WEBVTT - Bloomberg Surveillance TV: April 1, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.680 with Lisa Bromwitz and Amrie Hordern. Join us each day 0:00:18.720 --> 0:00:22.239 for insight from the best in markets, economics, and geopolitics 0:00:22.400 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.920 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.680 --> 0:00:31.280 am Eastern. Subscribe to the podcast on Apple, Spotify, or 0:00:31.280 --> 0:00:33.919 anywhere else you listen, and as always on the Bloomberg 0:00:34.000 --> 0:00:37.239 Terminal and the Bloomberg Business app. We begin this hour 0:00:37.280 --> 0:00:40.479 with stocksliding after their worst quarter in nearly three years. EDGYR, 0:00:40.520 --> 0:00:42.600 Danny if Youandenny Research cind Of gives us sm P 0:00:42.760 --> 0:00:46.879 five hundred price target to six k from sixty four hundred, 0:00:47.080 --> 0:00:49.720 writing the expected fallout from trump two point zero s 0:00:49.840 --> 0:00:53.720 ign of tariffs undercuts our former bullishness and dims the 0:00:53.760 --> 0:00:58.160 prospects of our base case roaring twenty twenties scenario. Ed 0:00:58.240 --> 0:00:59.120 joined us now for more. 0:00:59.320 --> 0:01:00.480 Edward Morning in the Morning. 0:01:00.800 --> 0:01:03.120 Second change for you in a number of weeks. 0:01:03.240 --> 0:01:05.480 I hope you're not looking for clarity for me, because 0:01:05.880 --> 0:01:11.640 I'm struggling with all the confusing information coming out of Washington. 0:01:11.880 --> 0:01:16.360 As you said, you're getting different messages from different people 0:01:16.760 --> 0:01:18.839 in the administration, and at the end of the day, 0:01:18.880 --> 0:01:22.400 it'll all depend on what the President concludes he wants 0:01:22.440 --> 0:01:25.080 to do that day, and he can change his mind. 0:01:25.080 --> 0:01:25.360 Again. 0:01:25.440 --> 0:01:27.800 How much damage do you think the accumulating uncertainty is 0:01:27.840 --> 0:01:29.920 doing already to the underlying economy. 0:01:30.440 --> 0:01:33.160 Well, if you look at all the soft data, which 0:01:33.200 --> 0:01:37.160 is very much forward looking, it's not looking good. The 0:01:37.240 --> 0:01:40.640 current data, the present data looks pretty good. The labor 0:01:40.680 --> 0:01:44.559 market is doing fine. I think we had some really 0:01:44.600 --> 0:01:48.480 cold weather in January and February that depressed consumer spending. 0:01:48.560 --> 0:01:50.960 So I think we're going to have this really bizarre 0:01:51.000 --> 0:01:54.400 scenario where the first quarter is we got real GDP 0:01:54.520 --> 0:01:57.280 up one percent. I know others have it even lower 0:01:57.280 --> 0:01:59.960 than that. Then it could be something like three percent 0:02:00.400 --> 0:02:02.760 in the second quarter, because you could really have a 0:02:02.840 --> 0:02:06.800 nice rebound in consumer spending and consumers could be running 0:02:06.800 --> 0:02:09.720 to buy cars before the prices go up, which will 0:02:09.800 --> 0:02:14.080 be kind of another possibility. And then in the second 0:02:14.120 --> 0:02:16.240 half of the year we could have stagflation with the 0:02:16.280 --> 0:02:20.880 economy in a growth recession, maybe very little growth, if any, 0:02:21.240 --> 0:02:24.720 maybe even a shallow recession. And so that's the way 0:02:24.800 --> 0:02:27.480 I've kind of seen this thing playing out in terms 0:02:27.520 --> 0:02:29.000 of its impact on the economy. 0:02:29.080 --> 0:02:30.880 And right now you and the market are focusing on 0:02:31.080 --> 0:02:34.440 the reign of tariffs. What happens when we're focusing every 0:02:34.520 --> 0:02:37.760 day on this potential extension of TCGA and other tax 0:02:37.800 --> 0:02:39.679 cuts that we may get, and they're focused on having 0:02:39.680 --> 0:02:40.840 this done before September. 0:02:41.040 --> 0:02:42.840 Yeah, well it's going to be you know, if you 0:02:42.880 --> 0:02:45.079 think it's messy now, it's going to get even messier 0:02:45.120 --> 0:02:47.639 if you on top of the whole tariff issue, which 0:02:47.680 --> 0:02:50.840 isn't going to go away just because they announced what 0:02:50.919 --> 0:02:53.880 they mean by reciprocal tariffs. I mean, the twenty percent 0:02:54.000 --> 0:02:57.320 number that's out there basically suggests that now the President 0:02:57.440 --> 0:03:00.880 is looking to raise revenues and Navirus saying six trillion 0:03:00.880 --> 0:03:04.040 dollars is what he claims that this could could raise. 0:03:04.280 --> 0:03:07.160 And now off on top of that, we start to 0:03:07.200 --> 0:03:10.359 try to extend the tax cuts, and an extension of 0:03:10.440 --> 0:03:14.040 tax cuts, it's not stimulative, it'll be very negative if 0:03:14.040 --> 0:03:16.480 they don't get the tax cuts extended. 0:03:16.800 --> 0:03:19.079 Well, try sactory last night's talking about that they want 0:03:19.120 --> 0:03:20.960 to get done. No tax on tips, no tax on 0:03:20.960 --> 0:03:23.920 Social Security, no tax on overtime, and also purchasing an 0:03:23.919 --> 0:03:27.120 American car making that tax deductible. Again, if you have 0:03:27.200 --> 0:03:29.200 even one of those sweeteners, would that be bullish for 0:03:29.240 --> 0:03:29.720 the market. 0:03:30.520 --> 0:03:34.800 Well, I don't know that that'll make it that much 0:03:34.840 --> 0:03:38.080 easier to get it through Congress. I mean that it 0:03:38.160 --> 0:03:41.680 is a vowful situation in Congress. The margin that the 0:03:41.720 --> 0:03:45.080 Republicans have is very narrow, and the Republicans always don't 0:03:45.080 --> 0:03:48.880 always stay united. So no, I don't know that those 0:03:48.920 --> 0:03:53.440 particular issues are going to be market moving at all. 0:03:53.920 --> 0:03:56.080 At a certain point. If people are talking about the 0:03:56.120 --> 0:03:59.520 likelihood of recession, what gives you the idea that this 0:03:59.600 --> 0:04:02.920 is going to be more stagflationary than just traditionally recessionary. 0:04:03.560 --> 0:04:05.760 Well, the thing that we all have to worry about, 0:04:05.760 --> 0:04:08.600 of course is the consumer and the consumer confidence numbers 0:04:08.640 --> 0:04:13.400 have all been depressed. The animal spirits that we all 0:04:13.400 --> 0:04:16.760 were kind of counting on to keep the stock market 0:04:16.800 --> 0:04:20.240 going and consumers going is kind of fizzled away here, 0:04:20.600 --> 0:04:22.200 And a lot of it has to do, obviously, with 0:04:22.880 --> 0:04:26.800 the kind of disappointment consumers were expecting that the administration 0:04:26.839 --> 0:04:31.520 would focus on somehow lowering prices and instead now we 0:04:31.560 --> 0:04:34.560 may we will have higher auto prices if we're going 0:04:34.600 --> 0:04:39.640 to have a twenty percent permanent tariff on autos, and 0:04:39.720 --> 0:04:41.840 of course if we have a twenty percent tariff across 0:04:41.839 --> 0:04:47.400 the board, prices are going to go up. So that's disconcerting. 0:04:47.640 --> 0:04:49.000 I guess that the reason why I ask this is 0:04:49.040 --> 0:04:51.800 because Daniel dots point a one time price adjustment. But 0:04:51.839 --> 0:04:53.920 if you have less demand, you'd imagine that would be 0:04:53.960 --> 0:04:55.760 a one time price adjustment, and then you won't be 0:04:55.760 --> 0:04:58.600 able to have the ability to really raise that, especially 0:04:58.640 --> 0:05:01.360 at a time where potentially the labor market could come 0:05:01.440 --> 0:05:04.080 under some stress. So what is giving people the sense 0:05:04.120 --> 0:05:06.200 that this time is different, that there could be a 0:05:06.360 --> 0:05:10.800 prolonged inflationary type of bent that raises questions about US treasuries. 0:05:10.839 --> 0:05:12.919 It raises questions about what the FAT can do. 0:05:13.080 --> 0:05:14.800 Sure, I mean, it's not likely to be a one 0:05:14.839 --> 0:05:17.680 month event where you know, you raise the tariff and 0:05:17.839 --> 0:05:20.240 the CPI goes up to one level and it's a 0:05:20.240 --> 0:05:23.000 bad month for the CPI and then it comes back down. 0:05:23.200 --> 0:05:25.800 As a matter of fact, we raised our inflation outlook 0:05:25.839 --> 0:05:28.240 for the rest of the year from two to three 0:05:28.320 --> 0:05:31.040 percent to three to four percent. I think it's going 0:05:31.040 --> 0:05:33.560 to show up that quickly, and I think it's not 0:05:33.640 --> 0:05:35.640 going to be that transitory. It's not going to be 0:05:35.920 --> 0:05:38.680 one or two months. It's going to last for several months. 0:05:39.760 --> 0:05:42.360 And again, this is an ongoing, dynamic process. We don't 0:05:42.400 --> 0:05:45.920 know whether more tariffs will be added or reduced. It's 0:05:45.960 --> 0:05:50.080 just kind of confusing. But I think companies have already 0:05:50.120 --> 0:05:53.320 anticipated that their costs are going to go up. Certainly, 0:05:53.320 --> 0:05:55.480 if you're in manufacturing, your costs are going to go 0:05:55.560 --> 0:05:58.360 up from all the parts. And as a result of that, 0:05:59.120 --> 0:06:03.760 we're seeing price kind of forward indicators of inflation showing 0:06:03.800 --> 0:06:07.520 that there's a problem, and so the regional business surveys, 0:06:07.560 --> 0:06:11.400 for example, also showing that prices paid are going up. 0:06:11.760 --> 0:06:13.760 Thanks the question ed, why do you think stocks are 0:06:13.760 --> 0:06:15.560 going higher by year, Rent. 0:06:16.200 --> 0:06:21.000 Well, I'm kind of counting on the market to look 0:06:21.040 --> 0:06:25.159 forward as it typically does, and I'm kind of hoping 0:06:25.200 --> 0:06:30.839 that all these issues get somewhat resolved by the end 0:06:30.880 --> 0:06:32.479 of the year, and I think the market starts to 0:06:32.520 --> 0:06:35.680 look ahead into twenty twenty six. I haven't given up 0:06:35.960 --> 0:06:38.880 on'm i roaring twenty twenty scenario, sticking with it. I'm 0:06:38.920 --> 0:06:44.160 sticking with it. I think it's got temporarily waylaid, all 0:06:44.160 --> 0:06:48.039 this tariff issues and all these policy balls that are 0:06:48.720 --> 0:06:51.920 up in the air. But I think the you know, 0:06:52.600 --> 0:06:56.280 I guess my underlying thesis is, look how well the 0:06:56.279 --> 0:07:00.440 economy has done in the past despite Washington and so 0:07:00.680 --> 0:07:02.000 I'm hoping that will work again. 0:07:02.640 --> 0:07:05.440 We've continued to underestimate the performance of this economy over 0:07:05.440 --> 0:07:07.640 the last several years. That's certainly been a feature, which is. 0:07:07.640 --> 0:07:09.479 The reason why a lot of people are saying that 0:07:09.600 --> 0:07:12.280 actually you could see gains and you could actually see 0:07:12.280 --> 0:07:15.760 ongoing inflation, because if you are underestimating the power of 0:07:15.800 --> 0:07:18.200 the consumer, they will be able to absorb some of 0:07:18.200 --> 0:07:20.680 this and they will keep spending. And companies know this. 0:07:20.960 --> 0:07:22.280 You know that they don't have a sense of that 0:07:22.320 --> 0:07:24.320 price target as much as pre pandemic. 0:07:24.360 --> 0:07:26.240 The could is right now on ES ANDP negative by 0:07:26.240 --> 0:07:28.280 four tenths of one percent, just a little bit softer. 0:07:28.440 --> 0:07:41.720 Ed of theardenty research in our nation's capital just moments ago. 0:07:41.760 --> 0:07:43.960 If you aren't just joining us and welcome to the program. 0:07:44.000 --> 0:07:46.280 The Washington Post reporting the White House aides have drafted 0:07:46.280 --> 0:07:49.680 a proposal to impose tariffs of around twenty percent on 0:07:49.720 --> 0:07:52.400 at least most imports into the United States. It's according 0:07:52.400 --> 0:07:55.120 to three people familiar with the matter. There's an additional 0:07:55.120 --> 0:07:56.840 dimension to this story on the tag site that I 0:07:56.840 --> 0:07:59.480 think is worth highlighting that a president's team is exploring 0:07:59.560 --> 0:08:02.080 using true millions of dollars in new import revenue for 0:08:02.120 --> 0:08:04.560 a tax dividend LISA or refund. 0:08:04.680 --> 0:08:07.080 So this would be the sweetener on the flip side 0:08:07.080 --> 0:08:09.120 of some of these tariffs. That would be, as some 0:08:09.160 --> 0:08:11.640 people are saying, the worst case scenario in terms of 0:08:11.680 --> 0:08:15.440 the most maximalist in terms of terriffs. A big question 0:08:15.480 --> 0:08:17.160 here of the timeline of how hard it would be 0:08:17.200 --> 0:08:19.960 to get those through. And I will just say bonds 0:08:20.000 --> 0:08:22.720 are still rallying on the margin, but not nearly as 0:08:22.800 --> 0:08:25.240 much as you'd expect if you think about some of 0:08:25.280 --> 0:08:28.880 the projections from Mark Zandy from Parthenon talking about the 0:08:29.000 --> 0:08:31.920 likelihood of recession and unemployment rising to as much as 0:08:31.960 --> 0:08:33.880 seven percent by twenty twenty seven. 0:08:34.000 --> 0:08:36.920 Tobermarcus of Wolf Research joins us now to extend the conversation. 0:08:37.480 --> 0:08:39.920 Topin good morning, and welcome to the program. How about 0:08:39.960 --> 0:08:42.920 that twenty percent on all imports, Now, this can change, 0:08:43.000 --> 0:08:44.600 As we always say on this program, I said just 0:08:44.600 --> 0:08:47.080 moments ago. Situations very very fluid. But how does that 0:08:47.120 --> 0:08:49.920 snack out relative to what you're expecting for tomorrow? 0:08:51.040 --> 0:08:54.520 Well, happy Liberation Day, Eve to use Well, Jonathan, Look, 0:08:54.559 --> 0:08:56.120 that's certainly at the high end of the range that 0:08:56.160 --> 0:08:59.360 we've been contemplating, even when you throw in gross value 0:08:59.360 --> 0:09:01.760 add a tax into the calculations of these numbers, which 0:09:01.760 --> 0:09:04.600 are the real big thing that drives them higher twenty 0:09:04.640 --> 0:09:07.320 percent as an average rate or rate that applies to 0:09:07.440 --> 0:09:09.560 many or most of the countries that are being here, 0:09:09.760 --> 0:09:11.400 that's definitely at the high end of the range that 0:09:11.440 --> 0:09:14.839 we've been contemplating. I think, even relative to a consensus 0:09:15.240 --> 0:09:19.320 among investors that's moved towards everyone expecting higher numbers tomorrow 0:09:19.320 --> 0:09:20.960 over the course of the past week or two, that 0:09:21.000 --> 0:09:23.280 would definitely be a surprise to the high end. 0:09:23.480 --> 0:09:25.720 Right now, the Washington Post is saying, this is just 0:09:25.840 --> 0:09:28.320 one proposal on the table, Tobin, Do you get a 0:09:28.320 --> 0:09:29.959 sense that the White House has actually made up their 0:09:30.000 --> 0:09:30.679 mind yet? 0:09:31.960 --> 0:09:34.280 By all accounts they have not. It sure seems like 0:09:34.320 --> 0:09:38.200 deliberations are ongoing. As recently as this weekend, it seemed 0:09:38.200 --> 0:09:40.840 like there were multiple reports that the idea of a 0:09:40.920 --> 0:09:43.959 flat across the board universal tariff in that twenty percent 0:09:44.080 --> 0:09:46.400 range had resurfaced. I do think they're going to end 0:09:46.480 --> 0:09:49.360 up with more individualized country by country numbers in this 0:09:49.400 --> 0:09:52.160 reciprocal framework. But exactly where those numbers come down does 0:09:52.160 --> 0:09:53.240 still seem to be up in the air. 0:09:53.520 --> 0:09:55.720 Is twenty percent here to stay if they go with 0:09:55.840 --> 0:09:58.720 that proposal, or is this the opening of a negotiation? 0:10:00.200 --> 0:10:01.920 So at some level, I do think that this is 0:10:01.920 --> 0:10:05.000 the opening of a negotiation. Certainly there will be negotiations. 0:10:05.040 --> 0:10:06.720 I fully expect that there will be talks with many 0:10:06.800 --> 0:10:09.360 our biggest trading partners, and I think there's probably room 0:10:09.400 --> 0:10:11.120 for the numbers to come down somewhat. But I think 0:10:11.240 --> 0:10:13.760 I am more concerned than a lot of the cell 0:10:13.840 --> 0:10:16.200 side about the durability of these tariffs. And I think 0:10:16.240 --> 0:10:18.600 it's really notable. In the past week, you had both 0:10:18.600 --> 0:10:21.200 Trump and Peter Navarro talk about six hundred billion dollars 0:10:21.240 --> 0:10:24.440 a year in tariff revenue, not you know, a week 0:10:24.480 --> 0:10:26.520 before that, you had a lot nick talking about one 0:10:26.600 --> 0:10:28.760 trillion dollars target for a revenue from tariff's as well 0:10:28.760 --> 0:10:30.880 as things like the new Trump Gold card. Those are 0:10:30.960 --> 0:10:33.520 numbers that you can only achieve if you actually keep 0:10:33.520 --> 0:10:35.920 these tariffs in place, not briefly threaten them and then 0:10:35.960 --> 0:10:38.240 quickly negotiate them away. And I do think there's an 0:10:38.240 --> 0:10:41.840 aspiration to fundamentally redirect the global trade system. So you know, 0:10:41.880 --> 0:10:42.880 I think a lot of this is going to be 0:10:42.880 --> 0:10:45.000 here to say, you know, from a negotiation perspective. Also, 0:10:45.040 --> 0:10:47.600 it's notable if that's are the thing driving this value 0:10:47.600 --> 0:10:49.600 add attackses, countries are not going to be able to 0:10:49.640 --> 0:10:51.840 negotiate those away. So this talk about if they drop 0:10:51.880 --> 0:10:54.920 their tariff barriers, will drop hours doesn't really work that way. 0:10:54.960 --> 0:10:57.960 If tariffs themselves are not the things driving these ostensibly 0:10:58.000 --> 0:10:59.160 reciprocal rates. 0:10:59.120 --> 0:11:01.560 Toobin, how long would it take to pass some of 0:11:01.559 --> 0:11:04.800 these other sweetener proposals that could potentially offset the growth 0:11:04.840 --> 0:11:07.520 hit from these tariffs to the United States. I'm talking 0:11:07.520 --> 0:11:09.480 about certain tax rebates. 0:11:09.040 --> 0:11:09.840 Or tax cuts. 0:11:10.920 --> 0:11:12.640 I think the tax bill is probably going to be 0:11:12.760 --> 0:11:15.800 enacted in a July type of timeframe. Certainly they are 0:11:15.800 --> 0:11:17.559 trying to get it done before the debt sealing X 0:11:17.600 --> 0:11:19.480 stage because of the plan in Congress at the moment 0:11:19.559 --> 0:11:22.600 is to include a dead sealing increase in reconciliation to 0:11:22.640 --> 0:11:24.400 have that be the vehicle. So that would mean they 0:11:24.400 --> 0:11:27.040 need to get it done before, probably roughly mid August, 0:11:27.520 --> 0:11:29.720 so that late summer timeline is what we've been circling. 0:11:29.760 --> 0:11:34.360 Sometime in Q three. It will be certainly better news 0:11:34.400 --> 0:11:36.079 for markets than the tariffs have been. But I think 0:11:36.080 --> 0:11:39.000 from a scale perspective, what's currently on the table does 0:11:39.040 --> 0:11:41.120 not look like it comes close to fully offsetting the 0:11:41.200 --> 0:11:43.240 hit from the tariffs. Like there are good things in there, 0:11:43.280 --> 0:11:45.959 both individually and in terms of corporate tax cuts on 0:11:46.000 --> 0:11:48.240 things like bonus appreciation, but it really is at a 0:11:48.280 --> 0:11:49.560 significantly smaller scale. 0:11:49.760 --> 0:11:51.839 I type an appreciate good time, I'm reaction to the 0:11:51.880 --> 0:11:54.600 break in news and a happy Liberation Day gave to 0:11:54.640 --> 0:11:57.320 you as well. Set type of Marcus the before free set. 0:12:07.400 --> 0:12:11.440 Let's turn back to commodities. Gold continuing its record breaking rally. 0:12:11.480 --> 0:12:14.720 Bank for America suggesting the precious metal could reach thirty 0:12:14.760 --> 0:12:18.120 five hundred, driven by central bank buying and haven demand 0:12:18.280 --> 0:12:22.040 a bit rising geopolitical and macro uncertainties. Francisco Blanche and 0:12:22.040 --> 0:12:24.680 Bank for America joint just now for more, Francisco, Welcome 0:12:24.720 --> 0:12:28.000 to the show. A nineteen percent move in the first quarter, 0:12:28.400 --> 0:12:32.679 the biggest quarterly game going back to nineteen eighty six. Francisco. 0:12:32.720 --> 0:12:34.880 Let's talk about the drivers of the first three months 0:12:34.880 --> 0:12:37.160 of this year before we get into the next nine 0:12:37.160 --> 0:12:40.440 months of twenty twenty five. What got us to this place. 0:12:42.520 --> 0:12:45.679 Thank you for having me again, John. So, look, I 0:12:45.679 --> 0:12:51.320 think gold this has been really drifted up by essentially 0:12:51.920 --> 0:12:55.240 we started with center back buying in the the last 0:12:55.240 --> 0:12:57.960 three years, but I think investors have started to accumulate 0:12:57.960 --> 0:13:01.320 it as well. Saving what's really change this has been 0:13:01.920 --> 0:13:06.440 more investor buying, whether it's through ETFs other instruments, but 0:13:06.480 --> 0:13:11.160 also we are seeing asset managers and insurers starting to 0:13:11.240 --> 0:13:15.280 pile in. So so that's that's been the change. Remember, 0:13:15.320 --> 0:13:18.960 we've seen a weekending US war. We've also seen following 0:13:19.080 --> 0:13:23.520 interest rates at least on on ten year yields in 0:13:23.559 --> 0:13:28.040 the US, and that's kind of led to incremental demand 0:13:28.200 --> 0:13:31.200 for gold. Plus, of course there's an issue of tips 0:13:31.360 --> 0:13:33.880 and the potential implications that may have in the economy. 0:13:33.960 --> 0:13:36.040 So I thing all of that has come together. But 0:13:36.160 --> 0:13:38.640 gold's not alone. I mean, we've seen a big rally 0:13:38.679 --> 0:13:43.559 across the commodity complex. We've seen also coffee moving up, 0:13:43.600 --> 0:13:48.040 We've seen you know it's in silver. Actually, commodities are 0:13:48.120 --> 0:13:51.400 up almost nine percent in the first quarter, John, I 0:13:51.400 --> 0:13:54.000 mean it, it's been a really strong run, maybe a 0:13:54.000 --> 0:13:57.680 little bit of unexpected run, and and and the sector 0:13:57.679 --> 0:14:00.120 has helped pace bonds and equities across the board. 0:14:00.400 --> 0:14:04.080 Francisco, Before we dive into just generally the commodity rally, 0:14:04.280 --> 0:14:08.360 how distinct is gold given its hedge factor as well 0:14:08.400 --> 0:14:11.360 as increasing concerns as we were speakingly towards cervellus earlier 0:14:11.720 --> 0:14:14.440 by diversifying away from the US dollar. 0:14:17.120 --> 0:14:20.960 Well, so I think there is an element here of verification, 0:14:21.080 --> 0:14:23.520 no doubt. I mean, central banks are now holding out 0:14:23.600 --> 0:14:26.560 ten percent of their reserve assets in gold, and that 0:14:26.680 --> 0:14:29.280 number is likely to continue to increase at an annual 0:14:29.320 --> 0:14:32.160 pace of one to two percent, probably as far as 0:14:32.240 --> 0:14:34.480 I can see. Remember, one of the things that the 0:14:34.520 --> 0:14:38.240 Trump administration is trying to do is to rebalance the 0:14:38.440 --> 0:14:42.600 US twin deficits, and that rebalancing of the twin deficits 0:14:42.640 --> 0:14:46.680 by definition implies that there is a lower desire bio 0:14:46.720 --> 0:14:51.480 Trump administration to continue to supply this reserve asset that 0:14:51.560 --> 0:14:53.880 the world has been caring for for a long time, 0:14:53.880 --> 0:14:56.680 which is which is US streacheries. Right, So if you 0:14:56.880 --> 0:15:00.600 reduce the deficit, if you're redeal the budget defici If 0:15:00.600 --> 0:15:03.800 you reduce the current count deficit and the trade deficits, 0:15:03.960 --> 0:15:08.000 by definition, there's going to be less treasure is available 0:15:08.160 --> 0:15:13.040 for central banks around to hold. And then there is 0:15:13.080 --> 0:15:15.800 the whole sanctions and tirets over that here that's also 0:15:15.960 --> 0:15:19.480 driving the demand for gold. 0:15:19.680 --> 0:15:21.920 So I guess my question for you is, have we 0:15:21.960 --> 0:15:24.080 seen the book of it? Why isn't your target higher? 0:15:24.120 --> 0:15:26.560 You see thirty five hundred as a recent target. We 0:15:26.600 --> 0:15:28.720 were just talking to Eddie ar Denny who left the 0:15:28.920 --> 0:15:31.120 office saying four thousand by the end of this year 0:15:31.120 --> 0:15:33.160 and five thousand by the end of this year, and 0:15:33.240 --> 0:15:34.640 it seems like people can't get enough. 0:15:36.440 --> 0:15:38.920 Well, I mean there's a little bit of that right now. 0:15:38.960 --> 0:15:42.480 But also remember gold is a pretty good, pretty large 0:15:42.480 --> 0:15:47.440 market already, right It's over ten trillion dollars and in value, 0:15:47.720 --> 0:15:49.680 so of course you can you can put any number there, 0:15:49.720 --> 0:15:53.160 because there is no there's no such things as intrinsic 0:15:53.280 --> 0:15:55.200 value in something like gold. I mean, there is, of 0:15:55.240 --> 0:15:58.240 course a cost of production, but as we know, mining 0:15:58.800 --> 0:16:01.160 increases the stoke gold by all one and a half 0:16:01.160 --> 0:16:04.000 percent a year. But the real story here is how 0:16:04.080 --> 0:16:07.280 much investment can you drive in of course gold could 0:16:07.320 --> 0:16:09.440 spike a or higher, but you would need to see 0:16:09.680 --> 0:16:12.360 a much worse economic outcome than what the market is 0:16:12.360 --> 0:16:14.960 currently pricing in our view, right, So it's going to 0:16:14.960 --> 0:16:18.200 be a steady grind higher as opposed to a big 0:16:18.280 --> 0:16:20.680 jump unless something grammatic happens. 0:16:21.400 --> 0:16:23.000 There's a lot of research that all this has to 0:16:23.000 --> 0:16:25.840 do a lot with the uncertainty about the trade and 0:16:25.840 --> 0:16:28.000 the terrors with the announcement we're going to get tomorrow. 0:16:28.120 --> 0:16:29.760 But how much is it just driven by the fact 0:16:29.800 --> 0:16:33.080 that it is uncertain and most people are projecting the 0:16:33.080 --> 0:16:35.400 next year to just remain uncertain. So the safest thing 0:16:35.440 --> 0:16:36.560 is to just go into gold. 0:16:38.240 --> 0:16:41.880 Well again, just mentioned that earlier. It's a combination of 0:16:41.920 --> 0:16:44.240 factors when you look at a goal. Historically it used 0:16:44.240 --> 0:16:49.040 to be race, it used to be effects, but now 0:16:49.120 --> 0:16:53.640 we have this uncertainty, which is of course triggering the purchases. 0:16:54.000 --> 0:17:00.280 But again, the uncertainty is really impacting all investors across 0:17:00.280 --> 0:17:03.520 the spectrum. As I said, we are seeing retail investors, 0:17:03.520 --> 0:17:07.480 we are seeing asset managers and insurers, pensions. We're seeing 0:17:07.680 --> 0:17:12.879 also center bank so and and again is it the 0:17:12.920 --> 0:17:16.840 safest bed here? I don't know, right, But are we 0:17:16.920 --> 0:17:20.720 going to continue to see interest across the board most likely, yes, 0:17:20.880 --> 0:17:23.439 Now order the downside risks, well, downside risks is that 0:17:23.480 --> 0:17:28.760 the Trump administration is successful at rebalancing it's it's accounts 0:17:28.800 --> 0:17:30.960 and we end up having a very strong US economy 0:17:31.800 --> 0:17:36.440 with relatively limited deficits, and therefore the US becomes a 0:17:36.520 --> 0:17:39.720 very attractive place to investiga in. Right. I mean a 0:17:39.760 --> 0:17:42.680 big part of the rotation to gold is also related 0:17:42.720 --> 0:17:45.320 to the drop in inequity markets, to drop in the 0:17:45.359 --> 0:17:47.840 MAC seven. Right, So let's say that we started to 0:17:47.880 --> 0:17:50.320 see against strong growth and strong rebalancing in the US 0:17:50.359 --> 0:17:53.480 as a result of all these policies, maybe gold isn't 0:17:53.520 --> 0:17:57.040 ass attractive anymore in that in that context, right, So, 0:17:57.040 --> 0:17:59.520 so I think we also have to consider the downside risks, 0:17:59.640 --> 0:18:01.520 not just the upside risks. Is never going to be 0:18:01.560 --> 0:18:02.520 a straight line for any. 0:18:02.359 --> 0:18:04.840 Accident, Francisco, I just want to finish on the availability 0:18:04.880 --> 0:18:08.320 of gold and maybe lean on your conversations with clients 0:18:08.640 --> 0:18:10.800 so you can avoid offer in your opinion unless you've 0:18:10.800 --> 0:18:13.080 got one bio made share it. Do you think that 0:18:13.320 --> 0:18:16.560 losing confidence about that gold availability in places like the 0:18:16.600 --> 0:18:19.879 Bank of England is that behind some of the speculative 0:18:19.960 --> 0:18:24.880 drive we saw into gold over the past few months, I. 0:18:24.800 --> 0:18:27.720 Don't think there's as much like a confidence in terms 0:18:27.720 --> 0:18:29.399 of what the stocks of gold being there. I think 0:18:29.440 --> 0:18:32.640 it's been more about the movement of gold to Europe 0:18:32.680 --> 0:18:35.919 into the US ahead of potential tires. Remember, there's a 0:18:35.920 --> 0:18:37.840 lot of instruments in the US that are issued. There 0:18:37.840 --> 0:18:41.680 are instruments that may have a gold physical backing. And 0:18:42.480 --> 0:18:46.400 if you've promised investors on any kind of note with 0:18:46.720 --> 0:18:50.280 a structure note or an ETF or some kind of fund, 0:18:50.440 --> 0:18:52.480 that that goal is going to be physically available for 0:18:52.920 --> 0:18:56.520 the investor to take to take hold in the US, 0:18:57.280 --> 0:18:59.919 you're probably shipping gold out right just in case that 0:19:00.040 --> 0:19:02.560 those times go up and suddenly you face a big 0:19:02.600 --> 0:19:05.800 dislocation between the promote in the US and the product 0:19:05.800 --> 0:19:07.920 the world. And some extent we've seen that in other 0:19:08.440 --> 0:19:13.520 commora instruments like copper and a bit less so in 0:19:13.640 --> 0:19:16.920 the energy space is a little more fungible. But investors 0:19:17.000 --> 0:19:19.320 are rushing to bring stuff into the US ahead of 0:19:20.160 --> 0:19:24.080 this so called liberation day tomorrow in the rose gardens. 0:19:24.080 --> 0:19:26.480 So what is the impact of those times is going 0:19:26.560 --> 0:19:29.040 to be Well, again, you'd rather have your product in 0:19:29.080 --> 0:19:32.240 the US of a ahead of that potential price change, 0:19:32.280 --> 0:19:37.840 because unlike currencies and legal instruments, komoris are going to 0:19:37.840 --> 0:19:40.600 suffer the tires directly, right, So it's a direct play 0:19:40.720 --> 0:19:43.560 on the tires, and you'd rather be in than out 0:19:43.680 --> 0:19:46.199 when those tireff walls go up. 0:19:46.280 --> 0:19:49.160 Another record hunt of the pounds away Francisco Prety second 0:19:49.240 --> 0:19:52.120 time breaking down Cade Francisco plunge to Bank America. 0:19:59.680 --> 0:19:59.960 Around. 0:20:01.600 --> 0:20:03.720 We begin this now with stock study has traded away 0:20:03.760 --> 0:20:07.600 President Trump for reciprocal tariffs. Emily Rowland of John Hancock writing, 0:20:07.680 --> 0:20:10.600 there is still a broad based global economic cycle that 0:20:10.640 --> 0:20:14.360 will drive earnings and valuations on stocks. Overall. This cycle 0:20:14.440 --> 0:20:19.480 maybe borrow time. As recent economic does start to show cracks, 0:20:19.760 --> 0:20:23.680 we would consider further pruning risk and portfolios. Emily. John, 0:20:23.760 --> 0:20:25.960 just now for more, Emily, welcome to the program. We've 0:20:26.000 --> 0:20:28.280 seen some major moves in this stock market through the 0:20:28.320 --> 0:20:34.040 first quarter. Do you see some big opportunities opening up now? Yeah, John, So. 0:20:34.040 --> 0:20:37.040 We are actually going to be moving to neutral on 0:20:37.240 --> 0:20:41.119 US large cap equities and actually allocating those assets to credit. 0:20:41.920 --> 0:20:45.480 And really it's not necessarily about the policy uncertainty. It's 0:20:45.520 --> 0:20:49.240 really just about the starting point. US stops have handily 0:20:49.280 --> 0:20:53.840 outperformed credit really since the stimulus boom in response to COVID, 0:20:53.880 --> 0:20:57.119