WEBVTT - Bloomberg Surveillance TV: November 14th, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Ameri Hordert. Join us each day 0:00:18.760 --> 0:00:22.280 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:37.199 Terminal and the Bloomberg Business app. And Victoria Fernandez of 0:00:37.240 --> 0:00:40.519 Crossmark warning against chasing this market. She writes, we have 0:00:40.560 --> 0:00:44.720 seen this story before. Breath deterioration coupled with bullish sentiment 0:00:44.800 --> 0:00:47.600 can lead to five to ten percent pullbacks, and we 0:00:47.640 --> 0:00:51.640 wouldn't be surprised if the story repeated itself here. Victoria 0:00:51.920 --> 0:00:54.040 joined us. Now for more, Victoria, welcome. I'm going to 0:00:54.120 --> 0:00:55.800 kick things off with the same question that I asked 0:00:55.800 --> 0:00:57.840 George can Carve us about an hour ago. Have you 0:00:57.880 --> 0:00:59.760 ever seen a free cat like this one over to 0:00:59.760 --> 0:01:01.960 two to three percent pullback on the S and P 0:01:02.080 --> 0:01:02.720 five hundred. 0:01:03.960 --> 0:01:07.319 Yeah, I mean yes, we have seen these pullbacks before, 0:01:07.319 --> 0:01:09.520 and it was what you were just talking about. When 0:01:09.560 --> 0:01:12.480 we have that breadth deterioration in this market, when you 0:01:12.520 --> 0:01:16.120 have this internal weakness kind of bubbling under the surface, 0:01:16.120 --> 0:01:18.759 but at the same time you have this, for lack 0:01:18.800 --> 0:01:20.560 of a better word, you have this exuberance, you have 0:01:20.680 --> 0:01:25.240 this sentiment that is extremely bullish. At some point those 0:01:25.280 --> 0:01:28.039 two worlds start to collide and you see this pullback. 0:01:28.319 --> 0:01:30.600 But look, Jonathan, we are still. 0:01:30.600 --> 0:01:33.400 Not that far below all time highs really when we 0:01:33.440 --> 0:01:36.000 look at the markets as a whole. So I still 0:01:36.040 --> 0:01:39.520 think there's probably some room to see more pullback, especially 0:01:39.600 --> 0:01:42.199 when you're seeing small caps down as much as they are. 0:01:42.520 --> 0:01:45.119 We know the tech stocks kind of led this rally. 0:01:45.200 --> 0:01:48.160 We see them leading the pullback we're having here, But 0:01:48.280 --> 0:01:51.560 I do think some of the internal weakness is driving this, 0:01:51.920 --> 0:01:52.600 and the fact that. 0:01:52.560 --> 0:01:54.280 The government shut down is now over. 0:01:54.560 --> 0:01:56.800 I think investors are starting to look and go, wait 0:01:56.800 --> 0:01:59.440 a minute, we've been ignoring some of these facts that 0:01:59.480 --> 0:02:01.480 have been out Here are some of these warning signs. 0:02:01.680 --> 0:02:03.680 Now they're starting to pay attention to it, and we're 0:02:03.680 --> 0:02:06.640 getting a little bit of a consolidation of a correction here. 0:02:06.880 --> 0:02:09.040 This is going to sound slightly cliche, but I'm going 0:02:09.080 --> 0:02:11.120 to run with it. Just how strong are the hands 0:02:11.120 --> 0:02:13.480 in this market right now? Victoria I was listening to 0:02:13.520 --> 0:02:17.080 Amy bu Silverman of RBC earlier on this morning. She 0:02:17.160 --> 0:02:19.280 tuned into Bloomberg Radio and she phoned in and she 0:02:19.320 --> 0:02:22.080 said something, Mike, I would describe people at the moment 0:02:22.120 --> 0:02:25.760 as fully invested. Bess how fragile has the buying actually been. 0:02:26.880 --> 0:02:29.080 I think that's a great description of where a lot 0:02:29.120 --> 0:02:29.840 of investors are. 0:02:29.840 --> 0:02:32.240 It's where a lot of our clients, I think, feel 0:02:32.280 --> 0:02:33.960 like they are because we tell them you want to 0:02:33.960 --> 0:02:36.960 be invested in this market. The pulldown that we've seen 0:02:37.040 --> 0:02:40.359 so far has not changed the trends. The trends are 0:02:40.400 --> 0:02:44.280 still higher. Until we see the trends change, we see 0:02:44.360 --> 0:02:49.000 negative relative performance coming out of some of these leadership sectors, 0:02:49.280 --> 0:02:52.040 and staples start to perform a lot better. 0:02:51.960 --> 0:02:52.440 Than I think. 0:02:52.480 --> 0:02:55.519 You continue to see the market, although it will churn, 0:02:55.880 --> 0:02:58.600 you will continue to see it move higher. And that's 0:02:58.600 --> 0:03:00.840 why you want to be invested in the market. But 0:03:00.919 --> 0:03:03.680 there are these warning signals. We haven't been getting the 0:03:03.760 --> 0:03:06.200 data we're about to get it. What is it going 0:03:06.240 --> 0:03:08.280 to tell us? Is it going to say we're weaker 0:03:08.320 --> 0:03:10.240 than what we thought some of the private data was 0:03:10.280 --> 0:03:11.320 actually telling us. 0:03:11.680 --> 0:03:14.480 If so, then yes, you will continue to have. 0:03:14.480 --> 0:03:17.079 Some spaces where you want to put some defensive components 0:03:17.160 --> 0:03:20.440 in your portfolio. So it does make sense it is 0:03:20.600 --> 0:03:24.120 fully invested, but a little bit of a bearish outlook Victoria. 0:03:24.240 --> 0:03:26.560 Just to build on what John was asking about, it 0:03:26.600 --> 0:03:30.160 does seem like institutional investors are fully invested, especially if 0:03:30.160 --> 0:03:32.200 they missed out in the rally or earlier this year. 0:03:32.639 --> 0:03:35.520 It does seem low though, Like there is retail selling 0:03:35.760 --> 0:03:37.040 and when you take a look at some of the 0:03:37.120 --> 0:03:39.920 high momentum sides of the market, that's what's. 0:03:39.880 --> 0:03:41.760 Led the draw down. It raises this question. 0:03:42.040 --> 0:03:46.200 Earlier this year retail and buying actually led to the upside, 0:03:46.240 --> 0:03:48.680 and investors chase that is this going to be the 0:03:48.720 --> 0:03:53.280 reverse of that retail selling and then eventually institutions chasing 0:03:53.320 --> 0:03:55.240 that as well, or are they stepping in to actually 0:03:55.320 --> 0:03:55.920 pick this up. 0:03:56.880 --> 0:03:59.280 Yeah, Unfortunately, I think you do see a lot of 0:03:59.280 --> 0:04:02.520 the retails chasing that market, and like you said, the 0:04:02.640 --> 0:04:06.800 reverse right now, institutional investors tend to take a little 0:04:06.840 --> 0:04:08.760 bit of a longer term approach, and so they are 0:04:08.840 --> 0:04:12.080 slower to move on some of these changes, they look 0:04:12.080 --> 0:04:14.040 and say, what are we looking at three, six, nine, 0:04:14.120 --> 0:04:16.760 twelve months out. Retail investors tend to be a little 0:04:16.760 --> 0:04:20.080 bit more emotional investors, and so you see things change 0:04:20.080 --> 0:04:23.240 more quickly and more turnover, and some of those portfolios. 0:04:23.600 --> 0:04:26.240 We have said all along, don't chase this market. Let 0:04:26.320 --> 0:04:28.880 it come to you. There's going to be an opportunity 0:04:28.920 --> 0:04:31.560 here because of the weakness that we saw in Breadth 0:04:31.640 --> 0:04:33.479 and internally that the market's going to come to you, 0:04:33.520 --> 0:04:35.800 and that's what it's doing right now. So I would 0:04:35.800 --> 0:04:38.520 actually take this as an opportunity to add to some 0:04:38.560 --> 0:04:40.680 of the names that you've liked. Some of the sectors 0:04:40.680 --> 0:04:43.680 that you're starting to see troughs and see up trends. 0:04:43.800 --> 0:04:46.440 We've talked about them before. You look at healthcare, you 0:04:46.480 --> 0:04:48.880 look at the big banks, you look at some of 0:04:48.920 --> 0:04:51.880 the materials components and the metals that are. 0:04:51.760 --> 0:04:53.600 There, and even energy. 0:04:54.040 --> 0:04:56.160 We saw about forty percent of the S and P 0:04:56.400 --> 0:04:59.680 energy sector actually make three month highs earlier this week. 0:05:00.080 --> 0:05:03.040 I think there's some places you can play. Institutional investors 0:05:03.040 --> 0:05:06.240 will start stepping into that, but retail investors tend to 0:05:06.279 --> 0:05:08.080 be a little bit more emotional and move with what 0:05:08.080 --> 0:05:09.560 they're seeing in the headlines. 0:05:09.200 --> 0:05:11.320 You didn't mention tech Victoria, and I do think that 0:05:11.360 --> 0:05:13.200 we have to focus on that, given the fact that 0:05:13.240 --> 0:05:15.479 not only has the tone shifted, but there's been a 0:05:15.520 --> 0:05:18.279 shift in the fundamentals of some of these companies. Not 0:05:18.320 --> 0:05:20.800 that they're not earning tons of money, but it does 0:05:20.839 --> 0:05:23.240 seem like the debt issue ins of the past few 0:05:23.279 --> 0:05:26.280 months has really caused some concern. You are seeing bond 0:05:26.279 --> 0:05:29.120 markets start to push back, You're seeing concessions in some 0:05:29.200 --> 0:05:31.599 of the new issue market. You are seeing some bonds 0:05:31.800 --> 0:05:33.919 lose a ton of value, particularly from Oracle. I'm just 0:05:33.960 --> 0:05:36.000 wondering if this is a warning shot to you that 0:05:36.080 --> 0:05:38.360 there has been a material shift in the tech sector 0:05:38.560 --> 0:05:40.159 and greater risk going forward. 0:05:41.160 --> 0:05:44.400 It's definitely a warning signal, Lisa. You know, we watch 0:05:44.440 --> 0:05:47.719 spreads very closely in the bond market. They are a 0:05:47.720 --> 0:05:50.920 warning signal, that canary and the coal mine to tell 0:05:50.960 --> 0:05:53.640 you what's happening. And we've seen the widening over the 0:05:53.720 --> 0:05:57.240 last month and even over the last quarter year to date, 0:05:57.360 --> 0:05:58.840 we're about equal. 0:05:58.520 --> 0:06:00.920 At this point in time. We been extremely tight. 0:06:01.040 --> 0:06:03.839 We've seen spreads wide now and yes, when it comes 0:06:03.880 --> 0:06:06.480 to tech, you're seeing large issuance come out, and it's 0:06:06.480 --> 0:06:08.680 been a question for a while, how are a lot 0:06:08.720 --> 0:06:11.400 of these companies going to pay for what they're saying 0:06:11.400 --> 0:06:13.960 they're going to do, and how is that going to 0:06:14.000 --> 0:06:16.640 aff affect free cash flow? How is that going to 0:06:16.960 --> 0:06:19.360 affect their debt ratios? And we're seeing some of that 0:06:19.400 --> 0:06:22.360 come to fruition. Now we're seeing some concerns about what 0:06:22.400 --> 0:06:25.440 that means longer term, especially if we're not getting the 0:06:25.480 --> 0:06:28.279 revenue generation that a lot of these companies say they're 0:06:28.320 --> 0:06:31.120 going to. So definitely something to watch and to be 0:06:31.240 --> 0:06:33.680 careful on when you're looking at the debt market. 0:06:33.800 --> 0:06:37.719 These companies Victoria seem absolutely determined to spend They've said 0:06:37.760 --> 0:06:41.400 that repeatedly. They are determined not to underinvest, and they 0:06:41.440 --> 0:06:44.719 don't mind taking the risk of over investing. Do you 0:06:44.760 --> 0:06:46.719 really see this market in a position at the moment 0:06:46.720 --> 0:06:50.240 at least to inflict discipline on those hyperscalis who are 0:06:50.320 --> 0:06:53.680 absolutely determined to spend hundreds of billions of dollars on 0:06:53.720 --> 0:06:54.280 this effort. 0:06:55.560 --> 0:06:58.240 Discipline is an interesting word, Donathan. I'm not sure that 0:06:58.279 --> 0:06:58.720 they are. 0:06:59.360 --> 0:07:02.560 These investors right now look at these companies and they 0:07:02.640 --> 0:07:05.360 believe what they're telling them, they're saying Okay, even though 0:07:05.400 --> 0:07:07.640 we saw free cash flow taking Vida out of the 0:07:07.640 --> 0:07:11.160 equation down almost twenty percent year over year for a 0:07:11.160 --> 0:07:13.880 lot of these companies, and now we're seeing debt issuants 0:07:13.960 --> 0:07:16.560 move higher, investors still say they're going to be able 0:07:16.600 --> 0:07:18.880 to do what they're doing. You heard Lisa Sue this 0:07:18.880 --> 0:07:21.800 week talk about eighty percent revenues from data centers for 0:07:21.800 --> 0:07:24.559 the next three to five years year over year. That's 0:07:24.600 --> 0:07:27.880 a lot of positivity coming from these companies. 0:07:27.880 --> 0:07:29.800 But yet at the same time, we're hearing. 0:07:30.200 --> 0:07:33.480 Builders can't deliver on data centers where there's not enough 0:07:33.560 --> 0:07:36.200 energy and power for some of these data centers. So 0:07:36.280 --> 0:07:38.760 I would be a little more skeptical than maybe the 0:07:38.880 --> 0:07:41.640 average investor is. But you know, I'm a bond girl 0:07:41.680 --> 0:07:43.440 at heart, so that makes sense that I would be 0:07:43.480 --> 0:07:46.160 a little more cautious. But I do think for now 0:07:46.360 --> 0:07:48.840 they are taking these companies out their word because their 0:07:48.880 --> 0:07:52.560 earnings are supporting it. The minute we don't see earning supportive, 0:07:52.960 --> 0:07:54.240 that's when I think you'll see it all. 0:07:54.280 --> 0:07:56.120 Flip Victoria, so how are you handling this? 0:07:56.280 --> 0:07:59.200 Are you selling tech stocks and selling the bonds as well? 0:07:59.280 --> 0:08:01.960 Are you buying this docs selling the credit? How are 0:08:01.960 --> 0:08:02.440 you playing it. 0:08:03.440 --> 0:08:07.080 Yeah, So we're trimming on some of our big tech names, 0:08:07.240 --> 0:08:09.360 but also we want to stay within you know, we 0:08:09.560 --> 0:08:11.680 parameters within the benchmark of where we need to be 0:08:11.760 --> 0:08:14.760 on these and because there's such strong holdings in the benchmark, 0:08:15.000 --> 0:08:17.400 we can't just eliminate these holdings completely. 0:08:17.440 --> 0:08:19.160 You have to have exposure to them. 0:08:19.320 --> 0:08:22.040 But we are taking the opportunity to put it to 0:08:22.080 --> 0:08:24.800 work into other areas, both on the equity side and 0:08:24.960 --> 0:08:28.240 on debt. And looking at that debt like seven to 0:08:28.280 --> 0:08:30.920 ten years out, we're starting to see the yield curve 0:08:30.960 --> 0:08:33.720 steep in. That two to thirty spread was a like 0:08:33.840 --> 0:08:36.200 sub one hundred and an hour about one fifteen, so 0:08:36.240 --> 0:08:37.760 we're starting to steep in a little bit. 0:08:38.040 --> 0:08:39.439 It's good for financials. 0:08:39.480 --> 0:08:41.920 That's our main area of where we're looking, but we're 0:08:41.920 --> 0:08:46.120 also looking at healthcare, buying some bonds and some equity there, 0:08:46.280 --> 0:08:48.320 and then like I said, looking at materials a little 0:08:48.320 --> 0:08:50.480 bit as well. I think those areas on both sides 0:08:50.520 --> 0:08:52.880 of the equation you can have in your portfolio. 0:08:54.320 --> 0:08:57.800 Stay with us. Mulblomberg Savannah's coming up off to this 0:09:06.720 --> 0:09:09.760 Official Economics data sets a return after they record long 0:09:09.800 --> 0:09:12.800 government shutdown delayed releases for more than a month. Joining 0:09:12.840 --> 0:09:15.720 us now the former BLS Commissioner, Bill Beach, But welcome 0:09:15.760 --> 0:09:17.640 back to the program. Can you give us some insight 0:09:17.679 --> 0:09:20.120 into how the BLS will be operating at the moment 0:09:20.480 --> 0:09:23.720 after a month plus long government shutdown. What the first 0:09:23.840 --> 0:09:25.080 order of business actually is. 0:09:26.440 --> 0:09:28.680 Well, I think they turned the data systems on yesterday. 0:09:28.720 --> 0:09:31.360 It's sort of in that data desert that you just 0:09:31.400 --> 0:09:36.080 referred to, and so hopefully everything rebooted. Well, that's always 0:09:36.480 --> 0:09:39.200 a question. And then they have to ask about the 0:09:39.200 --> 0:09:42.000 field staff. How many people are coming back to work. 0:09:42.280 --> 0:09:45.080 You know, some of those people probably took early retirement 0:09:45.200 --> 0:09:48.080 or retirement. It's kind of an older staff. Anyway, we 0:09:48.160 --> 0:09:50.320 might want to talk about the CPI. Back to the 0:09:50.440 --> 0:09:54.120 jobs report that doctor has it mentioned, It is true 0:09:54.240 --> 0:09:58.560 the jobs number which is acquired from firms through an 0:09:58.600 --> 0:10:03.120 electronic survey. Now BLS will prompt those firms to send 0:10:03.120 --> 0:10:06.319 their survey in electronically to Chicago or Fort Walton Beach 0:10:06.320 --> 0:10:10.280 where those forms are collected, and we will probably have 0:10:10.440 --> 0:10:16.400 a jobs number for October. But the household survey, which 0:10:16.480 --> 0:10:20.040 is collected largely by calling people on the telephone and 0:10:20.120 --> 0:10:22.560 asking them a series of questions, quite a lot, a 0:10:22.559 --> 0:10:26.480 lot of questions. We may never have those data, and 0:10:26.520 --> 0:10:29.199 that includes not only the unemployment rate, but all of 0:10:29.240 --> 0:10:34.360 the breakout by race, by region, labor force participation, all 0:10:34.400 --> 0:10:37.640 those things that are really important for policymakers to follow. 0:10:38.720 --> 0:10:41.120 I'm also concerned about the CPI, but I think on 0:10:41.160 --> 0:10:44.720 the labor side where that'll be the biggest hole. I 0:10:44.800 --> 0:10:47.719 do expect the jobs report to come out for September, 0:10:47.760 --> 0:10:49.440 which was fully collected but not. 0:10:49.400 --> 0:10:52.000 Quite written up yet. I expect that next week. I 0:10:52.040 --> 0:10:52.880 think they're right about that. 0:10:52.880 --> 0:10:55.319 Oh you mentioned inflation a few times. Just describe the 0:10:55.400 --> 0:10:59.240 CPI process, the data collection, how the survey's put together, 0:10:59.559 --> 0:11:01.600 and why so difficult to produce that number. 0:11:02.400 --> 0:11:05.160 So the CPI is collected from the first of the 0:11:05.200 --> 0:11:06.880 month to the end of the month. 0:11:07.360 --> 0:11:10.120 They put as many working days in there as possible, 0:11:10.600 --> 0:11:14.760 and it's largely collected. I'd say about seventy percent of 0:11:14.800 --> 0:11:19.480 all of the observations or goods services are collected by 0:11:19.520 --> 0:11:20.840 people going into stores. 0:11:20.920 --> 0:11:23.000 These are BLS employees. 0:11:22.880 --> 0:11:26.160 And literally going down the aisles and marking down the 0:11:26.160 --> 0:11:30.080 price and seeing how many potato chips are in the bag. 0:11:30.520 --> 0:11:33.920 So it's a labor intensive thing. Now we're starting that 0:11:34.080 --> 0:11:38.120 process probably next Monday. That only gives us two weeks 0:11:38.120 --> 0:11:40.800 to collect four weeks of data. Now, it is true 0:11:40.840 --> 0:11:42.960 that a lot of that data comes in electronically. The 0:11:43.000 --> 0:11:48.040 housing stuff, the gasoline, automobile prices, those are electronically produced 0:11:48.440 --> 0:11:50.359 data from private sources. 0:11:50.440 --> 0:11:52.920 So thirty percent find no problem. But you can't. 0:11:53.480 --> 0:11:55.640 You can't have a CPI with only thirty percent of 0:11:55.679 --> 0:11:59.560 the data. So I'm worried about the CPI. I'm worried 0:11:59.600 --> 0:12:06.439 about the quality of the October CPI, So that's an 0:12:06.440 --> 0:12:10.679 issue and we'll see how that works. The November numbers 0:12:11.320 --> 0:12:14.040 are also at risk because we're going to be collecting 0:12:14.080 --> 0:12:17.520 those November numbers as well as collecting as many of 0:12:17.559 --> 0:12:20.840 the data on the October side as we possibly can. 0:12:21.760 --> 0:12:23.480 That's going to be really dicey, but I think the 0:12:23.520 --> 0:12:26.160 staff is probably up to it. So let me just 0:12:26.200 --> 0:12:30.880 say bottom line, no unemployment rate, no labor force data 0:12:30.920 --> 0:12:33.800 that shows the demographics, and I think people should be 0:12:33.840 --> 0:12:38.760 concerned about the CPI. The PPI is collected largely electronically, 0:12:38.800 --> 0:12:42.640 and of course thet export indexes are entirely collected from 0:12:42.640 --> 0:12:44.800 administrative data from the Commerce Department. 0:12:45.160 --> 0:12:47.640 Bill just quickly here, how much are you seeing the 0:12:47.720 --> 0:12:51.160 reduction in staff for the Bureau of Labor Statistics, just 0:12:51.280 --> 0:12:54.960 generally presenting a problem in both ramping up but also 0:12:55.000 --> 0:12:57.199 going forward presenting the same kind of accurate data. 0:12:58.160 --> 0:13:01.720 Well, at the beginning of the shutdown, we had a 0:13:01.720 --> 0:13:03.960 really firm number. It was about one out of every 0:13:04.000 --> 0:13:09.240 five employees at BLS had quit. But there are two 0:13:09.320 --> 0:13:13.640 areas of really great concern. First off, the field, and 0:13:13.679 --> 0:13:15.760 I've mentioned that several times. You know, so many of 0:13:15.800 --> 0:13:18.640 our data from the Employment Cost Index, which is field 0:13:18.640 --> 0:13:23.960 collected to CPI, the household survey that does the unemployment rate. 0:13:24.040 --> 0:13:26.960 These are labor intensive, so you have to be really 0:13:27.000 --> 0:13:30.000 concerned for the thousand people, one thousand people basically who 0:13:30.040 --> 0:13:32.960 work in the field. We don't know how many of 0:13:32.960 --> 0:13:35.960 those people are coming back to work. Honestly, they're largely 0:13:36.000 --> 0:13:39.600 an older staff, and that means they may have choices 0:13:39.640 --> 0:13:42.040 in whether they work or not work. And then the 0:13:42.080 --> 0:13:44.920 other area that I'm very concerned about is the senior 0:13:45.040 --> 0:13:49.840 leadership of BLS. About thirty one positions that are absolutely crucial, 0:13:50.559 --> 0:13:55.360 and about twelve thirteen of those we think are now vacant. 0:13:55.480 --> 0:13:59.360 That's the largest vacancy rate, ever, and so this is 0:13:59.440 --> 0:14:03.800 expert that just can't be replaced quickly by going out 0:14:03.840 --> 0:14:07.040 to you know, indeed dot com and finding some good 0:14:07.120 --> 0:14:07.680 resume you. 0:14:08.160 --> 0:14:10.680 That's those two areas I'm very concerned about. 0:14:11.840 --> 0:14:12.480 Stay with us. 0:14:12.800 --> 0:14:25.240 More Bloomberg surveillance coming up after this. Wall Street watching 0:14:25.280 --> 0:14:27.400 for fresh trade deals from the White House. The Trump 0:14:27.480 --> 0:14:31.680 administration announcing new framework agreements with Latin American countries as 0:14:31.680 --> 0:14:34.720 tours continue with China. The former White House Senior Trade 0:14:34.720 --> 0:14:37.960 advisor Kellyan Shore, writing, one thing is clear, despite the shutdown, 0:14:38.320 --> 0:14:41.600 USTR has been extremely busy negotiating. 0:14:41.880 --> 0:14:44.200 Kelly Ann joined us now for more. Kelly, I'm welcome back. 0:14:44.200 --> 0:14:46.520 We've been tracking this together since it started back in 0:14:46.560 --> 0:14:48.840 early April, in fact, since the election took place more 0:14:48.880 --> 0:14:51.680 than twelve months ago. Are you seeing this administration and 0:14:51.720 --> 0:14:53.320 White House start to change course a little bit? 0:14:54.520 --> 0:14:56.920 Yeah, good morning, Thanks ver much for having me back on. 0:14:57.600 --> 0:15:00.960 I see directionally, the White House continuing strategy that it 0:15:01.080 --> 0:15:03.400 started with, which is we are going to impose these 0:15:03.560 --> 0:15:07.160 very high tariff rates and then negotiate with trading partners 0:15:07.160 --> 0:15:08.920 to try to land them at a place that's a 0:15:08.960 --> 0:15:12.040 bit more reasonable. And so they're continuing to do so, 0:15:12.160 --> 0:15:15.600 notwithstanding the White House's concern, which is clearly focused on 0:15:15.680 --> 0:15:19.200 the issue of affordability, consumer confidence, how much you're paying 0:15:19.200 --> 0:15:22.000 at the grocery store. Now, on top of this, on 0:15:22.040 --> 0:15:23.960 top of those four deals that were announced, plus we 0:15:24.000 --> 0:15:26.880 had South Korea that framework which was released last night, 0:15:26.960 --> 0:15:30.800 a potential upcoming deal with Switzerland, an interim deal potentially 0:15:30.840 --> 0:15:35.240 with Brazil, you're seeing the White House tees a more 0:15:35.280 --> 0:15:38.920 significant tariff relief package which would really hit Americans at 0:15:38.960 --> 0:15:41.760 the grocery store. Now, this would be a departure from 0:15:41.760 --> 0:15:44.280 where they've been going, but I do think directionally all 0:15:44.280 --> 0:15:47.560 along they've anticipated that they would need to course correct, 0:15:47.920 --> 0:15:51.320 that there would be recalibrations where there had been over corrections. 0:15:51.320 --> 0:15:52.920 So I think we're starting to see the first part 0:15:52.920 --> 0:15:53.160 of this. 0:15:53.280 --> 0:15:56.360 There's some contradictory messaging kit You're well aware of that. 0:15:56.680 --> 0:15:58.760 On the one hand, you're saying that tarifs don't lead 0:15:58.800 --> 0:16:01.080 to higher prices, on the other hand, just saying we 0:16:01.120 --> 0:16:03.440 need to do more on affordability, We're going to drop tariffs. 0:16:03.600 --> 0:16:05.000 How do you massage the messaging? 0:16:06.160 --> 0:16:08.720 Yeah, there was always a little bit of dissonance between 0:16:08.800 --> 0:16:11.960 these two messages, and this was always the White House's 0:16:12.040 --> 0:16:14.680 case to make to the American people that if we 0:16:14.720 --> 0:16:18.040 impose an average fifteen to twenty percent tariff on all 0:16:18.080 --> 0:16:21.200 goods coming from all countries, that's not going to lead 0:16:21.240 --> 0:16:23.640 to higher prices at the grocery store. It's not going 0:16:23.680 --> 0:16:26.720 to make your vacations more expensive. I think the American 0:16:26.720 --> 0:16:29.720 people have always been a little bit skeptical of this argument, 0:16:30.240 --> 0:16:31.960 and this is something the White House is going to 0:16:31.960 --> 0:16:35.400 have to continue to message moving forward. Now that said, 0:16:35.400 --> 0:16:37.440 what they'll point to is the fact that we impose 0:16:37.600 --> 0:16:40.160 hundreds of billions of dollars of tariffs and Trump one 0:16:40.160 --> 0:16:42.240 point zero, and that did not lead to inflation. 0:16:42.760 --> 0:16:44.080 And if you look at countries like. 0:16:44.080 --> 0:16:47.400 India or South Korea, which naturally have very high teriff rates, 0:16:47.680 --> 0:16:50.360 they're not concerned about that leading to inflation on a 0:16:50.440 --> 0:16:53.280 day to day basis. So why would that pattern hold 0:16:53.280 --> 0:16:56.000 in the United States? But I do think voters are 0:16:56.040 --> 0:16:58.160 not quite there yet, and this is something the White 0:16:58.160 --> 0:16:59.440 House is going to have to navigate. 0:16:59.560 --> 0:17:02.600 Kelly, how much is this argument a liability for the 0:17:02.640 --> 0:17:04.960 White House when it comes to the Supreme Court case? 0:17:05.200 --> 0:17:07.040 The idea that they're arguing that this is a national 0:17:07.040 --> 0:17:10.240 security issue while also talking about reducing tariffs for cost 0:17:10.240 --> 0:17:11.080 of living concerns. 0:17:12.400 --> 0:17:14.720 Well, I think we've got a bunch of different types 0:17:14.760 --> 0:17:17.320 of tariffs, some of which are being challenged right now 0:17:17.359 --> 0:17:20.520 at the Supreme Court, others which aren't. And we've always 0:17:20.560 --> 0:17:23.439 had carve out since the beginning of certain product categories 0:17:23.480 --> 0:17:27.240 like your iPhone, your laptops, some of the pharmaceutical products, 0:17:27.280 --> 0:17:31.840 and aircraft and airplane parts have always had different tariff treatment. 0:17:32.000 --> 0:17:35.000 So shifting some of that around or targeting certain food 0:17:35.040 --> 0:17:37.240 products I don't really think is going to make that 0:17:37.320 --> 0:17:39.280 much of a difference in terms of how the Supreme 0:17:39.320 --> 0:17:40.159 Court is looking at this. 0:17:40.520 --> 0:17:42.959 Do you think though, that, Kelly, when you talk to 0:17:43.280 --> 0:17:46.520 some of your clients, there is a feeling that maybe 0:17:46.560 --> 0:17:48.840 we've seen the peak in terms of the tit for 0:17:48.960 --> 0:17:52.040 trade war type of behavior, just simply because the cost 0:17:52.040 --> 0:17:55.800 of living concerns are starting to trump the concern about 0:17:55.880 --> 0:17:59.640 national security and the concern about getting leverage internationally. 0:18:00.960 --> 0:18:03.760 Well, I think, regardless of how voters are viewing cost 0:18:03.840 --> 0:18:07.679 of living, that we effectively had reached sort of the 0:18:07.720 --> 0:18:10.200 peak of this trade war. To begin with, the President 0:18:10.280 --> 0:18:12.520 was always going to come out swinging at the beginning 0:18:12.880 --> 0:18:15.480 to make this huge move to try to negotiate with 0:18:15.560 --> 0:18:19.280 every country on Earth and then land the plane at 0:18:19.320 --> 0:18:21.199 a lower rate, and that's what we saw him do 0:18:21.320 --> 0:18:24.000 in August. I think we're beginning to see more and 0:18:24.080 --> 0:18:27.760 more tariff reductions as part of these deals being negotiated, 0:18:28.080 --> 0:18:32.399 but I wasn't expecting these huge swings moving forward. I 0:18:32.400 --> 0:18:34.960 think this is effectively where the President wants to land 0:18:35.000 --> 0:18:37.800 things and have the teriff rate be on average at 0:18:37.840 --> 0:18:40.840 the end of his four years now. I do think 0:18:40.920 --> 0:18:44.680 that consumer confidence and affordability is a significant issue for 0:18:44.760 --> 0:18:47.080 the White House, which is why you're seeing them take 0:18:47.080 --> 0:18:50.080 this head on, as opposed to the prior messaging which 0:18:50.160 --> 0:18:53.040 was more about don't worry, the economy's doing great, kind 0:18:53.040 --> 0:18:56.040 of ignore how you feel. They're not there. Now they're 0:18:56.280 --> 0:18:59.640 head on addressing this, and I think that these recalibrations 0:18:59.640 --> 0:19:01.440 on our reflection. 0:19:01.080 --> 0:19:01.400 Of that. 0:19:03.280 --> 0:19:03.920 Stay with us. 0:19:04.240 --> 0:19:16.760 Mul Bloomberg surveillance coming up after this equity's pulling back 0:19:16.800 --> 0:19:19.160 is try to digest hawkish signals from the Federal Reserve. 0:19:19.240 --> 0:19:22.399 Daryl Krunk of wilst FAGO highlighting the three eyes that 0:19:22.520 --> 0:19:26.760 matter inflation, interest rates, and illiquidity rights in the recent 0:19:26.840 --> 0:19:30.119 self is more about positioning. It's sentiment extremes and weak 0:19:30.160 --> 0:19:32.880 hands that have changed to underlying fundamentals. 0:19:32.920 --> 0:19:33.160 Darrow. 0:19:33.240 --> 0:19:35.800 John is now for more. Darrek, good morning, Good morning, John. 0:19:35.800 --> 0:19:38.159 Just build on that a little bit. Okay, the fundamentals 0:19:38.200 --> 0:19:41.080 are strong, are they? The fundamentals are still strong. I 0:19:41.119 --> 0:19:43.239 don't think that there's a lot of debate about that. 0:19:43.600 --> 0:19:45.520 What I would say the two things maybe in yesterdays 0:19:45.520 --> 0:19:48.680 sell off, the people missed right. Number one, you had 0:19:48.720 --> 0:19:51.200 all the FED speakers out being hawkish. 0:19:51.240 --> 0:19:51.440