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Speaker 2: Alex deal At, Paul Sweeny, John Tucker, this is Bloomberg
Speaker 2: Intelligence Radio. I want to get back to this data
Speaker 2: because it is moving the bond market. In particular, the
Speaker 2: ten year yields now down by full ten basis points,
Speaker 2: kind of encroaching on the two hundred day moving average.
Speaker 2: All that consumer confidence data following the most since August
Speaker 2: of twenty twenty one, joining us now as Stefani Guie Schard,
Speaker 2: a senior economist at the Conference Board, what led this
Speaker 2: decline in confidence?
Speaker 3: So, first, this decline of confidence was broad based across
Speaker 3: income and edge groups, and it was ready driven by
Speaker 3: a return to pasimes in terms of expectations for future
Speaker 3: business condition and future employment.
Speaker 4: Stephanie, it seems like when we had the election, there
Speaker 4: was this burst of optimism across the number of fronts,
Speaker 4: including the economic front, that perhaps the Trump administration would
Speaker 4: be very pro business, pro growth, less regulation, lower taxes,
Speaker 4: all that kind of the data kind of suggests that
Speaker 4: that is fading a little bit.
Speaker 5: Is that Is that how you interpret a data point
Speaker 5: like this?
Speaker 3: So I think what you were mentioning before was reflected
Speaker 3: in our CEO Confidence Index that search over the last quarter.
Speaker 3: So we published this last week. In terms of consumers,
Speaker 3: we are really focused on the short term, on what's
Speaker 3: happening right now, to inflation, to the job market. We
Speaker 3: saw some increase in the price of some key stapers
Speaker 3: for consumers, like the price of X, and this is
Speaker 3: really affecting their mood and how they think about the economy.
Speaker 2: Is this data bifurcated in terms of party lines, because
Speaker 2: we typically see, say in the Umish surveys, the Republicans
Speaker 2: feeling good, Democrats feeling bad, particularly well under President Trump.
Speaker 3: Yeah, so that's still the case. I mean, Republicans are
Speaker 3: feeling much better than Democrats. But what we saw this
Speaker 3: month is a decline across the board, strong decline for
Speaker 3: independents and Democrat consumers, and a slight decline also for Republicans.
Speaker 5: Stephanie, thank you so much for joining us. Really appreciate it.
Speaker 4: Stephanie Gisha Senior Commerce for the Conference Board. Joining us
Speaker 4: from New York via zoom.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 2: We bring you all the top news in business, economics
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Speaker 2: right here in midtown Manhattan. Just taking a look care
Speaker 2: at the markets. As John Tucker was just talking about,
Speaker 2: we're around the loads of the session. The NASDAG is
Speaker 2: now out by almost full two percentage points, the S
Speaker 2: and P off by one percent. The semis are also
Speaker 2: getting hit quite hard. But really the rollover picked up
Speaker 2: a little bit of steam after that. US consumer confidence
Speaker 2: that have fell the most since August of twenty twenty one.
Speaker 2: Carolshlife is chief investment Officer at BIMO Family Office and
Speaker 2: joins US now. Carol, I know you look longer term,
Speaker 2: but what do you make of that market action we've
Speaker 2: seen over the last three days. It feels like the
Speaker 2: buy the dip is sort of losing some steam here.
Speaker 6: Well, maybe by the dip is But it's important to
Speaker 6: remember too, we hit all time highs a week ago,
Speaker 6: so and markets have gone a very long period of
Speaker 6: time without the normal level of volatility that you'd see.
Speaker 6: You would expect a five to ten percent kind of
Speaker 6: pullback in the normal range of things. We haven't really
Speaker 6: seen that, and so for markets to come a bit
Speaker 6: off that US exceptionalism story. And look at there are
Speaker 6: a lot of moving parts going in the economy right now,
Speaker 6: but consumer confidence, business confidence, some of that stuff is
Speaker 6: starting to waiver. We came off of the elections with
Speaker 6: a lot of exuberance in both places, and it's important
Speaker 6: to look at those numbers and realize that people are
Speaker 6: just kind of like it's been an awful, big barrage
Speaker 6: of news in the last forty five days, and so
Speaker 6: taking a step back to take a breath and process
Speaker 6: some of that is pretty normal.
Speaker 4: So, Karl, I know you folks over there at BIMO
Speaker 4: Family Office take a longer term view here. But putting
Speaker 4: in the context that we've had investors in twenty three
Speaker 4: and twenty four had really really really good equity returns
Speaker 4: north of twenty percent, how do you kind of reset
Speaker 4: here for twenty twenty five. What are the conversations you're
Speaker 4: having most often with your clients.
Speaker 6: Well, I think a piece of it too is to
Speaker 6: realize that having balanced in the portfolio and having balanced
Speaker 6: portfolios didn't work in twenty two, but it definitely has
Speaker 6: worked some in twenty three and twenty four. And so
Speaker 6: having some high quality fixed income in the portfolio being
Speaker 6: willing to take some trims in there instead and in
Speaker 6: cash that's fielding four and a half five five percent
Speaker 6: is a pretty nice way to balance some of this
Speaker 6: off in the short run. Now, not trying to time
Speaker 6: it all the way in or all the way out,
Speaker 6: but there is an ability to be able to have
Speaker 6: some of that dry powder, if you will, on the sidelines.
Speaker 6: And we wouldn't be alone because clearly Warren Buffett has
Speaker 6: a lot of dry powder as well.
Speaker 7: Oh yeah, it was eleven billion an interest in funny
Speaker 7: market for.
Speaker 5: Sitting there.
Speaker 7: Yeah, I'll take that. What we have seen though, yeah, right.
Speaker 2: Is money kind of flows starting to move out of
Speaker 2: the US and into Europe. Do you think that that
Speaker 2: actually is a trend that had legs?
Speaker 6: Yeah, we do think that You've got that. You know,
Speaker 6: you've had a lot of conversation around Trump tariff's notwithstanding
Speaker 6: that there is an appreciation for Chairman Chief, for example,
Speaker 6: and there's a suspicion that all the tariff talk is
Speaker 6: because he wants to cut a deal there. So we
Speaker 6: do suspect that you've got a lot going on. And
Speaker 6: it's interesting because I saw some stats yesterday that talked
Speaker 6: about the performance in ETFs since inauguration day, and when
Speaker 6: you look at that, the US is flat, China's up
Speaker 6: close to twenty percent, And so you've got a lot
Speaker 6: of different interesting things going on there. And we have
Speaker 6: recently just actually taken a country position in China specific
Speaker 6: as well as the Japan specific one that we've had
Speaker 6: on from a house view standpoint for a very long
Speaker 6: period of time.
Speaker 4: Well, talk to us about that China call, because we
Speaker 4: just had a segment we were talking with Bloomberg economists
Speaker 4: just about the tariffs and the trade situation with China.
Speaker 4: So what is your view on China these days?
Speaker 6: Well, I think another piece of it is is when
Speaker 6: you look at the technology leadership that they've gotten, not
Speaker 6: just deepseek, but you go back to twenty fifteen when
Speaker 6: they first initiated the China twenty twenty five plan industries
Speaker 6: they wanted to own and the ten years they've had
Speaker 6: to really focus on them. There's a lot of technological
Speaker 6: innovation and work around and the more we restrict advanced
Speaker 6: technology from them, the more they try to figure out
Speaker 6: how to make it work. And so between that and
Speaker 6: the beaten up valuations, not just in China but in
Speaker 6: Southeast Asia in particular, there's a lot of interesting things
Speaker 6: going on there from trying to balance off the world
Speaker 6: and it's always been a challenge. We've always led with,
Speaker 6: if you will, with globally diversified portfolios, but that's been
Speaker 6: a really hard argument to make in the last few years,
Speaker 6: as as the US markets have so vastly outperformed so
Speaker 6: many others. But we think you're seeing a broadening out
Speaker 6: of that. So having balanced portfolios. And the key challenge
Speaker 6: is for long term investors is never knowing exactly when
Speaker 6: those when those non US markets are.
Speaker 5: Going to move interesting.
Speaker 4: All right, Kenl, thank you so much for a few
Speaker 4: minutes your time. We really appreciate a couch life. The
Speaker 4: Chief Investment Officer BIMO Family Office.
Speaker 5: Here.
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Speaker 4: One of the other big global economic issues out there
Speaker 4: for global trade is the US relationship with China. It
Speaker 4: got tough under Trump's first administration, President Biden kind of
Speaker 4: keeping some of that rhetoric up as well, and now
Speaker 4: the second Trump administration trying to take up another level.
Speaker 4: So we want to get a sense of kind of
Speaker 4: where that this may go. And there's no one better
Speaker 4: to speak to than Tom Orlick. He's a senior economist.
Speaker 4: I mean, he is the Bloomberg Economics chief economist, lived
Speaker 4: and worked in Beijing for many years, so we really
Speaker 4: really understand what's going on over there. Tom, give us
Speaker 4: a sense of kind of how you think the second
Speaker 4: Trump administration is going to approach China and maybe how
Speaker 4: China will react.
Speaker 8: Well, it's great to be here, Paul. So I think
Speaker 8: it's interesting. I think there's going to be two rival
Speaker 8: groups who are kind of jockeying for position in terms
Speaker 8: of shaping Trump's second term China policy. The first group, well,
Speaker 8: that's the China Hawks. That's the folks who think China's
Speaker 8: catching up with the US way too fast. It's playing
Speaker 8: fast and loose with the rules on global trade, on
Speaker 8: intellectual property, and the US needs to take a really
Speaker 8: really strict stand on this. And the second group, and
Speaker 8: you saw them on stage at the inauguration, well that's
Speaker 8: the tech titans. It's folks like Tim Cook who have
Speaker 8: the entire supply chain or a substantial part of their
Speaker 8: supply chain located in China. It's folks like Nvidia who
Speaker 8: have a huge part of their business depending on China's
Speaker 8: electronics supply chain. So of course that group would very
Speaker 8: much like to see something which looks more predictable, more stable,
Speaker 8: more open in terms of US China relations. Early days,
Speaker 8: but we've got some reporting from Bloomberg News saying that
Speaker 8: Trump officials are speaking with the Netherlands and speaking with
Speaker 8: Japan about further toughening controls on China's access to semiconductors.
Speaker 8: So what that suggests is that the China Hawks, at
Speaker 8: least for now, are trying to set the agenda.
Speaker 2: So based on that, we're taking a look at the
Speaker 2: socks INDECKS semi index down over one and a half percent.
Speaker 2: So let's just go with the idea that we'll see
Speaker 2: stricter curbs on chips.
Speaker 7: Will it work? I mean, we saw what happened with
Speaker 7: deep seek for example.
Speaker 8: Yeah, it's a great point, Alex. So I think if
Speaker 8: you were speaking with one of the folks that did
Speaker 8: the export controls in Biden's first term, they'd probably make
Speaker 8: a couple of points. So the first is that the
Speaker 8: first round of export controls, the Biden administration told everyone
Speaker 8: about it six months before it came into force, right,
Speaker 8: And that's a kind of fairly obvious misstep.
Speaker 5: Right.
Speaker 8: If you tell China in six months time you can't
Speaker 8: buy any advanced semiconductors, well, of course China is going
Speaker 8: to spend six months assiduously stockpiling those advanced semiconductors. And
Speaker 8: then the second thing I think those China hawks would
Speaker 8: say would be, well, we always knew China was going
Speaker 8: to catch up pretty quick on the large language models.
Speaker 8: We knew they were only a few months behind chat GPT,
Speaker 8: so deepseak wasn't the surprise. The export controls are really
Speaker 8: aimed at preventing China from taking that next step towards
Speaker 8: autonomous general intelligence.
Speaker 4: TOM based upon your experience in China, how do you
Speaker 4: think presidency and the Chinese government will I guess respond
Speaker 4: and deal.
Speaker 5: With this trumpet ininustration?
Speaker 4: Did they understand how transactional President Trump can be and
Speaker 4: therefore maybe there is a quote unquote deal to be
Speaker 4: worked out to maybe just avert some of the bigger issues.
Speaker 8: So we've had this news overnight from Bloomberg reporters on
Speaker 8: the on the Trump team speaking with their counterparts in
Speaker 8: the Netherlands and Tokyo. So clearly there's not nothing going
Speaker 8: on on US China policy. At the same time, if
Speaker 8: we think about where the kind of the major focus
Speaker 8: of attention for Trump has been in his first few weeks, well,
Speaker 8: it's been on Ukraine, it's been on Gaza in the
Speaker 8: Middle East. There have been tariffs on China, certainly, but
Speaker 8: there's also been tariff threats against Canada, tariff threats against Mexico.
Speaker 8: So China, relative to where I think we could have been,
Speaker 8: doesn't appear to be the kind of top of mind
Speaker 8: gender item for the Trump administration. Now, I don't have,
Speaker 8: you know, a hotline into China's leadership compound. I don't
Speaker 8: I'm not privy to chi jianpings inner thoughts. But my
Speaker 8: guests would be that's kind of good news from their perspective, right,
Speaker 8: and they'd be pretty happy if Trump expends all of
Speaker 8: his energy focused on Ukraine and the Middle East and
Speaker 8: near neighbors and perhaps doesn't spend so much time thinking
Speaker 8: about China and China's rise as a geopolitical challenger.
Speaker 7: All right, Tom, I always appreciate it.
Speaker 2: Thank you so much, Tom, Or like Bloomberg Economics chief
Speaker 2: economists joining us on potential chip controls over China and
Speaker 2: then the ramifications of that.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 5: Steal and Paul Swinging.
Speaker 4: We're live here on Bloomberg Interactive Broker Studio in New
Speaker 4: York City.
Speaker 5: We're also streaming live on YouTube.
Speaker 4: Head over to YouTube dot com and search Bloomberg Podcast
Speaker 4: Live and that's where you find us. Well after the
Speaker 4: close tomorrow in Nvidia reports, and that is always a
Speaker 4: big day for in Nvidia shareholders, I think for technology
Speaker 4: shareholders as well, and as.
Speaker 5: The markets overall.
Speaker 4: Really, for the last couple of years, in Vidia has
Speaker 4: been a market moving event. So we want to get
Speaker 4: a little bit of your preview there, and then we're
Speaker 4: also going to talk Hamburgers.
Speaker 5: How we make the connection here, I don't know, but
Speaker 5: we'll try to do it.
Speaker 7: I like it.
Speaker 4: Kim Farst, founder and chief investment officer Boquet Capital Partners
Speaker 4: in Pittsburgh. So, Kim, I'd love to take advantage of
Speaker 4: your technology, chops. What should we be looking for when
Speaker 4: in Vidia reports tomorrow?
Speaker 9: Sure, well, I'll say what I say for absolutely every
Speaker 9: company who really cares what happened last quarter. I want
Speaker 9: to know what's going to happen next quarter in the
Speaker 9: quarter after that. And I think never has this been
Speaker 9: more important than for a company like Nvidia. Who is
Speaker 9: it the forefront of a very new technology that you know,
Speaker 9: literally hundreds of billions of dollars are being thrown at.
Speaker 9: So the question that we have is this is it
Speaker 9: for real? Are people still going to pay up? Are
Speaker 9: they still going to you know, build these huge data
Speaker 9: centers to run something that we don't have a problem
Speaker 9: that we can identify that that the money is fixing
Speaker 9: that is the question.
Speaker 7: And what do you think that's going to be best?
Speaker 7: Guess yes, I.
Speaker 9: Well for a couple of reasons. Firstly, you know, I'm
Speaker 9: a nerd. I'm a proud nerd was I was a
Speaker 9: software engineer in AI doing stuff with neural networks. How
Speaker 9: lucky are we that like this all has come up
Speaker 9: and I know about it? Okay, But anyhow, here's the problem.
Speaker 9: The only thing that I can and see that large
Speaker 9: language models really solve is the ability to get information
Speaker 9: in and out from humans to computers a little bit better.
Speaker 9: And who's going to benefit? I say, right now it
Speaker 9: looks like search that people are using it to search,
Speaker 9: they love it, and all these other kind of higher
Speaker 9: order smarter things we're not really able to pull off, like,
Speaker 9: you know, take care of my travel to go to Sydney, Australia,
Speaker 9: right and here are the dates and get me the
Speaker 9: cheapest fastest airline there. It can't do that, not yet,
Speaker 9: maybe not ever. We don't know who cares. But right
Speaker 9: now I think the companies that are putting money into
Speaker 9: this are those that have some sort of search that
Speaker 9: they're trying to maintain their market share. So Google, I'm
Speaker 9: talking to you and to a certain extent meta right,
Speaker 9: and Microsoft is the third one. So those people are
Speaker 9: going to continue or those companies are going to continue
Speaker 9: to pour money into this area for the foreseeable future.
Speaker 4: All Right, here's the hard pivot from AI to hamburgers.
Speaker 4: And here's my take on the hamburger business. Wendy's. I
Speaker 4: will stack up a good old Wendy's burger against a
Speaker 4: lot of the new ones out there, whether it's the Shakeshack,
Speaker 4: the five Guys, all that kind of stuff that Wendy's
Speaker 4: burger hangs in there. How about the stock here, Kim,
Speaker 4: what do you guys think about Wendy's here?
Speaker 9: It has not been hanging in That's the first thing, right,
Speaker 9: New is always better. People go hey, let me try
Speaker 9: that shake Shack, and then they're going to drop a
Speaker 9: lot of money and go, well, that was an okay burger,
Speaker 9: But okay, next time, maybe I want to do something different.
Speaker 9: That's one of our theories is the growth of Shakeshack
Speaker 9: is going to reintroduce people to a good hamburger. Like McDonald's,
Speaker 9: has its own flavor profile. It's not like a regular
Speaker 9: hamburger that you'd make it home and I guess Wendy's
Speaker 9: isn't either because it's square. But we move on from that,
Speaker 9: right anyhow, back to it now, the company's been trying
Speaker 9: to grow in breakfast and that has impacted its earnings,
Speaker 9: and we're looking past that, saying, hey, they've got a
Speaker 9: good idea. They're mostly a franchise e chain. The company owns,
Speaker 9: you know, some of the restaurants. This is a good model.
Speaker 9: And you know, we're hanging in there thinking they have
Speaker 9: a pretty good product and it might be time to
Speaker 9: look at it because it's sold off recently.
Speaker 2: So how do you pick between all the fast food guys?
Speaker 2: It's sort of like, you know, can you own a
Speaker 2: lot of them at this point when you have exposure
Speaker 2: to inflation, when you have exposure to the consumer.
Speaker 9: Well, I kind of go on my own, right, because
Speaker 9: I'm a consumer and I'm kind of a picky I
Speaker 9: like really high quality stuff, but I don't want to
Speaker 9: pay a lot for it, and Wendy's kind of fits
Speaker 9: that profile in many ways. First of all, they skew
Speaker 9: to a higher income buyer than a lot of the
Speaker 9: other chains, So that's something that I like. And I
Speaker 9: also like that in any sort of consumer oriented pick
Speaker 9: because as the I think there was news out yesterday
Speaker 9: maybe by Bloomberg that the top ten percent is spending
Speaker 9: more than they ever have, and they spend on things
Speaker 9: like hamburgers, right, So we like that, we like their
Speaker 9: salads in the summertime, they get a lot of traffic
Speaker 9: away from Panera again because it's a value option and
Speaker 9: it's convenient. So that's kind of my view. I don't
Speaker 9: want to own the whole lot of them. I want
Speaker 9: to own companies that are poised to beat the competition.
Speaker 5: How about them?
Speaker 4: I think, how about on the cost side, the costs
Speaker 4: of beef. I know that's been an issue for cost of.
Speaker 9: Beef is And here's the problem. They're fresh nut frozen,
Speaker 9: so they're buying from America. They don't really have the
Speaker 9: luxury that a lot of the other burger chains who
Speaker 9: are buying from South America and Australia. So that is
Speaker 9: an issue and that's something that we're all going to
Speaker 9: have to suffer through for a little while here. But hey,
Speaker 9: I hear they're these things called.
Speaker 7: Tear Yes truth. I hate Kim always good to catch up.
Speaker 2: Appreciate you at Kim forrest overbook Capital partners.
Speaker 7: Thank you very much.
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