steady. BONDSAR

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Speaker 3: two as FED Chair Jaypowse signals the Central Bank will

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Speaker 3: hold rates study for the foreseeable future. Cameron Dawson of

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Speaker 3: New Edge Wealth writing, further interest rate cuts will likely

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Speaker 3: need to come with incremental weakness in the economy, transforming

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Speaker 3: further cuts from because they can to, because they shirt.

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Speaker 3: Cameron joins us now for more. Cameron Goo mornick Ye's greeting,

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Speaker 3: what's your big takeaway from Chem and Pound in that

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Speaker 3: news conference yesterday.

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Speaker 6: That the recalibration phase is clearly over. He called it

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Speaker 6: that recalibration phase, not this one, which just means that

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Speaker 6: the interest rate cuts that we had which were tweaking

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Speaker 6: policy rates lower in order to get to closer to

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Speaker 6: this idea of neutral is likely behind us, meaning that

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Speaker 6: you'll have to see an uptick in the unemployment rate,

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Speaker 6: You'll have to see an uptick in or a weakening

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Speaker 6: in the overall growth rate in order to suggest that

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Speaker 6: they could cut rates further.

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Speaker 1: Is this actually a really good signal that essentially the

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Speaker 1: economy is robust and they're basically just taking a back

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Speaker 1: seat and being as boring as they possibly could, exactly

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Speaker 1: as desired.

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Speaker 3: We think that the.

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Speaker 6: Fed this year is going to be less consequential than

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Speaker 6: they have been, meaning that they're going to be more

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Speaker 6: reacting to growth. They're going to be more reacting to

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Speaker 6: policy versus driving markets as they have over the last

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Speaker 6: couple of years, as they started the hiking cycle then

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Speaker 6: started the cutting cycle. We think overall that the FED

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Speaker 6: hasn't been nearly as tight as they think that they are.

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Speaker 6: We think that the evidence of growth remaining so resilient,

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Speaker 6: being above trend the entire time that the FED has

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Speaker 6: been in a tight situation, meaning with the real FED

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Speaker 6: funds rate being above zero, just suggests that we are

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Speaker 6: likely closer to neutral at this point than having those

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Speaker 6: further cuts, which just suggests that this economy is more

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Speaker 6: resilient to interest rates than it was in prior cycles.

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Speaker 1: If the Fed's taking a backseat, let's take another tack,

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Speaker 1: because frankly, I think a lot of people would rather

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Speaker 1: talk about earnings than the FED at this time, given

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Speaker 1: the fact that the FED is following rather than leading.

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Speaker 1: What was your takeaway yesterday to not just the earnings

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Speaker 1: of Microsoft and Tesla and and Meta, but the reaction

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Speaker 1: to them and what actually gave investors confidence.

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Speaker 6: I think investors are still willing to dream the dream

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Speaker 6: and have this blank check mentality when it comes to

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Speaker 6: AI and CAPEX spending. But the thing that jumped out

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Speaker 6: to us most in Microsoft's earnings was this use of

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Speaker 6: the word commoditized, that some of this AI will become commoditized.

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Speaker 6: It will become something that everybody has. And the question

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Speaker 6: that we have is that what will the return on

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Speaker 6: invested capital be for a commoditized product? Very very different

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Speaker 6: than the monopolized businesses that you think of Microsoft with

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Speaker 6: in word processing, or you think of Google within search

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Speaker 6: or Meta within social networking. These are monopolized businesses or

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Speaker 6: near monopolies that deliver huge returns on invested capital have

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Speaker 6: eighty percent gross margins fifty percent operating margins, nearly from Meta,

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Speaker 6: which just suggests that maybe AI roics could be lower.

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Speaker 3: It's been a long week for this market, Sunny third,

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Speaker 3: they still can We go back to Monday.

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Speaker 4: Just briefly.

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Speaker 3: On Monday, Lisa me, pretty much everyone in the show

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Speaker 3: was talking about whether the capex narrative would be challenged.

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Speaker 3: METSA came out and basically doubled down on the whole thing. Now,

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Speaker 3: I didn't expect the c suite to change. The question

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Speaker 3: we asked is whether investors would lose patients. There's no

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Speaker 3: sign of that. This morning, the stock is up. We'll

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Speaker 3: investors keep patient with these companies as they spend tons

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Speaker 3: of money on these projects.

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Speaker 6: I think as long as they can keep googling Jevn's paradox,

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Speaker 6: maybe they'll keep being patient. I think what's giving people

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Speaker 6: the ability to give Meta the benefit of the doubt

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Speaker 6: on this capex is because their top line is growing

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Speaker 6: so much. And the key story for Meta is that

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Speaker 6: they're using AI in order to be able to drive

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Speaker 6: top line faster. Look at the growth in advertising pricing.

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Speaker 6: It was up fourteen percent. That's more than double what

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Speaker 6: the street expected, and that likely is a function of

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Speaker 6: the fact that they're using AI to monopolize more of

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Speaker 6: our eyeballs, to demand more of our attention. Now, if

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Speaker 6: top line begins to slow and META is eight percent advertising,

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Speaker 6: which means it's a cyclical business. If top line begins

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Speaker 6: to slow, I likely think that you will see less

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Speaker 6: benefit of the doubt on this capex because it won't

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Speaker 6: be able to be absorbed as much given this strong

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Speaker 6: profit growth.

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Speaker 3: Comen Dawson and you ch Wealth is still with us

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Speaker 3: around a table. So Cameron, we've got a threat at

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Speaker 3: twenty five percent on Mexico and Canada, ten percent potentially

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Speaker 3: on China. Europe's going to get it too. That could

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Speaker 3: be a universal tariff. You have a working assumption going

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Speaker 3: into the weekend.

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Speaker 6: Well, we think this notion that tariffs aren't inflationary or

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Speaker 6: disruptive because of what happened in twenty eighteen is limited

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Speaker 6: in the sense that twenty eighteen terraffs were so targeted

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Speaker 6: and they were on certain items, certain things within supply

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Speaker 6: chains that eventually didn't get all the way through to consumers,

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Speaker 6: which just means that if you're talking about blanket teriffs

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Speaker 6: across the board, we think that this could actually be

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Speaker 6: highly disruptive to supply chains, potentially inflationary because of that

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Speaker 6: disruption as people are trying to move things around, which

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Speaker 6: just suggests that this could weigh on growth and inflation

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Speaker 6: in a more meaningful way.

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Speaker 3: That sounds like stagflationhin is that what you'd be expecting.

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Speaker 4: It's definitely a risk.

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Speaker 6: And when you also throw on top of that the

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Speaker 6: potential for the labor force growth to slow down because

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Speaker 6: of immigration, both of these things suggest that a potential

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Speaker 6: upward pressure on inflation, potential downward pressure on growth. The

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Speaker 6: question is how far do they actually push these through.

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Speaker 6: Tariffs for negotiating purposes are very very different than tariffs

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Speaker 6: that are pay force. Teriffs that are paid for is

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Speaker 6: because you want to use tariff revenue to offset tax cuts,

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Speaker 6: for example, would have to be far more sweeping, would

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Speaker 6: have to be far more static, meaning once you put

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Speaker 6: them in place, even if people say, hey, well we're

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Speaker 6: going to be nicer to you going forward, it just

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Speaker 6: means that there is that risk that we have that

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Speaker 6: upward pressure on inflation, downward pressure on growth.

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Speaker 1: I'm glad you mentioned that what the purpose of some

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Speaker 1: of these tariffs are, how realistic it is that they're

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Speaker 1: going to be deployed. You saw the testimony from Howard Lutnik.

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Speaker 1: He also talked about the twenty five percent tariffs that

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Speaker 1: are set to go on Canada and Mexico on Saturday,

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Speaker 1: saying this is a separate tariff to create action. He

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Speaker 1: was talking about the border, he was talking about fentanyl.

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Speaker 1: He's saying, if they comply, there will be no tariff.

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Speaker 1: How do you, as an investor take different signals from

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Speaker 1: different places and understand how to price in and whether

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Speaker 1: to price in some of these potential levies.

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Speaker 6: I think the way to approach it as an investor

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Speaker 6: is how you think businesses are going to be able

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Speaker 6: to operate in this environment. If a business doesn't know

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Speaker 6: what tariffs are going to be and if they're going

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Speaker 6: to last for two weeks, because then you see a

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Speaker 6: response from Mexico and Canada, it really is hard to

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Speaker 6: be able to plan in that environment. And the question

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Speaker 6: would be our businesses trying to get ahead of this?

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Speaker 6: Are consumers trying.

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Speaker 4: To get ahead of this?

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Speaker 6: And this means that you could see disruption to supply

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Speaker 6: chains even if the tariffs don't stick around.

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Speaker 1: Which is the point that John was making yesterday. I'm

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Speaker 1: totally going to steal from him when he was basically

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Speaker 1: he was basically asking, you know, have we reached a

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Speaker 1: point where the auto manufacturers other than Tesla are basically

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Speaker 1: uninvestable because of the pipeline from Mexico and how many

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Speaker 1: imports they really have been controlling from that region.

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Speaker 6: Well, auto manufacturers have not necessarily been the most investable

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Speaker 6: companies even without tariffs, because they're so very capital intensive

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Speaker 6: and low margin. But it does add that layer of uncertainty.

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Speaker 6: And it is interesting that Tesla calls out tariffs being

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Speaker 6: an uncertainty for them in their earnings report. But I

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Speaker 6: guess at the end of the day, Tesla isn't a

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Speaker 6: car company.

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Speaker 3: Is a state of mind I'm selling. I agree with that.

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Speaker 3: I'm a seller of any guidance that is dependent on tariffs.

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Speaker 3: I'm a seller of the guidance from the Federal Reserve.

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Speaker 3: This market was a sealer of the guidance from GM.

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Speaker 3: The Bank ACCOUNTA didn't even provide any anyone providing guidance

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Speaker 3: when that's dependent on what happens over the weekend, and

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Speaker 3: what happens going forward from tariffs, I think you have

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Speaker 3: to take with a very very big grain of cell,

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Speaker 3: which is what.

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Speaker 1: We're seeing in the market. So at a certain point,

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Speaker 1: just to Cameron's issue here, if you see even the

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Speaker 1: threat of tariffs on a prolonged level, could you see

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Speaker 1: those disruptions to supply chains, disruptions to profitability for specific

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Speaker 1: companies just simply by virtue of the specter of that happening.

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Speaker 3: So this is a difficult moment in many ways because

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Speaker 3: parts of this market, the multiple evaluations might be capped

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Speaker 3: if you are exposed to a tariff story. Some of

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Speaker 3: the automobile makers, the auto manufacturers that likes a GM,

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Speaker 3: we saw that earlier in the week, and then certain

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Speaker 3: parts of the equy market exposed to the AI story.

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Speaker 3: I think that's a sense that the perceived value is

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Speaker 3: shifted away from maybe the energy plays of the last

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Speaker 3: year or so. Do you think valuations are capped there too?

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Speaker 6: Physical over digital or digital over physical really? And I

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Speaker 6: think that that's what the market is coming around to,

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Speaker 6: is that that you have had this big surgeon optimism

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Speaker 6: that the digital world would drive a lot of physical investment.

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Speaker 6: But even Microsoft said yesterday that they would be moderating

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Speaker 6: capex starting in twenty twenty six. So if you're starting

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Speaker 6: to see that slow down, it means that your power

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Speaker 6: providers and your infrastructure providers are also going to see

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Speaker 6: growth slow down. So it continues to be this world

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Speaker 6: where we think that there's very little more and for

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Speaker 6: error in the multiple. You're at twenty two point three

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Speaker 6: times forward. That leaves no room for negative news. Doesn't

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Speaker 6: mean you can't go higher. We could go into bubble territory,

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Speaker 6: but you would have to see a spark of speculative

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Speaker 6: fervor to get there.

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Speaker 3: Do you think we did go into bubble territory with

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Speaker 3: certain parts of this market?

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Speaker 6: I think that we were getting close, and we still

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Speaker 6: have that potential. If the FED comes out and cuts

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Speaker 6: interest rates a bunch of times, and financial conditions ease

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Speaker 6: even further, and liquidity becomes even more abundant, and you

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Speaker 6: see this continued surge in YOLO things like meme stocks

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Speaker 6: and zero data expiration options. I think that we are

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Speaker 6: on the verge of that being a potential outcome for

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Speaker 6: twenty twenty five, simply because any higher in the multiple poll,

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Speaker 6: any higher than twenty three times that has only been

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Speaker 6: achieved in true bubbles.

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Speaker 3: Just before you go, we'll do this a couple of

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Speaker 3: times going into the weekend. Do you say those times

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Speaker 3: go on or do you think we avoid them this weekend.

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Speaker 3: I'm not going to hold you to this. I just

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Speaker 3: want to gauge how people think and how they fail.

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Speaker 1: Let's just run out about a weekend after we get

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Speaker 1: to see your decision.

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Speaker 6: I think that they might go on for a period

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Speaker 6: of time and then get walked back.

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Speaker 3: Interesting a period of time being a week Okay, Hamon Dawson,

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Speaker 3: have you edged wealth? I appreciate it. One of the

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Speaker 3: best in fixed income joined us now for more so

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Speaker 3: on design a Franklin Temple sense.

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Speaker 7: Not good to see you, good to see you, too

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Speaker 7: good to be here.

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Speaker 3: The chairman said this that policy was meaningfully restrictive, and

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Speaker 3: you believe actually we're now in the neutral range. What

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Speaker 3: explains the difference between the two of you at the moment.

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Speaker 7: No, the policy is not and has not been restrictive

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Speaker 7: for a while now. And you know I did note

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Speaker 7: t when he said that, it's very difficult to figure

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Speaker 7: out what thel what neutral is. But you know, facts matter,

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Speaker 7: and you look at what the US economy has done

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Speaker 7: over the period of time that we've apparently been in

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Speaker 7: extremely restrictive territory, and clearly we weren't that restrictive because

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Speaker 7: the economy shows us. And i'd say that I think

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Speaker 7: a part of the reason the FED cannot say that, well,

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Speaker 7: you know, we're far from that, we are far from

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Speaker 7: being in the neutral rate range, is because then the

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Speaker 7: next step would be, well, why aren't you raising rates?

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Speaker 3: And I don't think they need to raise rates, but.

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Speaker 7: They're going to need to keep them high for a

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Speaker 7: quite quite a long period of time on the margins.

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Speaker 1: Now you're someone who raised this prospect of the longer

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Speaker 1: end yields rising quite considerably in the face of a

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Speaker 1: resurgence of inflation. Does this damp in that risk? If

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Speaker 1: there is a FED that might not be saying exactly

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Speaker 1: what you see to be the reality. But isn't moving,

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Speaker 1: isn't really raising, isn't raising rates, but isn't lowering rates either?

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Speaker 7: Well no, because I think a large part of the

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Speaker 7: reason that I think long end rates are are going

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Speaker 7: to sell off is actually to do with the fact

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Speaker 7: that I think there are going to be a whole

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Speaker 7: host of policies and I actually don't think tariffs are

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Speaker 7: one of them, but I do think fiscal policy risk.

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Speaker 7: So over the next sixty to ninety days, we'll see

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Speaker 7: what happens. But I think those are factors which could

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Speaker 7: feed into inflation. Potentially, how immigration gets executed in terms

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Speaker 7: of deportations, et cetera, et cetera. That could have negative

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Speaker 7: consequences as well. But I'm more concerned on the inflation

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Speaker 7: front than on the growth front.

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Speaker 4: From these this is important.

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Speaker 1: We've been focusing on tariffs as a potential economic headwhen

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Speaker 1: in terms of both the growth but also increasing inflation,

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Speaker 1: you're saying that's the wrong place to look. Which policies

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Speaker 1: in particular are most potentially inflation area that you're watching

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Speaker 1: out for.

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Speaker 7: So I am watching very much at what happens with.

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Speaker 3: The budget.

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Speaker 7: It's really about the fiscal it really is. We are

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Speaker 7: running two trillion dollar budget deficits in an economy that's

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Speaker 7: growing definitely above potential at this point. So that's one

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Speaker 7: element that I'm looking and following very closely. It looks

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Speaker 7: like this Republican caucus is fairly in discipline, so there's

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Speaker 7: some hope that they can't actually expand the budget deficit

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Speaker 7: as much as actually making good on all the promises

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Speaker 7: that have been put out. That would result in a

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Speaker 7: massive expansion, and I do think that would have a

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Speaker 7: negative consequence immigration. Look, if you actually could throw out

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Speaker 7: four million people overnight, that would be disruptive and it

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Speaker 7: would have inflationary consequences because if you're a restaurant owner

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Speaker 7: and half your workforce doesn't show up, you suddenly need

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Speaker 7: to hire more people and you're going to build up wages,

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Speaker 7: and that's inflationary.

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Speaker 1: Based on what you've seen with earnings, based in the

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Speaker 1: early indications from the administration, have you changed your view

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Speaker 1: that the bigger risk is to the upside with inflation

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Speaker 1: to then say, a deterioration in growth.

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Speaker 7: No, because actually I think that something which isn't considered

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Speaker 7: very much is the fact that deregulation actually really is

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Speaker 7: going to result in some positive It's going to have

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Speaker 7: a positive impact because in the end, small business owners

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Speaker 7: confidence are skyrocketed. Yes, I know that they're typically more Republican,

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Speaker 7: it's a bigger Republican base, but ultimately that confidence determines

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Speaker 7: whether they want to hire more, whether they want to

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Speaker 7: spend more on capex. All these things are kind of

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Speaker 7: positive on growth. And finally, I really don't think tariffs

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Speaker 7: necessarily have a negative growth impact on this country. Of course,

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Speaker 7: the ECB is going to respond. It's a large exporting group. We,

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Speaker 7: as today's GDP showed, are large importers. So tariff's an't

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Speaker 7: good to hurt our growth necessarily certainly.

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Speaker 3: Going to hurt Europe, China and others if they do

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Speaker 3: go forward with this. Can we get the bond market kill?

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Speaker 3: I sense maybe you think we see five before we

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Speaker 3: see four? Oh yeah, oh yeah.

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Speaker 7: If we're talking about five or four, I would definitely

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00:21:45,760 --> 00:21:48,119
Speaker 7: say five before four because I don't see the rational

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Speaker 7: right now. I need to see that trigger for significant

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Speaker 7: economic weakness, which I'm not seeing yet. I'm not saying

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Speaker 7: it can't happen. I don't think what we saw on

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Speaker 7: Monday with deep seek is that you know the Canarian

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Speaker 7: the coal mine. I really don't think so. But I

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Speaker 7: do think that we don't know. And on this I

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Speaker 7: do agree with the Fed chair Powell. The uncertainty we're

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00:22:10,040 --> 00:22:12,880
Speaker 7: seeing today is not commensurate with the uncertainty we saw

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Speaker 7: around COVID. For example, before we had vaccines, we didn't

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Speaker 7: know when things would reopen not looking at that. If

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Speaker 7: it was something like that, you could call it.

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Speaker 3: What do you make of his stance regarding the uncertainty

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Speaker 3: it's a policy.

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Speaker 7: I think Powell showed his origins as a lawyer, and

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Speaker 7: I think that that was a good thing overall. I'd

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Speaker 7: say that what he said was, you know, there wasn't

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Speaker 7: very much there, but he's being honest. There isn't very

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Speaker 7: much he can say at this point. I thought that

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Speaker 7: he actually moderated some of the questions with respect to

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Speaker 7: tariff's in a very very reasonable way. Tariffs are relative

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Speaker 7: crisis guys. It's not going to suddenly take us back

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Speaker 7: to nine percent inflation.

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Speaker 3: So now does I I appreciate your time?

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Speaker 7: Thank you?

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Speaker 3: Sow does I there? Franklin Templeton, the LASiS, on the

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00:22:59,520 --> 00:23:03,159
Speaker 3: Federi's and on financial markets as well. This is the

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00:23:03,240 --> 00:23:07,399
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495
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