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

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

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Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day

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

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

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

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

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

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Speaker 2: Terminal and the Bloomberg Business App. Jim Bianco of Bianco

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Speaker 2: Research is watching ten year bonyields and writes the following.

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Speaker 2: If rates are steady, then ten year bonields should continue

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Speaker 2: sideways before heading above five percent, and the curve will steepen.

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Speaker 2: Jim joins us now for more. Jim Bianco, I want

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Speaker 2: to go to a quote from Michael Hartner Bank for

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Speaker 2: America and get your thoughts on this take this morning,

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Speaker 2: we say hot three percent USCPI January is a blessing

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Speaker 2: in disguise for both bonds and starks. Michael and the

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Speaker 2: team go on to say rising inflation means Trump must

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Speaker 2: go small, not big. On terraff and immigration in the

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Speaker 2: coming months to avoid fanning a second wave of inflation. Jim,

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Speaker 2: would you agree with that sake, No.

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Speaker 3: I would not. I mean, we all know the phrases.

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Speaker 3: You're supposed to take Trump seriously, but not literally. And

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Speaker 3: that's what I think we've seen in the market in

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Speaker 3: the last twenty four hours. They're torturing themselves to basically,

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Speaker 3: you know, micro read what Trump has said, but take

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Speaker 3: them seriously. He intends on doing tariffs, and we are

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Speaker 3: going to get tariffs, and they're going to come. And

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Speaker 3: as much as we want to try and talk ourselves

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Speaker 3: out of it, they are coming later this year. And

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Speaker 3: I might add markets get things wrong all the time.

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Speaker 3: It convinced itself in January twenty twenty COVID wasn't going

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Speaker 3: to be anything, and it was.

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Speaker 4: It convinced itself in August.

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Speaker 3: Of twenty twenty that, you know, the young carry trade

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Speaker 3: unwined was the biggest deal we've ever seen, and it wasn't.

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Speaker 3: So it gets things wrong a lot. And take Trump seriously.

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Speaker 2: Aside, Jim, With that in mind, as you look at

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Speaker 2: bonds and stocks, and you look at stocks, clothes to

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Speaker 2: old time highs and bond yields near the low end

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Speaker 2: of the range for the year so far.

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Speaker 3: What do you think is more vulnerable, Oh, I think

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Speaker 3: the bond market is probably more vulnerable at this point.

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Speaker 3: The hot CPI number, I think is still a tell

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Speaker 3: that the at least at a minimum, the road to

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Speaker 3: two percent is now. You know, we've been talking about

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Speaker 3: the last mile for two years, and we're probably going

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Speaker 3: to have to talk about it for another two years

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Speaker 3: before we get there to two percent.

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Speaker 4: That we've got sticky inflation.

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Speaker 3: And if we've got sticky inflation, the Fed is probably

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Speaker 3: going to be done raising cutting rates, if not maybe

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Speaker 3: one more this year, although I think they might be

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Speaker 3: done for the year, meaning that the funds rate is

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Speaker 3: still going to end the year with a four handle

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Speaker 3: on it, even with one more cut. And if the

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Speaker 3: yield curve continues to steep in and we see some

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Speaker 3: kind of normalization of the curve, which we've been seeing

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Speaker 3: for the last several months, that means that you could

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Speaker 3: be pushing the tenure yield above five percent sometime later

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Speaker 3: this year.

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Speaker 4: And I still think that that's in the cards.

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Speaker 1: Jim, when you take a step back, it feels like

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Speaker 1: it's a little bit of a numbing and ironment. There

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Speaker 1: is so much noise you have. On one hand, about

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Speaker 1: three days ago, we were talking about that inflationary risk,

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Speaker 1: and you would have had a lot of compatriots talking

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Speaker 1: about five percent treasure yields. At the same time, you

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Speaker 1: got inflation data that looked bad on the surface, but

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Speaker 1: people got enough comfort from the individual details to say, actually,

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Speaker 1: this means that disinflation is intact. How do you strip

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Speaker 1: out the noise and have conviction about inflation call and

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Speaker 1: the possibility of expectations getting truly unmoored.

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Speaker 3: Well, I think if you look at the way that

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Speaker 3: the markets have been trading, and if you say start

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Speaker 3: with the stock market, the S ANDP is at the

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Speaker 3: higher end of a range.

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Speaker 4: It's been since two weeks after the election.

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Speaker 3: It's been trading in about a fifty eight hundred to

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Speaker 3: sixty one hundred range for like I said, over two months,

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Speaker 3: and it's just at the top end of the range.

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Speaker 3: And the same thing has been happening with the bond

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Speaker 3: market too. On November fifteenth, we're four to fifty, we're

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Speaker 3: four fifty three. We ended the year at four fifty six.

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Speaker 3: So there's a lot of noise and the markets move

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Speaker 3: around a lot. Yesterday was a big individual day in

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Speaker 3: the stock market, but the trend is still sideway, and

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Speaker 3: that says that that's still a market that is has

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Speaker 3: little convictioners unsure of where to go next. So it

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Speaker 3: sees all the news and it's not really reacting to

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Speaker 3: it other than having big days here or there, but

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Speaker 3: moving sideways.

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Speaker 4: And I think ultimately it's going to give a way too.

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Speaker 3: There's going to be terrifts, there's going to be a

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Speaker 3: little bit more inflation, and interest rates are going to

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Speaker 3: go higher.

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Speaker 1: Jim, when you talk about the inflationary impulse, are you

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Speaker 1: really attributing that to policy or do you see something

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Speaker 1: in the internals of the data that a lot of

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Speaker 1: people are just dismissing as highlighting some sort of pressure

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Speaker 1: that everyone is closing their eyes to.

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Speaker 4: No, I see something in the data.

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Speaker 3: Every time we have a financial crisis or recession, and

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Speaker 3: we had both in twenty twenty, the economy changes. Change

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Speaker 3: is not worse, it's not dystopian. The big change that

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Speaker 3: happened in the economy coming out of twenty twenty.

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Speaker 4: Was remote work.

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Speaker 3: Over a quarter of the country is now doing remote work,

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Speaker 3: and we know what Jamie Diamond's attitude about that is

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Speaker 3: from a couple of days ago.

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Speaker 4: He doesn't like it at all.

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Speaker 3: It is here, it is not going away, and that

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Speaker 3: is a fundamental change not only to the.

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Speaker 4: Way we work, but also to the way we live

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Speaker 4: our lives.

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Speaker 3: And I think that that is building excess pressures on

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Speaker 3: prices and leaving us with higher inflation, not eight ten

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Speaker 3: or Zimbabwe inflation, but more like three to four percent inflation.

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Speaker 4: And core CPI just finished it's forty fifth month in

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Speaker 4: a row above.

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Speaker 3: Three percent, So we've been seeing that kind of pressure,

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Speaker 3: although we continue to try and tell ourselves that no

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Speaker 3: we're going to go back to two percent. That you

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Speaker 3: know we're going to return, as Jpal says, to a

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Speaker 3: pre pandemic environment, the cycle changed.

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Speaker 4: We're in a different cycle right now.

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Speaker 5: Jim, I just love to quickly get your thoughts before

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Speaker 5: we end on what you actually think is going on

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Speaker 5: with tariffs, because you say the market should be taking

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Speaker 5: Trump seriously and they didn't. But he didn't actually sign

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Speaker 5: anything formidable yesterday. It's an investigation into these countries. There

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Speaker 5: was not a single tar iff placed yesterday. And my

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Speaker 5: read is he's a negotiating mode to get some sort

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Speaker 5: of concessions, especially out of the European Union. Would you

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Speaker 5: not agree with that?

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Speaker 4: Yeah.

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Speaker 3: I think tariffs are leverage, and I think they are

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Speaker 3: big leverage. And I think that when it comes to

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Speaker 3: negotiating with our partners, whether it's Canada, Mexico or the

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Speaker 3: European Union, Trump holds more cards than they do, and

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Speaker 3: I think that these tariffs are a threat and he

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Speaker 3: wants something else. Now, in the case of Europe, I

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Speaker 3: think what he wants is he wants more security arrangements.

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Speaker 3: He wants them to spend five percent of their budget

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Speaker 3: on a defense and he even said yesterday he wants them,

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Speaker 3: when they're spending five percent of their budget on defense,

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Speaker 3: to buy.

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Speaker 4: More stuff from defense makers in the United States.

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Speaker 3: So I think that all of this is more leverage

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Speaker 3: than an external revenue service to raise revenues. I think

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Speaker 3: he wants some of that too, but I think it's

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Speaker 3: really about negotiating and we need to understand that that's

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Speaker 3: what he's trying to do.

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Speaker 2: Hi, Jim Grid's kickoff this morning with you. I am

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Speaker 2: freciate it. Jim Pianco at Biancout Research Pit, a chair

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Speaker 2: of Academy Securities, saying maybe we need to squeeze some shorts.

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Speaker 2: But I suspect we're going to see tariff related headlines

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Speaker 2: to spook the market as early as the next week.

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Speaker 2: Pet Joined, just now for more, Pete, good morning, it's

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Speaker 2: good morning. Yeah, what happened yesterday? Should we start there?

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Speaker 6: Yeah?

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Speaker 7: I feel like it wasn't really Donald Trump speaking. I

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Speaker 7: feel like he got sucked into his advised advisors to

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Speaker 7: come up with this very mellow message. Right, if you

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Speaker 7: think about Trumpets, We're gonna take over Greenland.

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Speaker 6: Canada should be the fifty first state.

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Speaker 7: Right, there's no nuances about well, Quebec doesn't like Ontario.

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Speaker 7: He's always very aggressive, even on the initial set of tariff.

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Speaker 7: So I feel like the rest of the world's kind

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Speaker 7: of like, Okay, what was really said? And I do

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Speaker 7: think tariffs resonates with people, trade protection resonates with people.

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Speaker 7: I'm not even sure that resonates. So I feel that

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Speaker 7: sometime next week he's going to be like, no one's

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Speaker 7: taking this seriously.

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Speaker 6: I'm not going to listen to my advisors.

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Speaker 7: I'm going to go back to being myself and I'm

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Speaker 7: going to send a clear message.

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Speaker 2: I'd love to have Potin back in the G seven.

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Speaker 2: Russia should be sitting at the table that was restrained

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Speaker 2: version of the president yesterday.

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Speaker 6: So that was an interesting one.

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Speaker 7: I think it's again you go back and why Russia

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Speaker 7: was brought into the G seven or G eight at

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Speaker 7: the time was Okay, maybe if they work with us,

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Speaker 7: you'll move forward. I think it's a little bit incorrect

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Speaker 7: right now because there should be some sort of punishment

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Speaker 7: for the invasion, and certainly this is going to send Europe,

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Speaker 7: you know, in a tizzy. Right Europe's not gonna be

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Speaker 7: comfortable with us at all. Europe's not comfortable with any

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Speaker 7: form of peace right now, let alone bringing him back.

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Speaker 7: So again, I think there's all this friction, and I

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Speaker 7: think people have.

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Speaker 6: Been very when we jump in.

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Speaker 2: Europe's not comfortable with any kind of peace right now.

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Speaker 2: Can you translate that, because that just sends shocking too people.

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Speaker 2: What does that mean?

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Speaker 7: I think Europe, much more than US, is very worried

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Speaker 7: about If you give Putin an inch, you've given them

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Speaker 7: a mile, and that's any sort of a core that

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Speaker 7: gives Putin time to you know, take his win, consolidate,

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Speaker 7: leads him coming back for more than two years down

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Speaker 7: the road. That's I think very prevalent within Europe. It's

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Speaker 7: a thought that's much more concerning to them, and they

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Speaker 7: are sitting there much closer to the front lines, so

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Speaker 7: I think their view of a piece is very different

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Speaker 7: than ours, which.

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Speaker 1: Is the reason why a lot of the commentary that

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Speaker 1: we hear out of the Earth Union as well as

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Speaker 1: analysts in the United States is this doesn't really move

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Speaker 1: the needle further towards some sort of peace agreement that

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Speaker 1: is viable and long lasting. You have a lot of

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Speaker 1: generals ed at your firm at Academy Securities. Do they

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Speaker 1: agree or do they think that actually having conversations is

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Speaker 1: a really solid step, just like the market seems to imply.

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Speaker 7: So we think there is going to be a deal

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Speaker 7: done this year. I think whether Europe likes it or not,

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Speaker 7: it's going to happen. We think that the Russian frozen

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Speaker 7: dollar reserves are going to play a big part of that.

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Speaker 7: So that's going to be the carot and stick right Pudin.

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Speaker 7: We could try and fight you and keep all these

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Speaker 7: dollar reserves, or we can give you some back and

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Speaker 7: if you make peace Ukraine, you get a bunch of

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Speaker 7: dollar reserves to give up some land and do the rebuilding.

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Speaker 6: So I think that's a big part of it.

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Speaker 7: There'll be some sort of vague path for China or

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Speaker 7: sorry for Ukraine to head towards NATO that Pudin probably

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Speaker 7: won't believe in, and there's a chance, right if you.

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Speaker 6: Pull people together. I think most of our generals.

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Speaker 7: Again, I think one of the more interesting questions we've

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Speaker 7: been asked periods, what would you do most as a

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Speaker 7: general to ensure peace for the US?

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Speaker 6: US like fund the State Department. More so, I think.

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Speaker 7: Talking and engaging with countries, that's a way to pull

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Speaker 7: it together. So I don't know that there's an obvious

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Speaker 7: lasting piece, but if you stop the war, you get

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Speaker 7: people talking, there's that potential.

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Speaker 1: Markets are sniffing this out, and there's a question of

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Speaker 1: how much that is giving sort of a turbo charged

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Speaker 1: effect to some of the optimism that we heard a

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Speaker 1: couple months ago about the euro Maybe things have gotten

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Speaker 1: so bad they can't get any worse.

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Speaker 6: Do you lean into that?

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Speaker 1: And it's not just with Europe but also with China

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Speaker 1: that if there is discussion and there is some semblance

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Speaker 1: of deal making, then maybe that could actually reignite some

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Speaker 1: of the growth in the rest of the world, not

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Speaker 1: just the US.

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Speaker 6: So at the start of the year we are very adamant.

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Speaker 7: We call the geopolitical opportunities and risk, and I think

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Speaker 7: everyone talks about geopolitical risks.

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Speaker 6: We felt there'd be some sort.

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Speaker 7: Of resolution this year in Ukraine, Russia, there'd be some

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Speaker 7: sort of resolution with Iran Israel. Those are going to

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Speaker 7: be very positive for those regions. I think Germany can

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Speaker 7: Actually this might help Germany out of the slump, especially

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Speaker 7: if Ukraine's given these dollar reserves to rebuild. Poland I

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Speaker 7: think is going to be a huge beneficiary of this.

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Speaker 7: I think in the next few years you're going to

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Speaker 7: see Poland's importance grow more and more. And even when

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Speaker 7: Vance talks about pulling troops out of Germany, at least

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Speaker 7: in the past Trump administration, it was pulling troops out

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Speaker 7: of Germany and putting them in the Baltics, putting them

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Speaker 7: in Poland for two reasons. One closer to Russia, so

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Speaker 7: more important, and two this goes back to Trump. Having

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Speaker 7: a US military base in your country provides huge economic

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Speaker 7: benefits to that country. Right, the military spends money, the

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Speaker 7: people there spend money. So if Germany's not spending their

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Speaker 7: three percent, let's give it to the Baltics who are

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Speaker 7: spending their three percent. Let's give it to Poland, who's

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Speaker 7: done a lot. So I think there's going to be

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Speaker 7: a lot of you know, thought about this and it's

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Speaker 7: not simplistic.

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Speaker 1: Do you think that maybe then the long dollar trade

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Speaker 1: is crowded because right now what we're seeing is actually

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Speaker 1: a push towards the rest of the world. Gets your

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Speaker 1: house in order.

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Speaker 7: Yes, So I would say right now the portfolio we're

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Speaker 7: recommending people is very contrayan. But we still like despite

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Speaker 7: all the friction that we see with China, despite China

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Speaker 7: as national security threat number one, FXI and k web

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Speaker 7: By thinking you're going to continue to do to well,

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Speaker 7: they're heavily under owned.

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Speaker 6: China's trying to do its own thing.

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Speaker 7: Trump seems to back off and then periodically I think

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Speaker 7: that could explode higher. I like European stocks, and I

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Speaker 7: do like the chip makers in the US, but I

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Speaker 7: like the ones that can be domestic chip makers. I

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Speaker 7: think you're seeing more and more of this. We've been

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Speaker 7: talking about it since day one of Trump. He wants

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Speaker 7: a domestic chip industry. We need to be able to

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Speaker 7: make chips. That's going to be part of national security.

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Speaker 7: I think that's just starting to take off. And we've

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Speaker 7: seen some single stock reactions this week that I think

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Speaker 7: are just the beginning of what can come.

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Speaker 5: Everything you're saying to me, I keep thinking Trump is

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Speaker 5: very transactional, this nuance, this idea of pulling troops out

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Speaker 5: of Germany, but not to pull them out of Europe,

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Speaker 5: but put them in the Baltics. Isn't that what the

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Speaker 5: Europeans are Going back to Jonathan's point, Trump yesterday saying

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Speaker 5: he liked to see Putin back at the table to

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Speaker 5: the G eight. Well, Russia was kicked out because of

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Speaker 5: annexation illegal annexation of Crimea. At the same time Germany

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Speaker 5: was still willing to build Lord Stream too years later.

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Speaker 7: Yeah, and one thing I would say, there's I think

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Speaker 7: one thing. Europe's getting a little bit ahead of itself.

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Speaker 7: I don't think Russia is coming back to deliver cheap

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Speaker 7: gas to Germany anytime soon.

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Speaker 6: I think Russia's really moved on.

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Speaker 7: They're like, well, China's going to be a better customer,

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Speaker 7: India is going to be a better customer. They're both

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Speaker 7: going to be buying fossil fuels for fifty year in

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Speaker 7: the future. Germany wakes up every day saying we're not

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Speaker 7: going to use fossil fuels ever again, and then uses

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Speaker 7: fossil fuels. So I don't think you're going to see this,

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Speaker 7: you know, return to what it was. That switch has

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Speaker 7: been broken. It's not coming back. I think the US

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Speaker 7: has a better chance of establishing relationships with this And

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Speaker 7: the other thing I think.

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Speaker 6: You pointed out earlier is tariffs.

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Speaker 7: Trump is going to be carrot and stick with everyone.

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Speaker 7: Here's what you get if you behave nicely.

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Speaker 6: Here's what you know.

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Speaker 7: And that may work, it may backfire. That's going to

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Speaker 7: be the big question.

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Speaker 5: So right now, what do you think he wants his

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Speaker 5: major concessions when it comes to teriffs.

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Speaker 7: I think he does want something that allows us manufacturing

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Speaker 7: to grow, something that makes it easier to build things here.

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Speaker 7: And of all things we look at, I think the

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Speaker 7: one he's most committed to and the one where we

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Speaker 7: might get subsidies is the chip industry. I think everything

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Speaker 7: else would be nice. I think that's a must have.

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Speaker 7: And so when you think about must haves, it's the

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Speaker 7: chip industry.

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Speaker 2: You said, the GI who said it would be the GI.

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Speaker 5: You're thinking Canada gets kicked out because they'll be part

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Speaker 5: of the fifty first state, so.

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Speaker 2: Then it's still the G seven.

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Speaker 4: Just stand up in minded.

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Speaker 6: I know that's what you're thinking.

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Speaker 5: If you said it to me yesterday.

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Speaker 2: The pressure was building into these comforts again on Canada yesterday,

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Speaker 2: wasn't it.

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Speaker 6: What's that all about?

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Speaker 3: You know?

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Speaker 7: I think again that's why I found what he says

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Speaker 7: about Canada, for example, versus what he did on your

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Speaker 7: global tariffs so interesting. So if you're Canada in Mexico

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Speaker 7: right now or even some extent China, you're still facing

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Speaker 7: the first round of tariffs and your fentanyl negotiations. Then

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Speaker 7: you got slapped with twenty five percent on aluminum steel,

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Speaker 7: and now there's this vague talk about reciprocals and what

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Speaker 7: are you even negotiating now? I think his message was

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Speaker 7: too muddled yesterday. I think markets took it comfortably because Okay,

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Speaker 7: this isn't going anywhere. I think that's where he gets

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Speaker 7: disappointed in the next few days, when people don't show

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Speaker 7: up to kiss the ring, don't come saying, hey, President Trump,

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Speaker 7: what do.

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Speaker 6: We need to do?

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Speaker 7: And that's when I think he ups the rhetoric because

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Speaker 7: he does want people to come to the table. I

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Speaker 7: just don't think yesterday's message brings people to the table.

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Speaker 2: Right now, the marcut's not taking a seriously, that's for Showupay,

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Speaker 2: it's going to say as a wis pit a chair

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Speaker 2: that academy, let's get you to I love Oshatagas who

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Speaker 2: joins us now, Janet, I think a tough question. What

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Speaker 2: do you say to clients at the moment? Who asks you, Jeanette,

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Speaker 2: what do you think is going to happen on April first?

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Speaker 2: What'd you tell them?

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Speaker 6: So?

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Speaker 8: I think the one thing that we've noticed is that

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Speaker 8: it is important to have a difference between tariffs on

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Speaker 8: China and tariffs on the rest of the world. We

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Speaker 8: have noticed that Trump has proposed tariffs several times and

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Speaker 8: in the beginning for four weeks of his administration, but

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Speaker 8: only the tariffs on China the additional ten percent, have

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Speaker 8: actually gone into effect. Everything else seems to be up

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Speaker 8: for negotiation. So we did have Canada and Mexico already negotiate,

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Speaker 8: We had Columbia already negotiate. They're setting up a timeframe

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Speaker 8: saying you have basically until April first to start making

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Speaker 8: some offers. Obviously, you had Prime Minister Mody coming into

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Speaker 8: Washington yesterday. He came ready to offer some things to

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Speaker 8: Trump to try to fix that reciprocal trade relationship with

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Speaker 8: the US. And also the fact that these tariffs were

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Speaker 8: announced while jd. Vance is in Europe for the Munich

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Speaker 8: Security Conference is also important to try to say Europe,

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Speaker 8: you need to do something to change the relationship with

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Speaker 8: the United States.

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Speaker 5: Well, Janette, we do have the head of the European

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Speaker 5: Parliament Trade Committee saying that they're willing to lower the

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Speaker 5: tariff when it comes to autos. What else could Europe

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Speaker 5: give the United States in terms of concessions in these negotiations.

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Speaker 8: So I think definitely the autos has been a thorn

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Speaker 8: in Trump's side for quite some time. So getting that

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Speaker 8: rate down from ten percent to closer to two point

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Speaker 8: five and matching the US rate would be quite important. Obviously,

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Speaker 8: US l G has also been really important during the

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Speaker 8: entire Ukraine conflict. I think that Trump is definitely looking

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Speaker 8: for Europe to buy and more US LERG and then

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Speaker 8: also defense. So I think one of the things that

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Speaker 8: plays into Trump talking about lowering US defense spending is

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Speaker 8: also having other countries, including India, including Europe, buy more

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Speaker 8: US defense products and equipment, and so that I think

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Speaker 8: also kind of goes into this piece where they're trying

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Speaker 8: to get Europe to pay more for its own defense

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Speaker 8: and be less reliant on the United States, but still

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Speaker 8: purchase more things from the U States.

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Speaker 1: Jane, We've been speculating about some of these proposals for

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Speaker 1: a while. What specifically did we learn yesterday from a

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Speaker 1: proposal that was really light in details.

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Speaker 8: So I think the point is is that this could

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Speaker 8: also be One of the things that I thought was

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Speaker 8: very interesting is that Trump did say this might be

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Speaker 8: somewhat of a replacement for his universal tariff that he

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Speaker 8: proposed to do a ten percent tariff on all countries.

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Speaker 8: This is a way that they have a new trade

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Speaker 8: law that they're using. It's not busy, it's an old

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Speaker 8: trade law that hasn't been used, but that's where they're

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Speaker 8: looking to actually apply this. But it's saying that this

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Speaker 8: is also more of a one on one basis, saying

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Speaker 8: that whatever that country's tariff rate on the US is,

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Speaker 8: if they lower it, that is an ability to avoid

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Speaker 8: the tariffs or to change other non tariff barriers that

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Speaker 8: are impeding US trade. So it shows that there's actually

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Speaker 8: a lot of room for negotiation for changes to avoid

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Speaker 8: these terraffs from going into effect, and also shows that

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Speaker 8: it could be done a more one on one basis

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Speaker 8: rather than a broad universal tariff. I think Trump is

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Speaker 8: really trying to focus on countries with which the US

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Speaker 8: has large trade deficits. Those are countries like China, Mexico, Vietnam, Japan,

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Speaker 8: South Korea, Thailand. Those are really probably where he's going

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Speaker 8: to be focused India as well, actually, but those are

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Speaker 8: whereas going to be focused on, and then he can

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Speaker 8: kind of move on to other countries. But I think

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Speaker 8: that is kind of what we saw is a little

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Speaker 8: bit of a change there where you see it could

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Speaker 8: be a little bit less broad in the sense of

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Speaker 8: going after the entire all imports coming into the United States,

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Speaker 8: but also still shows that there is this room for negotiation.

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Speaker 1: Just quickly, Marcus are taking this as an idea that

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Speaker 1: maybe this president doesn't want tariffs for tariff's sake to

442
00:18:31,240 --> 00:18:33,520
Speaker 1: raise money. Do you think it's fair to discount that

443
00:18:33,560 --> 00:18:34,600
Speaker 1: at this point?

444
00:18:35,520 --> 00:18:39,119
Speaker 8: So I think he does want tariffs for the revenue purposes, obviously,

445
00:18:39,200 --> 00:18:41,520
Speaker 8: the Congress does have to pass a large text bill.

446
00:18:41,760 --> 00:18:44,359
Speaker 8: Congress is not going to legislate on tariffs, but having

447
00:18:44,440 --> 00:18:48,159
Speaker 8: that revenue come into the treasury is certainly something that

448
00:18:48,200 --> 00:18:49,919
Speaker 8: he could point to to say that this is not

449
00:18:49,960 --> 00:18:53,640
Speaker 8: going to cost as much as it has been perceived,

450
00:18:53,960 --> 00:18:56,800
Speaker 8: especially when we're looking at the deficit concerns, particularly coming

451
00:18:56,800 --> 00:18:59,240
Speaker 8: out of the House Conservatives. But I do also think

452
00:18:59,240 --> 00:19:02,240
Speaker 8: that it's not that he wants to necessarily have terariffs

453
00:19:02,240 --> 00:19:04,680
Speaker 8: in place just to have terarifs in place. He wants changes.

454
00:19:04,920 --> 00:19:07,240
Speaker 8: He wants other countries to make changes that are more

455
00:19:07,280 --> 00:19:10,480
Speaker 8: beneficial to the United States, saying repeatedly that he thinks

456
00:19:10,480 --> 00:19:12,960
Speaker 8: that the US has been treated poorly, and I think

457
00:19:13,040 --> 00:19:14,720
Speaker 8: that is more ultimately his goal.

458
00:19:14,880 --> 00:19:28,120
Speaker 2: Jenette appreciate the update. Thank you Janeto as statiguus joining

459
00:19:28,160 --> 00:19:30,800
Speaker 2: us around the time. Well, Lindsay, pix a stainful. A

460
00:19:30,800 --> 00:19:33,800
Speaker 2: whole bunch of headwinds have held bad the consumer consumer

461
00:19:33,880 --> 00:19:36,000
Speaker 2: centima we've seen that be hit in the last month

462
00:19:36,080 --> 00:19:37,320
Speaker 2: or so. Is it hurting spending?

463
00:19:37,720 --> 00:19:40,920
Speaker 9: Well, clearly, I think this number really starts to poke

464
00:19:41,000 --> 00:19:43,600
Speaker 9: some of the holes into the thesis that we see

465
00:19:43,600 --> 00:19:46,960
Speaker 9: this ongoing resilience of the consumer. Now, broadly speaking, we

466
00:19:47,000 --> 00:19:49,840
Speaker 9: continue to see the consumer spend in the marketplace on

467
00:19:49,920 --> 00:19:53,120
Speaker 9: goods and services, but it's that loss of momentum. It's

468
00:19:53,119 --> 00:19:56,440
Speaker 9: that second derivative decline of the consumer slowing the pace

469
00:19:56,840 --> 00:19:59,640
Speaker 9: of still positive expenditures. Now, Lisa, as you pointed out,

470
00:20:00,080 --> 00:20:03,160
Speaker 9: a lot of this weakness is offset by earlier upward

471
00:20:03,200 --> 00:20:07,440
Speaker 9: revisions to prior months. That being said, they're clearly still

472
00:20:07,520 --> 00:20:11,080
Speaker 9: challenges facing the consumer in this environment of higher prices,

473
00:20:11,200 --> 00:20:14,880
Speaker 9: higher borrowing costs, the resumption of student debt payments. There's

474
00:20:14,920 --> 00:20:17,840
Speaker 9: still a lot of challenges facing the average American and

475
00:20:17,880 --> 00:20:19,320
Speaker 9: the average household balance shape.

476
00:20:19,359 --> 00:20:21,520
Speaker 1: I feel like we're whipsawd in terms of a narrative

477
00:20:21,560 --> 00:20:24,119
Speaker 1: every day. One day it's weakness that potentially could be

478
00:20:24,119 --> 00:20:27,040
Speaker 1: the biggest headwind to the market this year. The other

479
00:20:27,119 --> 00:20:29,480
Speaker 1: it could be inflationary in an upwoard growth shock.

480
00:20:29,680 --> 00:20:31,320
Speaker 6: Which is it, well, I think it goes together.

481
00:20:31,359 --> 00:20:33,720
Speaker 9: I think inflation is one of the biggest challenges that

482
00:20:33,720 --> 00:20:37,720
Speaker 9: we're seeing way on consumers at this point. As consumers

483
00:20:37,760 --> 00:20:41,000
Speaker 9: are forced to face this burden of elevated prices as

484
00:20:41,040 --> 00:20:43,720
Speaker 9: they have been for years, that's going to continue to

485
00:20:43,760 --> 00:20:46,920
Speaker 9: erode their ability to spend in the marketplace. Now we've

486
00:20:46,920 --> 00:20:49,920
Speaker 9: seen consumers turn to many of these one off scenarios

487
00:20:50,000 --> 00:20:53,400
Speaker 9: by now pay later turning to credit cards with balances

488
00:20:53,440 --> 00:20:57,240
Speaker 9: over now one point two trillion dollars. But as that

489
00:20:57,520 --> 00:21:01,879
Speaker 9: burden continues to increase, that's going to ameliorate their ability

490
00:21:02,240 --> 00:21:04,800
Speaker 9: to find these additional supplements to continue to spend at

491
00:21:04,840 --> 00:21:07,600
Speaker 9: this pace. So we've gone from double digit spending down

492
00:21:07,640 --> 00:21:10,280
Speaker 9: to eight, down to six. We're now averaging just under

493
00:21:10,359 --> 00:21:13,320
Speaker 9: three percent since the start of twenty twenty three. That's

494
00:21:13,359 --> 00:21:17,119
Speaker 9: still indicative of a solid two percent GDP pace, but

495
00:21:17,760 --> 00:21:22,439
Speaker 9: if we slow further from here, that could start to

496
00:21:22,480 --> 00:21:26,000
Speaker 9: add to the momentum of a stagflation storyline.

497
00:21:26,040 --> 00:21:28,440
Speaker 1: So the pushback that we get from the stagflation fears

498
00:21:28,760 --> 00:21:31,480
Speaker 1: is if you actually look at the data inside of

499
00:21:31,480 --> 00:21:34,320
Speaker 1: some of the inflation metrics, it's not that bad, and

500
00:21:34,359 --> 00:21:37,840
Speaker 1: it's steadily disinflationary, and it really just matters core PCEE,

501
00:21:38,000 --> 00:21:40,399
Speaker 1: which is fine, and everything else is just noise. Do

502
00:21:40,400 --> 00:21:41,359
Speaker 1: you agree.

503
00:21:41,640 --> 00:21:44,199
Speaker 9: I think we've seen a lot of improvement from earlier

504
00:21:44,240 --> 00:21:46,359
Speaker 9: peak levels. I don't want to throw cold water on

505
00:21:46,400 --> 00:21:49,480
Speaker 9: the improvement that we've seen, but we are not in

506
00:21:49,520 --> 00:21:53,560
Speaker 9: a clear disinflationary environment at this point as of last year,

507
00:21:53,640 --> 00:21:56,440
Speaker 9: a lot of noise, a lot of volatility in the metrics,

508
00:21:56,720 --> 00:21:59,399
Speaker 9: and more recently we've seen not just a move sideways,

509
00:21:59,720 --> 00:22:04,320
Speaker 9: but upward acceleration for four consecutive months in the PPI

510
00:22:04,440 --> 00:22:07,000
Speaker 9: and the CPI and some of the core metrics. The

511
00:22:07,040 --> 00:22:11,280
Speaker 9: supercore CPI housing alone double the two percent target. So

512
00:22:11,520 --> 00:22:14,680
Speaker 9: with that acceleration, we expect the PC and the core

513
00:22:14,760 --> 00:22:17,920
Speaker 9: PC to remain closer to two and a half percent,

514
00:22:18,280 --> 00:22:22,080
Speaker 9: which still perpetuates the concern then of choking off upside

515
00:22:22,080 --> 00:22:23,080
Speaker 9: potential for growth.

516
00:22:23,359 --> 00:22:26,560
Speaker 1: We're dominated by headlines about policy changes that could be

517
00:22:26,640 --> 00:22:29,760
Speaker 1: coming down the pike, and we are awaiting a discussion

518
00:22:29,840 --> 00:22:33,200
Speaker 1: from JD. Vance And I'm wondering, from your perspective, how

519
00:22:33,320 --> 00:22:37,359
Speaker 1: quickly some of what's being discussed percolate into the economic

520
00:22:37,440 --> 00:22:39,439
Speaker 1: data and backdrop that you're seeing.

521
00:22:39,440 --> 00:22:42,240
Speaker 9: Well, it can certainly add to the uncertainty in the marketplace.

522
00:22:42,280 --> 00:22:44,840
Speaker 9: It can add to the uncertainty we see in consumer confidence,

523
00:22:44,880 --> 00:22:47,159
Speaker 9: and I think that was in good part behind that

524
00:22:47,280 --> 00:22:48,920
Speaker 9: drop that we saw at the start of the year.

525
00:22:49,240 --> 00:22:52,080
Speaker 9: But in terms of filtering into the actual price data

526
00:22:52,600 --> 00:22:56,000
Speaker 9: that I think will be extended out probably about six

527
00:22:56,040 --> 00:23:00,000
Speaker 9: months or so because businesses have already responded in anticipate

528
00:23:01,160 --> 00:23:04,000
Speaker 9: of those tariffs, of those higher prices, so a lot

529
00:23:04,040 --> 00:23:07,040
Speaker 9: of that inventory build has already been taken into account.

530
00:23:07,320 --> 00:23:09,359
Speaker 9: So we're not going to see that filter into the

531
00:23:09,359 --> 00:23:12,280
Speaker 9: price metrics for some time, but again it will continue

532
00:23:12,320 --> 00:23:14,399
Speaker 9: to cause near term volatility and uncertainty.

533
00:23:14,520 --> 00:23:16,359
Speaker 2: Lindsay, it's great to catch up with you, as always,

534
00:23:16,480 --> 00:23:19,679
Speaker 2: very Lindsaypix of there as Steve Fuller. This is the

535
00:23:19,720 --> 00:23:24,960
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536
00:23:25,240 --> 00:23:27,720
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537
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