1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,160 Speaker 2: Terminal and the Bloomberg Business app. We begin this hour 10 00:00:37,400 --> 00:00:40,040 Speaker 2: with stocks hire on reports for a more targeted US 11 00:00:40,120 --> 00:00:43,400 Speaker 2: tariff approach. Jean Pavan of Blackrock writing, we stay overweight 12 00:00:43,640 --> 00:00:46,720 Speaker 2: US equities on our tactical horizon of six to twelve months, 13 00:00:46,880 --> 00:00:50,240 Speaker 2: as policy uncertainty should ease over the period. John joins 14 00:00:50,280 --> 00:00:52,400 Speaker 2: us now for more. John, good to see you more 15 00:00:52,440 --> 00:00:55,640 Speaker 2: confidence being long stocks versus bonds. Just help us understand 16 00:00:55,800 --> 00:00:57,080 Speaker 2: the why. Well. 17 00:00:57,080 --> 00:01:00,360 Speaker 3: On the bone side, I think we are a high 18 00:01:00,440 --> 00:01:04,600 Speaker 3: conviction that we are observing right now resetting of global 19 00:01:04,680 --> 00:01:05,440 Speaker 3: rates higher. 20 00:01:05,440 --> 00:01:06,319 Speaker 4: It's a big story. 21 00:01:06,360 --> 00:01:10,200 Speaker 3: I think you know, we see fiscal spending being everywhere. 22 00:01:10,520 --> 00:01:12,720 Speaker 3: This is important reaction to the foreign policy of the 23 00:01:12,840 --> 00:01:15,399 Speaker 3: US UH and that has still to play out. So 24 00:01:15,440 --> 00:01:18,920 Speaker 3: I guess being underweight bonds is is OIG conviction. On 25 00:01:18,959 --> 00:01:22,960 Speaker 3: the equity side of things, we remain of the view 26 00:01:23,080 --> 00:01:24,880 Speaker 3: that we are at, Like you. 27 00:01:24,760 --> 00:01:28,480 Speaker 4: Know, uncertainty right now is maxed out. Never seen that before. 28 00:01:28,760 --> 00:01:32,720 Speaker 3: Along many policy leavers, objectives are not clear, and so 29 00:01:32,840 --> 00:01:35,679 Speaker 3: all that together I don't think can last forever. I mean, 30 00:01:35,680 --> 00:01:38,120 Speaker 3: that's not good for anyone. So we think over the 31 00:01:38,160 --> 00:01:42,120 Speaker 3: next few weeks, as we get more clarity, I think 32 00:01:42,160 --> 00:01:44,680 Speaker 3: markets will be able to get on with whatever is 33 00:01:44,720 --> 00:01:45,399 Speaker 3: the destination. 34 00:01:45,600 --> 00:01:47,480 Speaker 4: And that's that's the that's the overweight the. 35 00:01:47,480 --> 00:01:50,200 Speaker 2: Markets swear markets in the United States. What about markets 36 00:01:50,200 --> 00:01:52,920 Speaker 2: elsewhere that have actually rallied into this decision. 37 00:01:52,920 --> 00:01:54,960 Speaker 5: I'm thinking of China, I'm thinking of Europe. 38 00:01:55,240 --> 00:01:57,880 Speaker 3: Yeah, so I think right now this has been the opposite. Right, so, 39 00:01:57,920 --> 00:02:00,560 Speaker 3: we've seen the rest of the world out performing in 40 00:02:00,600 --> 00:02:02,960 Speaker 3: the US, but on the sixty to twelve month horizon, 41 00:02:03,520 --> 00:02:06,480 Speaker 3: we expect to go back to the US taking the lead. 42 00:02:07,040 --> 00:02:09,960 Speaker 3: I think this is partly because on the European side, 43 00:02:10,080 --> 00:02:12,560 Speaker 3: even though we are a bit more positive, we turn neutral. 44 00:02:12,600 --> 00:02:14,839 Speaker 3: We used to be on the weight. We think this 45 00:02:14,880 --> 00:02:17,239 Speaker 3: is more of a narrow story. It's ministry spending its 46 00:02:17,240 --> 00:02:20,120 Speaker 3: banks and it has some momentum for a few months, 47 00:02:20,120 --> 00:02:22,120 Speaker 3: but we don't think this is yet a macro story 48 00:02:22,120 --> 00:02:23,679 Speaker 3: that's going to carry Europe. 49 00:02:23,400 --> 00:02:24,600 Speaker 4: For the next twelve months. 50 00:02:24,760 --> 00:02:27,359 Speaker 3: So we expect to revert back to US taking the 51 00:02:27,440 --> 00:02:28,480 Speaker 3: lead as a result, if you. 52 00:02:28,440 --> 00:02:31,040 Speaker 6: Put these two ideas together, the idea that we're seeing 53 00:02:31,080 --> 00:02:34,519 Speaker 6: a structural repricing of rates and that you still are 54 00:02:35,280 --> 00:02:37,560 Speaker 6: overweight the US or expecting the US to take the 55 00:02:37,600 --> 00:02:40,960 Speaker 6: lead later this year, do you think overall equity returns 56 00:02:41,080 --> 00:02:44,640 Speaker 6: are going to be constrained by this repricing of rates. 57 00:02:44,400 --> 00:02:48,600 Speaker 3: Globally, So we don't think rates are coming down. We 58 00:02:48,639 --> 00:02:50,960 Speaker 3: think the ten year in a year in the US, 59 00:02:51,360 --> 00:02:54,400 Speaker 3: which has been rallying, is not the story we're going 60 00:02:54,400 --> 00:02:56,680 Speaker 3: to see going forward. So there's going to be an adjustment. 61 00:02:57,160 --> 00:03:00,520 Speaker 3: But we think that you know, there's like deep forces 62 00:03:00,520 --> 00:03:03,760 Speaker 3: that will reassert themselves AI. We still are, you know, 63 00:03:03,960 --> 00:03:09,280 Speaker 3: very bollish on AI being a powerful source of driver's returns, 64 00:03:09,560 --> 00:03:11,560 Speaker 3: and as a result, we think it's possible to withstand 65 00:03:11,639 --> 00:03:15,360 Speaker 3: higher rates, moderate increase in rates, and withstand those for 66 00:03:15,400 --> 00:03:19,320 Speaker 3: equity if we get a very significant adjustment in rates, 67 00:03:19,320 --> 00:03:22,239 Speaker 3: which is not impossible given the uncity we're facing. Depending 68 00:03:22,240 --> 00:03:24,240 Speaker 3: on the policies that will be put in place, then 69 00:03:24,280 --> 00:03:25,919 Speaker 3: it would challenge the view in equities. 70 00:03:25,919 --> 00:03:27,960 Speaker 6: I guess for the US in the United States, do 71 00:03:28,000 --> 00:03:29,600 Speaker 6: you think that the US is going to be the 72 00:03:29,639 --> 00:03:32,720 Speaker 6: main beneficiary from this AI mega trend that you've been 73 00:03:32,720 --> 00:03:34,720 Speaker 6: talking about for quite a while, or do you think 74 00:03:34,760 --> 00:03:37,360 Speaker 6: that increasingly you and your colleagues are starting to think 75 00:03:37,360 --> 00:03:40,400 Speaker 6: about China as also being maybe not as much of 76 00:03:40,400 --> 00:03:42,720 Speaker 6: a beneficiary, but a significant one with some of the 77 00:03:42,760 --> 00:03:44,160 Speaker 6: advancements that we're seeing currently. 78 00:03:44,520 --> 00:03:47,640 Speaker 3: Yeah, I think both are set to benefit from the 79 00:03:47,680 --> 00:03:50,240 Speaker 3: from the AI story. I think about China and the US, 80 00:03:50,520 --> 00:03:52,200 Speaker 3: we think this is where it plays out. There's a 81 00:03:52,200 --> 00:03:54,800 Speaker 3: bit of a Middle East story as well, but it's 82 00:03:54,880 --> 00:03:57,760 Speaker 3: not a global story, so we think this is more 83 00:03:57,800 --> 00:04:00,920 Speaker 3: powerful in the US. I think the U US eventually 84 00:04:00,960 --> 00:04:04,320 Speaker 3: provide an environment where we were more comfortable with I guess, 85 00:04:04,760 --> 00:04:07,720 Speaker 3: you know, on the macro perspective, Uh, so the AI 86 00:04:07,720 --> 00:04:09,760 Speaker 3: story is playing in both places. I think the macro 87 00:04:09,840 --> 00:04:12,040 Speaker 3: backdrop eventually is more positive in the US. That's why 88 00:04:12,080 --> 00:04:15,120 Speaker 3: the combination of macro in AI favors US over China. 89 00:04:15,160 --> 00:04:16,920 Speaker 7: For US, it's interesting you mentioned the Middle East. We 90 00:04:16,960 --> 00:04:18,800 Speaker 7: just had shake time noon down in Washington and the 91 00:04:18,839 --> 00:04:20,920 Speaker 7: UAE saying they're going to invest more than one trillion 92 00:04:20,960 --> 00:04:23,919 Speaker 7: in AI. But a lot of that is almost contingent 93 00:04:24,000 --> 00:04:24,880 Speaker 7: on them being able. 94 00:04:24,680 --> 00:04:26,000 Speaker 2: To get access to these chips. 95 00:04:26,200 --> 00:04:28,080 Speaker 7: Is that all the leverage the US holds, they have 96 00:04:28,120 --> 00:04:28,680 Speaker 7: all the power. 97 00:04:30,480 --> 00:04:33,560 Speaker 3: I think that's part of it, right, So there's there's 98 00:04:33,640 --> 00:04:36,320 Speaker 3: a it's it's it's first of all, it's a story 99 00:04:36,360 --> 00:04:39,240 Speaker 3: that is a very high buyers to intrigue, a massive 100 00:04:39,279 --> 00:04:42,159 Speaker 3: amount of cape that is needed to be a player 101 00:04:42,160 --> 00:04:44,320 Speaker 3: in that space, and I think so you need big 102 00:04:44,360 --> 00:04:47,839 Speaker 3: firm with big balance sheet. Uh, it's possible for other 103 00:04:47,920 --> 00:04:50,719 Speaker 3: countries with deep pockets to play a role in there. 104 00:04:50,920 --> 00:04:53,359 Speaker 3: But I do think that the US does have, you know, 105 00:04:53,400 --> 00:04:54,880 Speaker 3: the upper hand on this at this stage. 106 00:04:54,880 --> 00:04:56,840 Speaker 7: When you see positive news like that, but then you 107 00:04:56,880 --> 00:05:01,160 Speaker 7: also see banks coming out and potentially easing their probability 108 00:05:01,200 --> 00:05:02,480 Speaker 7: of US recession. 109 00:05:02,720 --> 00:05:03,640 Speaker 5: How do you wag the two? 110 00:05:04,800 --> 00:05:05,000 Speaker 4: Well? 111 00:05:05,040 --> 00:05:07,279 Speaker 3: I think right now that the part we haven't talked about. 112 00:05:07,279 --> 00:05:09,240 Speaker 3: We've talked about the six to twelve month horizon with 113 00:05:09,320 --> 00:05:11,400 Speaker 3: the our view that eventually we get back to a 114 00:05:11,400 --> 00:05:14,680 Speaker 3: better place. But for now, as I said, the uncertainty 115 00:05:14,720 --> 00:05:17,440 Speaker 3: is kind of peak level. I don't think I've ever seen, 116 00:05:18,000 --> 00:05:19,839 Speaker 3: you know, so much a range of views on what 117 00:05:19,920 --> 00:05:24,080 Speaker 3: might happen. The commentary on the outlook is as wide 118 00:05:24,080 --> 00:05:26,240 Speaker 3: as I've never seen. It's as political has never seen it. 119 00:05:26,720 --> 00:05:29,960 Speaker 3: And as a result, that is holding back people. And 120 00:05:30,000 --> 00:05:31,960 Speaker 3: the longer it lasts, then I think we don't think 121 00:05:31,960 --> 00:05:33,640 Speaker 3: a recession is in the card. We think there's a 122 00:05:33,680 --> 00:05:37,279 Speaker 3: lot of resilience. In fact, I don't think the recession 123 00:05:37,320 --> 00:05:39,560 Speaker 3: is the biggest risk. I think the recession the biggest 124 00:05:39,640 --> 00:05:42,640 Speaker 3: risk is long term decision, infrastructure decision and so on 125 00:05:43,200 --> 00:05:44,840 Speaker 3: that if they're put on old we're going to see 126 00:05:44,839 --> 00:05:47,560 Speaker 3: a lower structural growth rate in the US eventually, and 127 00:05:47,600 --> 00:05:50,000 Speaker 3: that's much bigger deal than a recession. 128 00:05:50,040 --> 00:05:51,960 Speaker 6: You keep talking about how later this year we'll get 129 00:05:51,960 --> 00:05:54,520 Speaker 6: to a better place from some sort of policy level, 130 00:05:54,560 --> 00:05:57,039 Speaker 6: or from a certainty level. What does that mean at 131 00:05:57,080 --> 00:05:59,479 Speaker 6: a time when we keep talking about uncertainty being a 132 00:05:59,480 --> 00:06:01,360 Speaker 6: feature not a bug of this administration. 133 00:06:02,320 --> 00:06:02,960 Speaker 4: I don't, I think. 134 00:06:03,000 --> 00:06:04,919 Speaker 3: I mean, I'll give you one example in the tariff. 135 00:06:04,960 --> 00:06:08,680 Speaker 3: I think you know you right now, there is a debate. 136 00:06:08,720 --> 00:06:11,080 Speaker 3: There's uncertainty about what will be the impact of those 137 00:06:11,120 --> 00:06:13,960 Speaker 3: tariff for the US, for the trading partners, and you 138 00:06:13,960 --> 00:06:15,960 Speaker 3: can make an argument that it's going to be minimal, 139 00:06:16,040 --> 00:06:18,400 Speaker 3: it doesn't hurt the US. Once the evidence comes in, 140 00:06:19,279 --> 00:06:22,359 Speaker 3: I think the leverage of this buggaining chip will be waning, 141 00:06:22,480 --> 00:06:24,000 Speaker 3: and so I think one way or the other, we're 142 00:06:24,000 --> 00:06:26,240 Speaker 3: going to see a reduction. It's going to be harder 143 00:06:26,279 --> 00:06:29,080 Speaker 3: to dismiss the damage from tariff, is going to be 144 00:06:29,200 --> 00:06:31,360 Speaker 3: harder to just make bold statement about we're going to 145 00:06:31,440 --> 00:06:33,920 Speaker 3: go with even higher tariffs, and I think you get 146 00:06:33,960 --> 00:06:36,200 Speaker 3: a circunvergence someplace as a result. 147 00:06:36,440 --> 00:06:38,520 Speaker 2: Is that the moment to buy bonds when we actually 148 00:06:38,520 --> 00:06:40,560 Speaker 2: start to say that, or is there another reason why 149 00:06:40,680 --> 00:06:42,680 Speaker 2: you just don't believe treasuries are going to play that 150 00:06:42,760 --> 00:06:43,599 Speaker 2: role this time around. 151 00:06:43,880 --> 00:06:47,080 Speaker 3: I think the underlying forces. We don't think inflation is resolved. 152 00:06:47,120 --> 00:06:50,080 Speaker 3: I think the Fed last week has painted the most 153 00:06:50,080 --> 00:06:53,719 Speaker 3: optimistic scenario on and they've included then in their forecasts 154 00:06:53,720 --> 00:06:54,360 Speaker 3: on the tariffs. 155 00:06:54,360 --> 00:06:55,040 Speaker 5: You don't buy it. 156 00:06:55,160 --> 00:06:55,760 Speaker 4: I don't buy it. 157 00:06:55,839 --> 00:06:57,640 Speaker 3: And then I think the fiscal side, I mean, we'll 158 00:06:57,640 --> 00:07:01,440 Speaker 3: need to see, but we have hope of taxic extension 159 00:07:01,480 --> 00:07:03,560 Speaker 3: coming in, so we know this is this is. 160 00:07:03,600 --> 00:07:06,800 Speaker 4: UH going to make the deficit wider. 161 00:07:06,839 --> 00:07:10,560 Speaker 3: If it's the only thing happening, the saving is much 162 00:07:10,600 --> 00:07:13,160 Speaker 3: more concertain, and so I think the fiscal story remains 163 00:07:13,720 --> 00:07:15,800 Speaker 3: one of deficits and putting pressure on meals. 164 00:07:15,840 --> 00:07:17,720 Speaker 2: When you open up the SEP and you look at 165 00:07:17,720 --> 00:07:20,640 Speaker 2: those forecasts from the Federal Reserve, which pace of that 166 00:07:20,720 --> 00:07:22,680 Speaker 2: jumped up to you and said that's aspirational? 167 00:07:22,920 --> 00:07:23,600 Speaker 5: I don't buy it. 168 00:07:24,520 --> 00:07:24,720 Speaker 4: Well. 169 00:07:24,760 --> 00:07:26,840 Speaker 3: To me, the most revealing part of the of the 170 00:07:27,560 --> 00:07:30,320 Speaker 3: SEP and the press conference last week was when when 171 00:07:30,440 --> 00:07:32,880 Speaker 3: asked about whether this is a one of story inflation. 172 00:07:33,280 --> 00:07:35,240 Speaker 3: I think the chairman was very careful to say, well, 173 00:07:35,280 --> 00:07:36,120 Speaker 3: we don't know for sure. 174 00:07:36,600 --> 00:07:39,480 Speaker 4: Last time it was. But when he answered the question later. 175 00:07:39,440 --> 00:07:42,440 Speaker 3: About like when they would get concerned about inflation, he said, well, 176 00:07:42,480 --> 00:07:44,920 Speaker 3: if we were to see inflation appearing in as part 177 00:07:44,920 --> 00:07:47,280 Speaker 3: of the economy that has nothing to do with with tariff, 178 00:07:47,320 --> 00:07:48,520 Speaker 3: then we would get concerned. 179 00:07:48,960 --> 00:07:51,120 Speaker 4: That's to me like doubling down on this is a 180 00:07:51,120 --> 00:07:51,480 Speaker 4: one off. 181 00:07:51,480 --> 00:07:53,880 Speaker 3: They see the tariff as being a one off, and 182 00:07:53,920 --> 00:07:56,000 Speaker 3: so that that definitely stand stood out for me. 183 00:07:56,240 --> 00:07:57,480 Speaker 5: Do you not think it is a one off. 184 00:07:58,440 --> 00:08:00,200 Speaker 4: I think I think it could be. 185 00:08:00,080 --> 00:08:02,800 Speaker 3: But it was last time because it was like very targeted. 186 00:08:03,440 --> 00:08:06,040 Speaker 3: If we're talking about Broadbay's resetting of global trade, I 187 00:08:06,080 --> 00:08:07,880 Speaker 3: think there's going to be adjustment. I think the cost 188 00:08:07,920 --> 00:08:11,240 Speaker 3: of doing international production will be higher. And it's not 189 00:08:11,320 --> 00:08:13,440 Speaker 3: like just a tax or a tariff. It's the broader 190 00:08:13,480 --> 00:08:15,000 Speaker 3: adjustment higher cost of production. 191 00:08:15,080 --> 00:08:17,520 Speaker 2: For some time, you've heard the argument from economists that 192 00:08:17,560 --> 00:08:21,200 Speaker 2: because employment anxiety is higher now, the second round effects 193 00:08:21,240 --> 00:08:23,960 Speaker 2: will be dampened. People won't be able to ask for 194 00:08:24,280 --> 00:08:26,400 Speaker 2: a raise. You won't see those second or the second 195 00:08:26,480 --> 00:08:28,960 Speaker 2: round effects of that spike in prices. 196 00:08:29,000 --> 00:08:30,320 Speaker 5: What do you say back to those people. 197 00:08:30,920 --> 00:08:33,560 Speaker 3: I think we have a very tight liberal market. I 198 00:08:33,600 --> 00:08:37,000 Speaker 3: think the FED seasons are being balanced. I think we 199 00:08:37,080 --> 00:08:39,400 Speaker 3: have seen over the last few years immigration playing a 200 00:08:39,440 --> 00:08:42,160 Speaker 3: massive role in helping the liberal market cope with a 201 00:08:42,160 --> 00:08:43,040 Speaker 3: lot of tightness. 202 00:08:43,360 --> 00:08:45,640 Speaker 4: I think that is the big story going forward. 203 00:08:45,720 --> 00:08:48,800 Speaker 3: So I'm not sure that the boggaining power for wage 204 00:08:48,840 --> 00:08:50,160 Speaker 3: negotiations will shift that much. 205 00:08:50,160 --> 00:08:56,240 Speaker 8: As for a pay raise, Really, you're on really a mission, man. 206 00:08:56,280 --> 00:09:00,559 Speaker 5: I wonder what that psychology shame from them, you know. 207 00:09:01,440 --> 00:09:04,600 Speaker 2: Employer and yeah, well I keep fitting it not asking 208 00:09:04,600 --> 00:09:09,040 Speaker 2: for a bowl of whatever. It's Oliver, John Bava and 209 00:09:09,080 --> 00:09:21,880 Speaker 2: Black Croc. Thank you, Thank you, Banks for America publishing 210 00:09:21,920 --> 00:09:25,280 Speaker 2: its newest small Businesses Checkpoint. The team rights in the following. 211 00:09:25,520 --> 00:09:29,440 Speaker 2: Despite continued optimism, small business uncertainty is on the rise. 212 00:09:29,679 --> 00:09:33,000 Speaker 2: According to aggregated credit and debit card spending data, small 213 00:09:33,040 --> 00:09:37,280 Speaker 2: businesses are slowing their card spending across the board. Sharon Miller, 214 00:09:37,320 --> 00:09:39,280 Speaker 2: the President and co head of Business Banking and Bank 215 00:09:39,280 --> 00:09:40,440 Speaker 2: for America, joined us now for more. 216 00:09:40,480 --> 00:09:41,800 Speaker 5: Sharon, good to see you, good to see it. 217 00:09:42,120 --> 00:09:42,640 Speaker 4: Good morning. 218 00:09:42,679 --> 00:09:45,120 Speaker 2: Let's talk about the little spots of weakness that we're 219 00:09:45,120 --> 00:09:48,079 Speaker 2: starting to see emerge. Where are they and what's behind it? 220 00:09:48,440 --> 00:09:52,839 Speaker 8: Well, we are seeing weakness in manufacturing firms, especially the 221 00:09:53,040 --> 00:09:56,840 Speaker 8: smaller manufacturing firms, so those with five hundred thousand revenue 222 00:09:56,880 --> 00:09:59,840 Speaker 8: and below. But as you look at the larger companies, 223 00:10:00,000 --> 00:10:02,640 Speaker 8: we are still seeing strength there. We're seeing strength and 224 00:10:02,760 --> 00:10:07,440 Speaker 8: retailers with the exception of furniture, which. 225 00:10:07,240 --> 00:10:09,720 Speaker 6: Really shows the sort of ad hoc nature of some 226 00:10:09,800 --> 00:10:12,360 Speaker 6: of the threats and how different companies are responding to it. 227 00:10:12,400 --> 00:10:14,960 Speaker 6: Before we dig into the specific sectors, I'm wondering the 228 00:10:14,960 --> 00:10:18,000 Speaker 6: difference between big and small businesses you say small businesses 229 00:10:18,040 --> 00:10:20,959 Speaker 6: are slowing their card spending across the board. Is that 230 00:10:21,000 --> 00:10:23,040 Speaker 6: the right distinction to make small versus big? 231 00:10:23,320 --> 00:10:26,840 Speaker 8: I would say small versus medium sized businesses. So when 232 00:10:26,840 --> 00:10:29,880 Speaker 8: you think of our segments anywhere from startup to fifty 233 00:10:29,960 --> 00:10:32,360 Speaker 8: million in revenues, so you have small and mid sized 234 00:10:32,400 --> 00:10:35,160 Speaker 8: companies within there. But generally speaking, we're talking about a 235 00:10:35,160 --> 00:10:38,160 Speaker 8: million dollar in below company. When we're seeing smaller businesses. 236 00:10:38,240 --> 00:10:40,640 Speaker 7: What's the standout? What industry has been very strong at 237 00:10:40,640 --> 00:10:41,000 Speaker 7: the moment. 238 00:10:41,280 --> 00:10:44,199 Speaker 8: Well, we are seeing strength and retailers with the exception 239 00:10:44,240 --> 00:10:47,760 Speaker 8: of furniture, but restaurant spending is strong. We are seeing 240 00:10:47,800 --> 00:10:53,120 Speaker 8: strong strength and shopping going out to eat, all of 241 00:10:53,160 --> 00:10:56,880 Speaker 8: those types of retailers, e commerce. So I think that 242 00:10:56,960 --> 00:10:59,920 Speaker 8: there's some trends there, and so you have to see 243 00:11:00,040 --> 00:11:02,400 Speaker 8: what the data is telling you, not necessarily what the 244 00:11:02,400 --> 00:11:03,520 Speaker 8: consumer is telling you. 245 00:11:03,880 --> 00:11:07,840 Speaker 6: Is this a leading indicator? Are these card data tending 246 00:11:07,960 --> 00:11:11,520 Speaker 6: to a point to strength or weakness depending on where 247 00:11:11,520 --> 00:11:12,360 Speaker 6: we are in the cycle. 248 00:11:12,480 --> 00:11:14,679 Speaker 8: Well, I think it's a weight and see attitude. I mean, 249 00:11:14,720 --> 00:11:18,640 Speaker 8: there are things on the horizon and some dependencies that 250 00:11:18,720 --> 00:11:22,880 Speaker 8: businesses are thinking about, whether it's tariffs, the political environment, taxes. 251 00:11:23,120 --> 00:11:26,120 Speaker 8: How is all that going to come to life as 252 00:11:26,160 --> 00:11:29,200 Speaker 8: they're thinking about CAPEX for their business. 253 00:11:28,920 --> 00:11:31,080 Speaker 2: Let's say on CAPEX, how do you get a decent 254 00:11:31,160 --> 00:11:35,280 Speaker 2: idea of whether those CAPEX decisions aren't being delayed, pushed back, 255 00:11:35,559 --> 00:11:38,120 Speaker 2: or just totally derailed. Which one do you think it 256 00:11:38,160 --> 00:11:38,760 Speaker 2: is at the moment? 257 00:11:38,920 --> 00:11:40,960 Speaker 8: I think it's delayed. I think it's a weight and 258 00:11:41,000 --> 00:11:45,240 Speaker 8: see attitude where you're still seeing people spending on their business, 259 00:11:45,400 --> 00:11:48,360 Speaker 8: albeit not as strong as we had seen last year. 260 00:11:48,480 --> 00:11:51,880 Speaker 8: So there is some wait and see out there because 261 00:11:52,200 --> 00:11:54,720 Speaker 8: they don't know what's going to happen. And so as 262 00:11:54,720 --> 00:11:57,000 Speaker 8: I'm talking to clients around the country, that's what I'm 263 00:11:57,040 --> 00:11:59,640 Speaker 8: hearing as well. We do want to expand we do 264 00:11:59,720 --> 00:12:02,080 Speaker 8: want to invest in our business, but we're holding off 265 00:12:02,280 --> 00:12:04,040 Speaker 8: just a bit to see what's going to happen. 266 00:12:04,120 --> 00:12:04,360 Speaker 5: Sean. 267 00:12:04,400 --> 00:12:06,320 Speaker 2: As you know, these companies have a massive role to 268 00:12:06,320 --> 00:12:09,520 Speaker 2: play an employment in this country, and we're starting to 269 00:12:09,679 --> 00:12:12,200 Speaker 2: focus even more on the hard day to the employment 270 00:12:12,280 --> 00:12:15,240 Speaker 2: numbers that come in every week jobless claims. Now, if 271 00:12:15,280 --> 00:12:17,120 Speaker 2: you go into a wait and see economy, how long 272 00:12:17,160 --> 00:12:19,040 Speaker 2: before you start to say we're not going to hire, 273 00:12:19,120 --> 00:12:19,839 Speaker 2: we're going to fire. 274 00:12:20,200 --> 00:12:21,040 Speaker 5: Is there a lack of time. 275 00:12:21,160 --> 00:12:23,520 Speaker 2: Is there a typical framework timeline to think about this, 276 00:12:23,640 --> 00:12:25,080 Speaker 2: or we in no man's land. 277 00:12:25,520 --> 00:12:26,920 Speaker 4: I wouldn't say we're in no man's land. 278 00:12:26,960 --> 00:12:29,240 Speaker 8: I mean we've got to watch the data every week, 279 00:12:29,320 --> 00:12:32,200 Speaker 8: every month and what's happening in the economy. But I 280 00:12:32,240 --> 00:12:35,600 Speaker 8: would say that in business formation and those that are 281 00:12:35,640 --> 00:12:40,240 Speaker 8: actually putting together plans to hire businesses, we are seeing 282 00:12:40,280 --> 00:12:43,400 Speaker 8: an increase in the number of new businesses opened that 283 00:12:43,480 --> 00:12:46,480 Speaker 8: are talking about I'm going to employ people, and so 284 00:12:47,040 --> 00:12:49,600 Speaker 8: that is good news as you think about where we 285 00:12:49,640 --> 00:12:52,480 Speaker 8: are today versus pre pandemic. 286 00:12:52,080 --> 00:12:55,400 Speaker 6: Levels, Are there significant exceptions We were talking about sort 287 00:12:55,440 --> 00:12:57,400 Speaker 6: of the ad hoc nature of who gets hurt and 288 00:12:57,400 --> 00:13:00,719 Speaker 6: who doesn't. Are there areas small park where you are 289 00:13:00,760 --> 00:13:02,360 Speaker 6: seeing real deterioration. 290 00:13:03,160 --> 00:13:05,960 Speaker 8: I would say we are seeing, you know, a little 291 00:13:06,000 --> 00:13:09,560 Speaker 8: bit of deterioration and manufacturing, especially in those firms less 292 00:13:09,600 --> 00:13:13,480 Speaker 8: than five hundred thousand in revenues. In furniture, that's the 293 00:13:13,520 --> 00:13:17,679 Speaker 8: only retail category that we did see a decline. And 294 00:13:17,720 --> 00:13:20,960 Speaker 8: so those two areas are areas that we are watching. 295 00:13:21,080 --> 00:13:23,560 Speaker 2: Find the retailer point absolutely fascinating and I think it 296 00:13:23,600 --> 00:13:26,280 Speaker 2: reinforces what Chairman pow said just last week that you 297 00:13:26,320 --> 00:13:28,880 Speaker 2: can read too much into the sentiment survey data is 298 00:13:28,920 --> 00:13:31,280 Speaker 2: look at what people are doing and right now for him, 299 00:13:31,320 --> 00:13:33,280 Speaker 2: for many for economists too, they're looking at the hard 300 00:13:33,360 --> 00:13:35,439 Speaker 2: data and it's still holding up and there's not much 301 00:13:35,440 --> 00:13:35,960 Speaker 2: to see here. 302 00:13:36,280 --> 00:13:38,600 Speaker 6: When you take surveys online, there have been studies that 303 00:13:38,640 --> 00:13:40,640 Speaker 6: show that people tend to say that they feel less good, 304 00:13:40,960 --> 00:13:43,120 Speaker 6: and a lot of these surveys are online, and so 305 00:13:43,200 --> 00:13:45,040 Speaker 6: they all ran to online. 306 00:13:44,720 --> 00:13:45,640 Speaker 5: I feel terrible. 307 00:13:46,160 --> 00:13:48,520 Speaker 6: Why and then they say, oh, I'm going to go shopping, 308 00:13:48,559 --> 00:13:50,079 Speaker 6: you know, And this is sort of what has been 309 00:13:50,120 --> 00:13:53,199 Speaker 6: bearing out retail fare exactly in the data. 310 00:13:53,000 --> 00:13:53,800 Speaker 5: That sounded personal. 311 00:13:53,840 --> 00:13:56,920 Speaker 6: Branmo's just saying, it's always you know, those texts that 312 00:13:56,960 --> 00:13:58,679 Speaker 6: you said to people or you're just ranting and then 313 00:13:58,679 --> 00:14:00,360 Speaker 6: you're like, Okay, now I'm done, move on. 314 00:14:00,480 --> 00:14:02,760 Speaker 2: Is that how people approach you, Mitch? When it comes 315 00:14:02,760 --> 00:14:04,160 Speaker 2: out on Friday, you are. 316 00:14:04,120 --> 00:14:06,680 Speaker 4: My opinion on the world pretty much. 317 00:14:06,760 --> 00:14:08,760 Speaker 2: Sharon is good to see as always. Thanks for being 318 00:14:08,760 --> 00:14:11,200 Speaker 2: with us. We appreciate the update. Sharon millerde of Bank 319 00:14:11,240 --> 00:14:23,360 Speaker 2: for America. Let's stick with the consumer investors looking ahead 320 00:14:23,360 --> 00:14:26,360 Speaker 2: to consumer confidence and later on this week, Danna Tausi 321 00:14:26,400 --> 00:14:29,520 Speaker 2: if the Taosi Advisory Group writing, frenetic is an app 322 00:14:29,520 --> 00:14:32,920 Speaker 2: word to describe the current environment. Key measurements such as 323 00:14:32,960 --> 00:14:36,560 Speaker 2: consumer sentiment and volatility in the stock market reflect the 324 00:14:36,640 --> 00:14:39,720 Speaker 2: anxiety out there. Dana John just now for more, Donna, 325 00:14:39,720 --> 00:14:40,560 Speaker 2: good to see what's. 326 00:14:40,320 --> 00:14:41,280 Speaker 5: Always nice to see you. 327 00:14:41,320 --> 00:14:42,000 Speaker 9: Thank you for having me. 328 00:14:42,080 --> 00:14:44,080 Speaker 2: People pulling back, that's what we want to know. Do 329 00:14:44,120 --> 00:14:45,320 Speaker 2: you see it in the channel checks? 330 00:14:45,600 --> 00:14:47,760 Speaker 9: We are we are singing in the channel checks. When 331 00:14:47,760 --> 00:14:49,680 Speaker 9: you look at the earnings results that are coming out 332 00:14:49,680 --> 00:14:53,800 Speaker 9: from retailers lately, the fourth quarter almost feels divorced from 333 00:14:53,800 --> 00:14:56,080 Speaker 9: what you have in the first quarter, and going forward, 334 00:14:56,400 --> 00:14:58,800 Speaker 9: you look at the guidance that companies are giving out 335 00:14:58,840 --> 00:15:01,840 Speaker 9: in the consumer space for the first quarter. In essence, 336 00:15:01,880 --> 00:15:04,440 Speaker 9: we always know the consumer area is a third and 337 00:15:04,520 --> 00:15:08,520 Speaker 9: fourth quarter weighted, but now the first quarter is expected 338 00:15:08,560 --> 00:15:11,280 Speaker 9: to be for the most part, weaker than consensus and 339 00:15:11,320 --> 00:15:14,400 Speaker 9: what consensus had out there, So you need to accelerate 340 00:15:14,520 --> 00:15:17,440 Speaker 9: even more rapidly. And that word forrenetic the reason I 341 00:15:17,560 --> 00:15:22,320 Speaker 9: like it. I looked up the definition anxiety indusive indusive 342 00:15:22,360 --> 00:15:25,600 Speaker 9: activity in a wild and uncontrollable way, and that what 343 00:15:25,720 --> 00:15:26,600 Speaker 9: it feels like today. 344 00:15:26,680 --> 00:15:29,640 Speaker 2: Consumption has been super resilient for the last several years. 345 00:15:29,640 --> 00:15:32,120 Speaker 2: But beneath the surface, beneath the headline numbers, it's been 346 00:15:32,200 --> 00:15:35,320 Speaker 2: very bifurcated. Low income consumers have been squeezed for quite 347 00:15:35,360 --> 00:15:38,000 Speaker 2: a while. A number of years now. High income consumers 348 00:15:38,000 --> 00:15:40,520 Speaker 2: have held up. Is that still the case, because if 349 00:15:40,560 --> 00:15:42,520 Speaker 2: they start to go, this is over? 350 00:15:42,880 --> 00:15:43,600 Speaker 5: What's the story? 351 00:15:43,760 --> 00:15:47,240 Speaker 9: I think the higher consumers moditorated. They're spending a bit. 352 00:15:47,440 --> 00:15:49,920 Speaker 9: You look at what Delta Airlines said a few weeks ago, 353 00:15:49,960 --> 00:15:52,440 Speaker 9: and Delta is the premier airline or the premium price 354 00:15:52,480 --> 00:15:55,240 Speaker 9: of twenty percent or more. You're still seeing the uber 355 00:15:55,320 --> 00:15:58,400 Speaker 9: high end doing very well. You look at Rmez's results 356 00:15:58,400 --> 00:16:01,640 Speaker 9: and the double digit increases. But everyone else out there 357 00:16:01,840 --> 00:16:04,480 Speaker 9: it's a state where it's not as robust as it 358 00:16:04,560 --> 00:16:08,160 Speaker 9: had been, and consumers are discerning. Look at what Costco 359 00:16:08,240 --> 00:16:11,200 Speaker 9: said where they've seen a shift to people eating at home, 360 00:16:11,480 --> 00:16:14,360 Speaker 9: and we're seeing more evidence of that type of behavior. 361 00:16:14,680 --> 00:16:15,640 Speaker 4: What do you need to win? 362 00:16:15,960 --> 00:16:19,520 Speaker 9: You need newness, you need events, you need activation in 363 00:16:19,640 --> 00:16:23,160 Speaker 9: order to drive interest. I was on Friday and on Saturday, 364 00:16:23,160 --> 00:16:25,080 Speaker 9: I was downtown at the opening of the new print 365 00:16:25,160 --> 00:16:27,800 Speaker 9: Tom's Department store, the first one here in the US, 366 00:16:28,040 --> 00:16:31,640 Speaker 9: the weight was around the block, So there's interest in newness. 367 00:16:31,840 --> 00:16:34,200 Speaker 6: Do we have a sense then, just to that point 368 00:16:34,320 --> 00:16:36,800 Speaker 6: of who might be using this as an excuse the 369 00:16:36,840 --> 00:16:40,000 Speaker 6: idea that there's consumer hesitancy. So when on kitchen sink 370 00:16:40,080 --> 00:16:42,840 Speaker 6: it throw all your problems out there, clear the decks, 371 00:16:43,080 --> 00:16:44,080 Speaker 6: and then do what you want. 372 00:16:44,480 --> 00:16:46,800 Speaker 9: I think some of the companies overall who have been 373 00:16:46,840 --> 00:16:50,920 Speaker 9: performing poorly you are able to do that. You've certainly 374 00:16:50,960 --> 00:16:54,040 Speaker 9: taken a look at some of the lower end department 375 00:16:54,040 --> 00:16:56,800 Speaker 9: stores that have had some of those issues, but many 376 00:16:56,880 --> 00:16:59,560 Speaker 9: of the others they're hoping that they can still see 377 00:16:59,600 --> 00:17:04,280 Speaker 9: that sell through the ones that are winning brand leaders, 378 00:17:04,680 --> 00:17:10,280 Speaker 9: discounters and off pricers. You definitely see even the weakness 379 00:17:10,280 --> 00:17:12,919 Speaker 9: and some of the luxury brands that haven't been as strong. 380 00:17:13,200 --> 00:17:15,320 Speaker 9: You look at some of the European brands like Caring 381 00:17:15,680 --> 00:17:18,800 Speaker 9: doesn't have the same robust posture that they had before, 382 00:17:19,000 --> 00:17:21,480 Speaker 9: and they just found a new Gucci designers. So we'll 383 00:17:21,480 --> 00:17:24,720 Speaker 9: see what happens. It'll be interesting to see LVMH's sales 384 00:17:24,760 --> 00:17:26,719 Speaker 9: results when they report in mid April. 385 00:17:26,960 --> 00:17:29,879 Speaker 7: Who do you think is going to be really caught 386 00:17:30,000 --> 00:17:31,920 Speaker 7: in the crosshairs when it comes to tariffs. 387 00:17:32,240 --> 00:17:35,120 Speaker 9: The areas that are being impacted the most from tariffs, 388 00:17:35,400 --> 00:17:37,760 Speaker 9: it's definitely some of the footwear companies, some of the 389 00:17:37,800 --> 00:17:41,080 Speaker 9: dollar stores, and the speed which you need to diversify. 390 00:17:41,560 --> 00:17:44,400 Speaker 9: You can do three things. You diversify to other areas, 391 00:17:44,520 --> 00:17:46,720 Speaker 9: you split the cost with the manufacturers, or and you 392 00:17:46,840 --> 00:17:51,400 Speaker 9: raise prices. But diversifying and paying the cost with manufacturers 393 00:17:51,480 --> 00:17:55,120 Speaker 9: or them diversifying it takes time. There's a reason companies 394 00:17:55,119 --> 00:17:57,720 Speaker 9: went to China. It's fast and the labor knew what 395 00:17:57,760 --> 00:17:59,280 Speaker 9: to do and it's cost effective. 396 00:17:59,400 --> 00:18:01,720 Speaker 7: But when it comes to April second, we're going to 397 00:18:01,760 --> 00:18:03,600 Speaker 7: get this quote liberation day. Maybe it's going to be 398 00:18:03,680 --> 00:18:06,960 Speaker 7: more selective than a broad scope. How are these companies 399 00:18:07,000 --> 00:18:09,400 Speaker 7: preparing for that they're not being able to move manufacturing 400 00:18:09,400 --> 00:18:10,240 Speaker 7: a matter of weeks. 401 00:18:10,560 --> 00:18:13,240 Speaker 9: They're including it in their guidance from many of the companies. 402 00:18:13,280 --> 00:18:16,480 Speaker 9: The guidance that you've seen for twenty twenty five includes 403 00:18:16,560 --> 00:18:19,600 Speaker 9: the tariff implications at the point until which they know 404 00:18:19,640 --> 00:18:22,880 Speaker 9: how much the tariff is anything else it is basically 405 00:18:22,880 --> 00:18:25,720 Speaker 9: they'll need to reset again. And for the most part 406 00:18:25,760 --> 00:18:28,240 Speaker 9: in the early runnings, You're right, it's not a lot 407 00:18:28,240 --> 00:18:30,760 Speaker 9: of the apparel world, but it is many the other 408 00:18:30,840 --> 00:18:33,840 Speaker 9: areas that raises prices for the end consumer. 409 00:18:34,119 --> 00:18:37,399 Speaker 6: So we've heard reports about certain companies I'm thinking about 410 00:18:37,440 --> 00:18:41,240 Speaker 6: Walmart in particular, that have gone to Chinese suppliers and said, 411 00:18:41,280 --> 00:18:43,560 Speaker 6: all right, cut your cost by ten percent, eat it, 412 00:18:43,840 --> 00:18:45,560 Speaker 6: and they say, no, thank you, not going to do 413 00:18:45,600 --> 00:18:47,960 Speaker 6: it this time. How much are you seeing that across 414 00:18:47,960 --> 00:18:50,800 Speaker 6: the board, these sort of efforts to job owing suppliers 415 00:18:50,800 --> 00:18:53,600 Speaker 6: into absorbing it, not getting that, and so ultimately they 416 00:18:53,600 --> 00:18:56,120 Speaker 6: will have no choice but to raise those prices. 417 00:18:56,560 --> 00:18:58,680 Speaker 9: I'm hearing about it from some of the bigger players, 418 00:18:58,680 --> 00:19:01,840 Speaker 9: the smaller players also, so they're all looking at other 419 00:19:01,960 --> 00:19:05,640 Speaker 9: areas in which diversified manufacturing, not in the US because 420 00:19:05,680 --> 00:19:09,120 Speaker 9: of how expensive it is, going to South America, going 421 00:19:09,160 --> 00:19:11,640 Speaker 9: to Africa are some of the other areas that we're 422 00:19:11,640 --> 00:19:13,359 Speaker 9: hearing companies work to do that. 423 00:19:13,760 --> 00:19:15,680 Speaker 5: Macy's has Macy's problems. 424 00:19:15,960 --> 00:19:18,520 Speaker 2: Their stock is down by another twenty percent, so fine, 425 00:19:18,560 --> 00:19:22,399 Speaker 2: Yet today, do we need another luxury department store in 426 00:19:22,480 --> 00:19:24,800 Speaker 2: New York City? You mentioned Prince TOMPs. Do we need 427 00:19:24,840 --> 00:19:26,280 Speaker 2: another one overall? 428 00:19:26,400 --> 00:19:28,919 Speaker 9: I mean location is a little bit different on Wall Street. 429 00:19:29,040 --> 00:19:32,159 Speaker 9: But in saying that, there was people down there, certainly 430 00:19:32,160 --> 00:19:33,440 Speaker 9: when I was there around the block. 431 00:19:33,480 --> 00:19:35,359 Speaker 2: I know it's the same thing down there over the weekend. 432 00:19:35,400 --> 00:19:38,080 Speaker 2: I just wonder if that loss We'll see, well. 433 00:19:37,880 --> 00:19:39,760 Speaker 9: No, in a month or so. But I think that 434 00:19:39,840 --> 00:19:43,400 Speaker 9: locational is a little bit odd to get regular visitors 435 00:19:43,400 --> 00:19:43,880 Speaker 9: all the time. 436 00:19:43,920 --> 00:19:45,560 Speaker 7: But they don't want to be known as a department store. 437 00:19:45,600 --> 00:19:47,760 Speaker 7: I think that friends are very very said about this, yes, 438 00:19:47,920 --> 00:19:50,720 Speaker 7: so how are so? How are they communicating that five 439 00:19:51,040 --> 00:19:52,840 Speaker 7: to a have a minute what they have said about 440 00:19:53,000 --> 00:19:55,119 Speaker 7: they don't printense, doesn't want to be known as a 441 00:19:55,119 --> 00:19:55,760 Speaker 7: department store. 442 00:19:55,800 --> 00:19:56,520 Speaker 5: What are they cooling it? 443 00:19:56,880 --> 00:19:59,000 Speaker 9: Experiential? They want to be experience. 444 00:19:59,040 --> 00:19:59,760 Speaker 6: I'll approach there. 445 00:20:00,119 --> 00:20:04,600 Speaker 9: They basically have like five beverages like a Harrod's, much smaller. 446 00:20:04,680 --> 00:20:06,800 Speaker 9: I mean, when you're thinking fifty five thousand square feet, 447 00:20:06,840 --> 00:20:09,760 Speaker 9: it's two floors the ret not all the restaurants are open. 448 00:20:09,840 --> 00:20:10,119 Speaker 2: Yet. 449 00:20:10,240 --> 00:20:12,240 Speaker 6: The reason why is exactly because of the way that 450 00:20:12,280 --> 00:20:15,800 Speaker 6: you ask that question, do we really need more department stores? 451 00:20:15,840 --> 00:20:17,600 Speaker 6: You have to wonder a lot of people are thinking 452 00:20:17,640 --> 00:20:20,760 Speaker 6: the same thing. Because Macy's was not a pleasant experience, 453 00:20:20,840 --> 00:20:23,240 Speaker 6: because it didn't really do it well. 454 00:20:23,280 --> 00:20:25,080 Speaker 5: It downtounds a bit of a ghost town. On the weekend. 455 00:20:25,320 --> 00:20:27,399 Speaker 5: We've got enough to fall down there to make this work. 456 00:20:27,920 --> 00:20:29,919 Speaker 9: That's going to be the big question. They do have 457 00:20:30,040 --> 00:20:33,160 Speaker 9: exclusive brands from France that are there. Since it's hard 458 00:20:33,160 --> 00:20:35,280 Speaker 9: to get in, it's going to take time for everyone 459 00:20:35,359 --> 00:20:37,640 Speaker 9: to see it and go back on a repeat basis. 460 00:20:37,720 --> 00:20:40,199 Speaker 7: Yeah, so I'm willing to go downtown to go see it, 461 00:20:40,280 --> 00:20:42,600 Speaker 7: especially knowing there's lines and there's probably more lines during 462 00:20:42,600 --> 00:20:43,359 Speaker 7: the week I've had. 463 00:20:43,320 --> 00:20:46,760 Speaker 9: One, right, Well, I agree. I will go back there 464 00:20:46,800 --> 00:20:49,400 Speaker 9: to check it out, to see how they're differentiating themselves. 465 00:20:49,600 --> 00:20:52,639 Speaker 9: You would think there was other locations like that Barney's building, 466 00:20:52,680 --> 00:20:55,399 Speaker 9: but that's much bigger than fifty five thousand square feet 467 00:20:55,720 --> 00:20:58,480 Speaker 9: and you need an anchor to bring people up. Madison Avenue. 468 00:20:58,560 --> 00:21:00,960 Speaker 2: Oh, the old Barnie's building. Yes, I used to like 469 00:21:01,000 --> 00:21:02,200 Speaker 2: it there, used to like. 470 00:21:02,160 --> 00:21:02,760 Speaker 4: It that empty. 471 00:21:02,840 --> 00:21:04,480 Speaker 2: It's still empty, right, it's still the one that you're 472 00:21:04,480 --> 00:21:05,880 Speaker 2: talking about, the one on Madison another. 473 00:21:06,000 --> 00:21:07,080 Speaker 9: Madison and sixty first. 474 00:21:07,119 --> 00:21:08,800 Speaker 2: I need to do something about that, Dyna. We'll sort 475 00:21:08,800 --> 00:21:11,080 Speaker 2: that out. Danna TOOWSI there the Taosi Advice Regroup. Danna, 476 00:21:11,119 --> 00:21:13,359 Speaker 2: thank you, thank you. So I was downtown beig Muan 477 00:21:13,480 --> 00:21:16,240 Speaker 2: was full lots of people. They are having lunch, doing drinks, 478 00:21:16,280 --> 00:21:16,919 Speaker 2: all of that stuff. 479 00:21:17,000 --> 00:21:17,600 Speaker 5: Then you go to. 480 00:21:17,560 --> 00:21:20,120 Speaker 2: Prince Homs around the corner. The line literally gone around 481 00:21:20,119 --> 00:21:20,360 Speaker 2: a block. 482 00:21:20,400 --> 00:21:22,480 Speaker 7: Twenty five percent of the brands that they're bringing in 483 00:21:22,560 --> 00:21:24,760 Speaker 7: you cannot get in the United States. You literally have 484 00:21:24,840 --> 00:21:26,520 Speaker 7: to go to France to see them. And I've been 485 00:21:26,560 --> 00:21:29,120 Speaker 7: to printentps in France and I love it. So I'm 486 00:21:29,200 --> 00:21:31,440 Speaker 7: very excited about this because finally you get access. 487 00:21:31,560 --> 00:21:33,480 Speaker 5: That's the attraction. I think that's the attraction. 488 00:21:33,560 --> 00:21:35,199 Speaker 7: That's how they're going to win potentially, and maybe the 489 00:21:35,200 --> 00:21:36,520 Speaker 7: restaurants one to get it. 490 00:21:36,640 --> 00:21:39,360 Speaker 6: Yeah, Well, with the experience aspect is important. I mean 491 00:21:39,400 --> 00:21:42,639 Speaker 6: I think about that with my own younger cohort of 492 00:21:42,760 --> 00:21:45,560 Speaker 6: sample size at home, and they talk about the experience 493 00:21:45,600 --> 00:21:47,920 Speaker 6: of going to certain places and why they are willing 494 00:21:47,960 --> 00:21:50,240 Speaker 6: to go to the place. It gives the place somewhere 495 00:21:50,280 --> 00:21:50,479 Speaker 6: to go. 496 00:21:50,880 --> 00:21:51,640 Speaker 4: It's interesting. 497 00:21:52,280 --> 00:21:55,680 Speaker 2: I can't friends exactly don't care less about the experience, 498 00:21:56,080 --> 00:21:58,320 Speaker 2: sort of like I just want a friction free transaction. 499 00:21:58,880 --> 00:22:03,040 Speaker 2: I just want to get thanks for everyone. I don't 500 00:22:03,080 --> 00:22:04,920 Speaker 2: want to talk to people. Just let's get the size 501 00:22:04,960 --> 00:22:05,959 Speaker 2: and let's go shops. 502 00:22:06,040 --> 00:22:08,320 Speaker 7: I must really see you coming in and run I'm 503 00:22:08,320 --> 00:22:10,400 Speaker 7: the type of person that they offer you some champagne 504 00:22:10,480 --> 00:22:11,760 Speaker 7: and that's I'm buying another. 505 00:22:11,560 --> 00:22:14,520 Speaker 2: Pose more expensive, that's taking a hit on the margin. 506 00:22:14,560 --> 00:22:16,080 Speaker 2: I'm just direct. They're much easier. 507 00:22:17,160 --> 00:22:19,560 Speaker 9: Wow of seeing something new, it's very exciting. 508 00:22:19,800 --> 00:22:22,240 Speaker 2: Make the sale. Coming up on the program, They're always 509 00:22:22,240 --> 00:22:34,160 Speaker 2: going to say, thank you. Let's stick with the economy. 510 00:22:34,240 --> 00:22:38,280 Speaker 2: Kathy Boschantik of Nationwide Mutual Insurance writing, if downside risk 511 00:22:38,320 --> 00:22:42,000 Speaker 2: to our baseline forecasts continue to build, the FMC may 512 00:22:42,040 --> 00:22:45,399 Speaker 2: shift its focus from inflation to slowing economic growth and 513 00:22:45,440 --> 00:22:49,680 Speaker 2: potentially deliver a rate cut earlier in Q three. Kathy 514 00:22:49,760 --> 00:22:51,680 Speaker 2: joins us now for more. Kathy, welcome to the program. 515 00:22:51,800 --> 00:22:54,280 Speaker 2: That is the number one question that so many people have. 516 00:22:54,680 --> 00:22:58,160 Speaker 2: If the Federal Reserve has sticky and above target inflation, 517 00:22:58,680 --> 00:23:01,560 Speaker 2: are they in a position to respond to downside risk 518 00:23:01,920 --> 00:23:05,080 Speaker 2: materializing in the economy. What gives you the confidence that 519 00:23:05,119 --> 00:23:07,000 Speaker 2: they can do that later this year? 520 00:23:08,040 --> 00:23:11,720 Speaker 1: Well, good morning, John, and I should highlight first our 521 00:23:11,760 --> 00:23:14,440 Speaker 1: baseline forecast is that they don't you know that they 522 00:23:14,520 --> 00:23:17,480 Speaker 1: wait until the fourth quarter and we only have one 523 00:23:18,000 --> 00:23:20,800 Speaker 1: rate hike for the year. But what I was illustrating 524 00:23:20,880 --> 00:23:23,880 Speaker 1: is that we continue to see downside risk building, right, 525 00:23:24,200 --> 00:23:27,639 Speaker 1: You're seeing in the economic data. Even if these terrorists 526 00:23:27,640 --> 00:23:31,480 Speaker 1: which you were talking about, maybe are more targeted and 527 00:23:31,480 --> 00:23:34,679 Speaker 1: not as negative for growth or inflation, you still have 528 00:23:34,760 --> 00:23:37,600 Speaker 1: a lot of uncertainty out there. I think even after 529 00:23:37,640 --> 00:23:41,240 Speaker 1: April second, it will have a little clarity, but still uncertainty, 530 00:23:41,240 --> 00:23:44,320 Speaker 1: and that uncertainty is corrosive to economic growth. So my 531 00:23:44,480 --> 00:23:47,680 Speaker 1: concern is that there's downside risk to our baseline and 532 00:23:48,280 --> 00:23:51,440 Speaker 1: that defend. Yeah, maybe they do need to come in 533 00:23:51,440 --> 00:23:54,560 Speaker 1: in the third quarter. Now they have to balance things, right, 534 00:23:54,720 --> 00:23:59,040 Speaker 1: you know, inflation versus growth. But if they believe now 535 00:23:59,240 --> 00:24:02,720 Speaker 1: Chairman Power open this the genie bottle, right and said 536 00:24:02,960 --> 00:24:06,520 Speaker 1: that the genial said transitory. If they really do believe that, 537 00:24:07,480 --> 00:24:10,000 Speaker 1: then they can shift to growth because they're going to 538 00:24:10,080 --> 00:24:14,119 Speaker 1: look through the tariff impact. But you know, tremendous uncertainty 539 00:24:14,160 --> 00:24:15,200 Speaker 1: at this point, Kathy. 540 00:24:15,280 --> 00:24:17,400 Speaker 6: Right now, the market's baking in almost three rate cuts 541 00:24:17,400 --> 00:24:18,320 Speaker 6: through the remainder. 542 00:24:18,000 --> 00:24:19,520 Speaker 2: Of this year by the Federal Reserve. 543 00:24:19,840 --> 00:24:22,440 Speaker 6: Do you think that that increases the risk of inflation 544 00:24:22,640 --> 00:24:25,560 Speaker 6: picking back up in the scenario that you just laid out, 545 00:24:25,640 --> 00:24:28,560 Speaker 6: or growth is slowing, inflation is sticky and some of 546 00:24:28,560 --> 00:24:31,919 Speaker 6: it or a lot of it can be attributed to tariffs. 547 00:24:32,960 --> 00:24:37,240 Speaker 1: Yeah, you know, financial conditions I think overall are a 548 00:24:37,280 --> 00:24:39,440 Speaker 1: bit a bit volatile, and a lot of that due 549 00:24:39,440 --> 00:24:42,400 Speaker 1: to the equity market. But we're also seeing corporate bond 550 00:24:42,480 --> 00:24:46,080 Speaker 1: spreads widen a bit, you know, not alarmingly so, but 551 00:24:46,200 --> 00:24:51,080 Speaker 1: wid so, even though the bond markets pricing in more easing. 552 00:24:52,080 --> 00:24:54,600 Speaker 1: The fact is, I don't think overall financial conditions have 553 00:24:54,760 --> 00:24:57,000 Speaker 1: really eased that much. And if you look at the 554 00:24:57,040 --> 00:25:00,360 Speaker 1: tenure yield, it's you know, it's quite volatile, but it's 555 00:25:00,359 --> 00:25:03,080 Speaker 1: still gonna mean time. Mortgage rates are eyes so I 556 00:25:03,119 --> 00:25:06,040 Speaker 1: don't see that you know, easier credit flowing through to 557 00:25:06,119 --> 00:25:09,440 Speaker 1: the economy and really jazzing up things. If anything, maybe 558 00:25:09,560 --> 00:25:13,000 Speaker 1: provides a little buffer, but I think there's still a 559 00:25:13,040 --> 00:25:15,960 Speaker 1: lot of headwinds, you know, hitting the consumer, hitting businesses 560 00:25:16,000 --> 00:25:17,320 Speaker 1: at this point, which. 561 00:25:17,200 --> 00:25:19,480 Speaker 6: Raises a question cave of whether fed rate cuts will 562 00:25:19,520 --> 00:25:22,280 Speaker 6: actually be effective at boosting growth. Will they be the 563 00:25:22,320 --> 00:25:25,960 Speaker 6: same kind of put, if not on acid prices then 564 00:25:26,400 --> 00:25:29,080 Speaker 6: on the economy that they have been traditionally. 565 00:25:31,400 --> 00:25:35,400 Speaker 1: Yeah, it's I think that what the market really wants 566 00:25:35,440 --> 00:25:38,320 Speaker 1: is that Trump put, and we don't seem to be 567 00:25:38,359 --> 00:25:41,000 Speaker 1: getting that as much or at least the strike price 568 00:25:41,080 --> 00:25:44,240 Speaker 1: is lower. But again there is good news that the 569 00:25:44,280 --> 00:25:47,400 Speaker 1: tariffs that then would be announced that April second could 570 00:25:47,400 --> 00:25:50,639 Speaker 1: be more targeted, and there's sectoral tariffs, you know, maybe 571 00:25:50,680 --> 00:25:53,199 Speaker 1: not on top of that, but again we don't know. 572 00:25:53,280 --> 00:25:55,000 Speaker 1: But I think with the FED, I think we have 573 00:25:55,040 --> 00:25:56,560 Speaker 1: to be careful to think the FED is just going 574 00:25:56,640 --> 00:25:59,880 Speaker 1: to come to the rescue. I think they could support 575 00:26:00,040 --> 00:26:02,960 Speaker 1: growth is needed, but I think, you know, so much 576 00:26:03,040 --> 00:26:05,720 Speaker 1: really is coming out of the White House. The economic 577 00:26:05,760 --> 00:26:09,800 Speaker 1: policy changes are really kind of swamping the FED effect. 578 00:26:09,840 --> 00:26:10,320 Speaker 3: I think at this. 579 00:26:10,400 --> 00:26:13,600 Speaker 7: Point, Kathy isn't too early for j. Powell to call 580 00:26:13,640 --> 00:26:17,120 Speaker 7: it transitory when wom we don't know how harsh these 581 00:26:17,160 --> 00:26:19,479 Speaker 7: targeted tariffs are going to be and we don't know 582 00:26:19,520 --> 00:26:23,440 Speaker 7: the retaliation those countries may take on the United States. 583 00:26:25,240 --> 00:26:28,760 Speaker 1: Yeah, I kind of probably, like many people, kind of 584 00:26:29,160 --> 00:26:32,080 Speaker 1: shuddered a little bit when I heard transitory, because we 585 00:26:32,200 --> 00:26:36,600 Speaker 1: don't know, and we could continue to get like this 586 00:26:36,680 --> 00:26:42,000 Speaker 1: stripping out of tariff announcements, and that could mean that 587 00:26:42,040 --> 00:26:46,000 Speaker 1: the inflation impact lasts for longer. Even if it's not 588 00:26:46,920 --> 00:26:50,119 Speaker 1: as big, it could last for long and that complicates things. 589 00:26:50,200 --> 00:26:52,800 Speaker 1: I think quite a bit, so I think it was 590 00:26:52,880 --> 00:26:57,040 Speaker 1: a little premature, and I think you know, they could 591 00:26:57,280 --> 00:27:01,760 Speaker 1: the baseline their forecast is what you know. It does 592 00:27:01,800 --> 00:27:05,440 Speaker 1: show a temporary increase in inflation and then growth slowing. 593 00:27:05,560 --> 00:27:08,679 Speaker 1: But I think, you know, putting that transitory stamp that, 594 00:27:08,720 --> 00:27:10,199 Speaker 1: I think that was a little PREMATURER. 595 00:27:10,400 --> 00:27:10,720 Speaker 5: Kathy. 596 00:27:10,720 --> 00:27:12,639 Speaker 2: I think some people are confident because they believe the 597 00:27:12,680 --> 00:27:15,119 Speaker 2: labor market's not as tight as it once was, and 598 00:27:15,160 --> 00:27:17,959 Speaker 2: the potential for second round effects, the potential for people 599 00:27:18,240 --> 00:27:19,600 Speaker 2: going out and saying, you know what, I want a 600 00:27:19,600 --> 00:27:22,200 Speaker 2: bigger paycheck and the company actually following through and delivering 601 00:27:22,200 --> 00:27:26,560 Speaker 2: one is somehow been dampened by the increasing employment anxiety 602 00:27:26,560 --> 00:27:28,399 Speaker 2: that we've witnessed in some of the surveys over the 603 00:27:28,480 --> 00:27:31,000 Speaker 2: last month. We've got some pushback actually from Black Rock 604 00:27:31,080 --> 00:27:33,560 Speaker 2: Jean Bavan about twenty minutes ago on that point, and 605 00:27:33,600 --> 00:27:35,720 Speaker 2: I think it was actually credible pushback. He said, you've 606 00:27:35,720 --> 00:27:37,479 Speaker 2: got to think about the lack of immigration we're going 607 00:27:37,520 --> 00:27:39,800 Speaker 2: to see over the next several years, and this labor 608 00:27:39,800 --> 00:27:43,240 Speaker 2: market could well be tighter than people think alongside that 609 00:27:43,400 --> 00:27:46,720 Speaker 2: tariff effort, and which would make us vulnerable to second 610 00:27:46,800 --> 00:27:48,760 Speaker 2: round effects. Kathy, how do you think about the labor 611 00:27:48,760 --> 00:27:51,480 Speaker 2: market dynamic, because I think that point is probably the 612 00:27:51,480 --> 00:27:52,360 Speaker 2: most important one. 613 00:27:53,720 --> 00:27:56,680 Speaker 1: Yeah, no, I think that's a great point. That Yes, 614 00:27:56,920 --> 00:27:59,680 Speaker 1: it's it's hirer to go in to ask for a reason. 615 00:28:00,240 --> 00:28:05,159 Speaker 1: You know, employ employers have more power right now. But 616 00:28:05,280 --> 00:28:07,840 Speaker 1: on the other hand, just as you pointed out, John less, 617 00:28:07,880 --> 00:28:11,199 Speaker 1: immigration means all else equal a tighter labor market. If 618 00:28:11,240 --> 00:28:15,040 Speaker 1: you look at the household survey, they dissect foreign born 619 00:28:15,320 --> 00:28:20,160 Speaker 1: and uh kind of indigenous, you know, domestic workers here, 620 00:28:20,520 --> 00:28:22,800 Speaker 1: and all of the jobs that are created of playing 621 00:28:22,840 --> 00:28:25,520 Speaker 1: the household survey last year on net were for foreign 622 00:28:25,560 --> 00:28:28,320 Speaker 1: born workers. Because we have a demographic issue here right, 623 00:28:28,359 --> 00:28:31,000 Speaker 1: we have people who are retiring, the baby boomers. So 624 00:28:31,400 --> 00:28:34,160 Speaker 1: we do need immigration to kind of keep the labor 625 00:28:34,200 --> 00:28:37,679 Speaker 1: market fluid and and it could get tighter than we 626 00:28:37,720 --> 00:28:41,560 Speaker 1: all think, especially in certain sectors. Now, whether that transcends 627 00:28:41,720 --> 00:28:44,600 Speaker 1: to the whole labor market, you know, wage growth going 628 00:28:44,680 --> 00:28:47,160 Speaker 1: up maybe a different story, but certainly where immigrants are 629 00:28:47,200 --> 00:28:52,239 Speaker 1: prominent in the agriculture, retail, homeworking situations, there you can 630 00:28:52,320 --> 00:28:53,320 Speaker 1: see some wage pressure. 631 00:28:53,480 --> 00:28:55,440 Speaker 2: Hey, Kathy, I appreciate your for you as always, and 632 00:28:55,520 --> 00:28:58,680 Speaker 2: the clerk say, Kathy poll chance it that of nationwide. 633 00:28:59,120 --> 00:29:02,720 Speaker 2: This is the burg Surveillance Podcast, bringing you the best 634 00:29:02,720 --> 00:29:06,040 Speaker 2: in markets, economics, and geopolitics. You can watch the show 635 00:29:06,080 --> 00:29:09,040 Speaker 2: live on Bloomberg TV weekday mornings from six am to 636 00:29:09,160 --> 00:29:12,920 Speaker 2: nine am Eastern. 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