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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. You're listening to the

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Speaker 1: Bloomberg Intelligence Podcast. Catch us live weekdays at ten am

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Speaker 1: Eastern on Applecarplay and Android Auto with the Bloomberg Business App.

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Speaker 1: Listen on demand wherever you get your podcasts, or watch

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Speaker 1: us live on YouTube.

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Speaker 2: We want to get to this economic data. ISM manufacturing

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Speaker 2: data came out. We're looking at the fifty point three.

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Speaker 2: The consensus was fifty point seven, so a little bit

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Speaker 2: weaker there. New orders kind of interesting. Consensus was fifty

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Speaker 2: four point six. Came at forty eight point six, so

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Speaker 2: a big miss there. Tim Fury joins his chairman of

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Speaker 2: the Manufacturing Business Survey for the Institute for Supply Management, Tim,

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Speaker 2: what do you make of this ISM data coming out

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Speaker 2: here on our Manufacturing Buddies by Hi Paul Hilo.

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Speaker 3: So hey, I think the real story here, let's get

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Speaker 3: right to it, is the prices number sixty two points four.

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Speaker 3: We're up seven point five points, and you know in

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Speaker 3: December and January we had some price growth too. We

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Speaker 3: really were putting our prices then for the twenty twenty

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Speaker 3: five economic year, for the delivery year.

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Speaker 4: So there's really no reason for this number to go

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Speaker 4: up so high, except for the fact that.

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Speaker 3: As soon as terifts were announced on the lunium and steel,

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Speaker 3: the spot market immediately jumped up twenty percent. Now, our

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Speaker 3: sixty two point four number is a measurement really.

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Speaker 4: Of why the lake is, not how deep it is.

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Speaker 3: So what this is really saying is a lot of

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Speaker 3: companies were impacted by the stealing lunum increase that was

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Speaker 3: almost immediate and had to carry over factor I think

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Speaker 3: on what's happening in a new order level, because it's

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Speaker 3: essentially frozen people from placing orders because suppliers and sellers

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Speaker 3: are arguing amongst themselves about who's going to pay for this. Then,

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Speaker 3: on top of that, the inventory number grew in part

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Speaker 3: because of the Chinese lunar New Year materials being delivered,

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Speaker 3: but also because people were pulling forward material in anticipation

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Speaker 3: of tariffs. And then your supplier delivery number went up too,

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Speaker 3: in part because suppliers may be refusing to deliver until

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Speaker 3: customers agree to pay the increased costs. So you know, overall,

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Speaker 3: this is the fifty point three look pretty good, But to.

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Speaker 4: Gut to this doesn't look pretty good.

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Speaker 3: Yeah, if you had if you had a stable input

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Speaker 3: number Stummer wouldn't been in the forty eight range, so wow.

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Speaker 5: Okay.

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Speaker 6: Also, the employment number dipped significantly as well. I felt

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Speaker 6: like the narrative before it was that we weren't seeing layoffs,

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Speaker 6: but we weren't seeing hiring. Has that now changed?

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Speaker 4: No, you're well, you're exactly right.

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Speaker 3: We're continuing on the same cycle that we've been for

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Speaker 3: the last three or four months. I think what's happening

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Speaker 3: here is in the absence of some confidence that we're

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Speaker 3: going to start to grow here and not have a burp.

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Speaker 3: You know this, This does not support another rate cut.

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Speaker 3: I think what's happening is people are continuing to release people,

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Speaker 3: but they're not doing it so much. Alex's time on layoffs.

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Speaker 3: It's more about attrition and freezes.

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Speaker 4: So they're not overreacting here, but they are.

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Speaker 3: Deciding that, well, let's continue to d staff. You're a slightly,

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Speaker 3: but we're not going to use a layoff activity. We're

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Speaker 3: just going to freeze and we're going to trip down

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Speaker 3: until the environment becomes clearer.

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Speaker 2: All right, Tim, thanks so much for joining us. Really

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Speaker 2: appreciate it. Tim Furrey, he's the chairman of the Manufacturing

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Speaker 2: Business Survey at the Institute for Supply Management. Smart kids

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Speaker 2: call it IM. This may be, I guess, kind of

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Speaker 2: one of the first concrete data points that will point

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Speaker 2: back to us about the potential impact of some of

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Speaker 2: these tariff discussions on actual manufacturing activities. So we'll keep

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Speaker 2: that in mind.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 6: Josh Wingrove is joining us Bloomberg Senior White House Reporter.

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Speaker 6: He joins us now in the White House lawn. Hey, Josh,

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Speaker 6: good to chat with you. We're clearly waiting for these

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Speaker 6: tariffs to be put into effect tomorrow. My question, though,

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Speaker 6: is how sensitive do you think the administration currently is

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Speaker 6: to the market, which is saying some thing a little

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Speaker 6: different than maybe we were expecting, say, four months ago.

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Speaker 7: Yeah. I think that that is seen as the sort

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Speaker 7: of one true guard rail that President Trump pays attention to.

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Speaker 4: Now.

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Speaker 7: That said, many of his aides have been saying, look like,

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Speaker 7: in the first term, we did a lot of tariffs

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Speaker 7: and things didn't really you know, go sideways. Although you

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Speaker 7: know inde bend anailists will tell you there was a

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Speaker 7: lot of sort of weakness periodically on the underrelly of

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Speaker 7: the economy in the first term. The big question right

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Speaker 7: now is, you know, is this all a bluff? And

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Speaker 7: remember this is only one stream of tariffs, and if

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Speaker 7: you've been having trouble keeping the plot, not that any

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Speaker 7: of us have, obviously, but it would be understandable because

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Speaker 7: you've got these ones. You've got ones next week on

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Speaker 7: steel and aluminum, which by the way, would hit Canada

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Speaker 7: and Mexico pretty hard, regardless of whether there's another delay

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Speaker 7: tonight or not. And then of course in April you

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Speaker 7: have not only the sectoral tariffs on autos, maybe lumber,

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Speaker 7: maybe chips, maybe pharmaceutical drugs, all of which could hit

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Speaker 7: Canada and or Mexico pretty hard. And and those other

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Speaker 7: dare so so called reciprocal tariffs that would be on

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Speaker 7: a country back country basis, including of course maybe Canada,

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Speaker 7: Mexico and China on top of whatever does or does

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Speaker 7: not happen tonight. So things are coming down multiple paths,

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Speaker 7: and there's been going to be a lot of focus

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Speaker 7: of course, to I know, whether these go in or not.

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Speaker 7: It's you know, a bit unusual that we're sitting here.

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Speaker 7: We don't know. A month ago we were in the

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Speaker 7: same position of what happened. There were calls between President

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Speaker 7: Trump and President Shinbaum in Mexico and Prime Minister Trudeau

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Speaker 7: in Canada, who only has a few days left or

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Speaker 7: so as Prime minister. We don't know right now whether

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Speaker 7: those calls are on tap. That would do one thing

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Speaker 7: to look for today as a signal of whether there'll

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Speaker 7: be another deferral. Remember, of course, the China tariffs also

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Speaker 7: could be doubled from ten to twenty percent today. No

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Speaker 7: real sign of any indication that that would be put off.

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Speaker 7: So you know, these things could all move into Pendley.

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Speaker 7: It's maybe not all, sort of all three or none.

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Speaker 2: Josh, We're going to hear from President Trump addressing the

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Speaker 2: Joint Session of Congress tomorrow evening any preview there. What's

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Speaker 2: kind of the agenda.

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Speaker 7: I mean, he wants to take a victory lab he

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Speaker 7: wants to talk about the things that they've done in

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Speaker 7: the first month. I think we're going to talk about

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Speaker 7: the border that is context for the tariffs, and really

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Speaker 7: it's kind of an eye the beholder, think on how

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Speaker 7: you choose to read that. He's been, you know, tweeting

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Speaker 7: or posting about border numbers coming way down. Of course,

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Speaker 7: the border is the justification for some of these tariffs,

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Speaker 7: so you know he'll either be there to say, look,

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Speaker 7: I just dropped tariffs on a trillion and a half

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Speaker 7: in goods, and you know, here we are and we're

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Speaker 7: into a trade fight now, or he can declare victory

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Speaker 7: on the border. Maybe that gives him a window to

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Speaker 7: defer at least some of these terraffs. But other than that,

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Speaker 7: I think we'll hear a lot about the border. We're

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Speaker 7: going to hear a lot about, of course, America first messaging.

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Speaker 7: The backdrop of that, of course, will be the fallout

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Speaker 7: from last Friday and the ongoing question of what will

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Speaker 7: happen in Ukraine, Will there be a minerals deal? These

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Speaker 7: are all just swirling in the air. So you know,

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Speaker 7: Trump is a showman at heart, so I think a

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Speaker 7: lot of this will be pomp and show and circumstance.

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Speaker 7: Of course, he wants to point to what he's done,

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Speaker 7: but there are questions, huge questions swirling about what comes next.

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Speaker 6: So what's the off ramp?

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Speaker 5: For the tariffs is.

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Speaker 7: If Trump decides that Mexico and Canada in particular have

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Speaker 7: done enough on the border, then he might defer them.

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Speaker 7: Secretary Besson, of course, has talked about maybe reciprocal. That's

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Speaker 7: maybe a bad word to choose, because we're reasoning another

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Speaker 7: thing matching tariffs on China that Mexico and Canada have

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Speaker 7: either talked about or in some cases already done. So

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Speaker 7: that's been a bit of a puzzler. He's sort of

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Speaker 7: asking for stuff that's already out the door. And if

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Speaker 7: they can get sort of this Fortress North America type

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Speaker 7: of idea into President Trump's sort of, you know, get

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Speaker 7: his buy in on it, then maybe there's a deferral.

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Speaker 7: We also don't know that these will move at the

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Speaker 7: same time. Remember a month ago Mexico was deferred before

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Speaker 7: Canada was. Trudeau and Trump had two calls. Trump has

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Speaker 7: been very critical of Trudeau. So right now we don't

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Speaker 7: know if anyone or all three will again move as one.

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Speaker 7: I think this is a really important point. The way

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Speaker 7: they've technically done it is by doing separate executive orders,

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Speaker 7: so they can pull in punt and you adjust on

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Speaker 7: the fly. One other quick thing to flag is last

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Speaker 7: night they tweaked the can of their Mexico ones. It

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Speaker 7: is either a signal that they plan to proceed or

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Speaker 7: at least a signal that they want to be seen

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Speaker 7: as threatening to plan to proceed with these terrats. And

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Speaker 7: what it did is tweak some of the rules on

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Speaker 7: deminimus change, which affects parcelshipping, basically punting that until they

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Speaker 7: can figure out a way to collect terrafts from either

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Speaker 7: individual retailers or mom and pop shipping things across the border.

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Speaker 7: And so that is a if they're fine tuning, that

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Speaker 7: suggests that they're at least holding open the option to

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Speaker 7: go ahead with these terrats, if not planning to do

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Speaker 7: so explicitly.

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Speaker 6: I mean, in the meantime, President Trump, I'll be speaking

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Speaker 6: later on today. He hinted that there'll be some economic

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Speaker 6: policy rolled out. The Wall Street Journal now reporting that

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Speaker 6: a TSMC is expected to announce one hundred billion dollar

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Speaker 6: investment in the US for chip making facilities. You like,

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Speaker 6: twenty seconds. Is this the kind of thing we can

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Speaker 6: expect now at one o'clock.

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Speaker 7: I mean, I will defer to my friends of the

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Speaker 7: journal if they're reporting that Trump has loved to make

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Speaker 7: these announcement big numbers. I will say, until now, the

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Speaker 7: numbers have not always withstood the full life of day

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Speaker 7: when you dig into the details. So we'll be looking

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Speaker 7: for those details today.

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Speaker 6: Well, so Josh appreciate that. Josh Winning Grow Bloomberg Senior

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Speaker 6: White House reporter and Bloomberg. Of course, we'll be bringing

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Speaker 6: you that live later on this afternoon. The Journal reporting

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Speaker 6: that TSMC expected to announce one hundred billion dollars in

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Speaker 6: investment in the US.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Coarclay, and Android

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Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 6: All right, The other stock on the move is Kroger.

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Speaker 6: That stock down over one percent. Apparently the CEO resigns

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Speaker 6: over quote, personal conduct after a board probe. Want to

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Speaker 6: get more on this with Jaywon Kong, Bloomberg retail reporter

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Speaker 6: joining us. Do we know Jaywon what this personal conduct was?

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Speaker 5: We do not. It's pretty limited. You know what we

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Speaker 5: know right now?

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Speaker 8: We know that the CEO resigned after the the board

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Speaker 8: conducted an investigation into his personal conduct. We know that

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Speaker 8: it was a personal conduct and that the behavior did

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Speaker 8: not involve the company's operations, but that it was inconsistent

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Speaker 8: with their policy on business ethics. So now you know

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Speaker 8: Brodney mcmull and he's resigned effective immediately. And Braun Sergeant,

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Speaker 8: who's been on the board of the company for almost

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Speaker 8: twenty years, he'll serve as in terms CEO.

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Speaker 2: So how important is this CEO that did resign, mister McMullan,

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Speaker 2: How important he has he has he been to the story.

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Speaker 8: He's been in his role for you know, over a decade,

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Speaker 8: and he's you know, led the company through really important moments,

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Speaker 8: whether it's you know, really getting into the e commerce business,

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Speaker 8: led the company through the pandemic, you know, the period

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Speaker 8: of historic inflation that we've lived through, and most recently,

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Speaker 8: he tried to merge with Albertson's in what could have

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Speaker 8: been the biggest grocery deal in in the US and

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Speaker 8: history of course.

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Speaker 5: That you know did not come through after the government

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Speaker 5: blocked it.

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Speaker 8: But he's, you know, someone that's been at the Helm

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Speaker 8: for for quite a while after a long tenure at

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Speaker 8: the company, and is someone yeah that's you know what

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Speaker 8: the company through a lot of important moments.

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Speaker 6: How's Kroger doing otherwise? Did we just take that away

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Speaker 6: for a second. What's it like to uh be in

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Speaker 6: Kroger business right now?

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Speaker 5: Yeah, So.

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Speaker 8: It's you know, the company did really well during the

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Speaker 8: pandemic and inflation, like a lot of its other peers

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Speaker 8: in the retail business. That growth has started to moderate,

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Speaker 8: partly as people.

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Speaker 5: Look to save money.

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Speaker 8: And you know, as we talked about the Albertson's deal,

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Speaker 8: that had been sort of an overhang on on the company,

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Speaker 8: you for the last few years as they tried to merge,

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Speaker 8: you know, and then that deal about blocked by.

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Speaker 5: D f TC.

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Speaker 8: They had to go to court to defend it, and

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Speaker 8: we know the result now, which is that it didn't

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Speaker 8: you know, go through. But that's been you know, a

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Speaker 8: bit of a distraction for for quite a while. And

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Speaker 8: on top of that, the management team is also pretty new.

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Speaker 8: The CFO left last year and joined a competitor at Costco.

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Speaker 8: The chief merchant, which is of course a really important

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Speaker 8: role in the retail business. He also left at the

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Speaker 8: end of last year for a different opportunity, and so

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Speaker 8: we're you know, kind of seeing both of those factors

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Speaker 8: starting to play out now as they you know, tried

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Speaker 8: to operate and.

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Speaker 5: Navigate through a lot of macro uncertainties.

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Speaker 2: So what's the Is there another m and a trade

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Speaker 2: in there for the in that supermarket business? Again, you

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Speaker 2: mentioned Kroger's had some success and they've had and deals blocked.

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Speaker 2: Are they still in the market for growth of the acquisition.

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Speaker 8: It's hard to say right now. I mean the Alberson

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Speaker 8: theel just fell apart, you know, a few months ago.

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Speaker 8: The expectation, I think from people who follow the company

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Speaker 8: is that, you know, Kruger could look to do other

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Speaker 8: deals down the line, But I think for now, the

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Speaker 8: main priority is getting back to business and pursuing you know,

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Speaker 8: organic growth.

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Speaker 6: Thank you so much to in turn my Mike there,

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Speaker 6: my bad man, It's Monday, Jay One. Thanks a lot,

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Speaker 6: great reporting. We appreciated Jay Won Kong joining us a

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Speaker 6: Bloomberg retail reporter.

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Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live

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Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android

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Speaker 1: you get your podcasts, or watch us live on YouTube.

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Speaker 2: Alex Steeve, Paul Sweening. We're live here in our Bloomberg

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Speaker 2: Interactive Broker studio. We are streaming live on YouTube's ahead

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Speaker 2: over YouTube dot com starts Bloomberg Podcast Live, and that's

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Speaker 2: where you'll find it. I've seen, like I was mentioning

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Speaker 2: Alex earlier, that in the last few weeks, we've heard

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Speaker 2: from professional investors that there's growing concerns maybe about the

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Speaker 2: US economic growth and the exceptionalism thereof. And if so,

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Speaker 2: what do you do with your investments? Christina Hooper joins

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Speaker 2: US here. She is chief Global market Strategist for Investco. Christina,

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Speaker 2: how do you think about US economic growth over the

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Speaker 2: last several weeks? Has your outlook change it all? And

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Speaker 2: if so, how did you maybe change kind of the

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Speaker 2: way you're looking at investment opportunities.

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Speaker 9: Well, Paul, Alex, it's great to be with you. My

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Speaker 9: outlook hasn't changed much. Our expectation when we put out

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Speaker 9: our twenty twenty five outlook in November was that we're

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Speaker 9: likely to see better performance from developed markets x US

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Speaker 9: in twenty twenty five, and so that is playing out.

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Speaker 9: The US has been doing so well for so long,

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Speaker 9: and this seems to be a time in which we're

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Speaker 9: likely to see key drivers like greater monetary policy easing

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Speaker 9: and lower valuation supporting other markets. So my view is

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Speaker 9: that we're likely to see some hiccups. It doesn't mean

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Speaker 9: we're going to see a dramatic downturn, but we do

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Speaker 9: have as a frame of reference the twenty eighteen twenty

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Speaker 9: nineteen Terra force which were negative for US stocks, so

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Speaker 9: we want to be careful there.

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Speaker 6: So does that mean, Okay, we had someone else on

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Speaker 6: the last hour that said by the dip, It sounds

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Speaker 6: like it's more let it play out and see what

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Speaker 6: happens by stealth elsewhere.

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Speaker 9: So I think first and foremost it's about rebalancing. Most

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Speaker 9: investors are likely overweight US equities and underweight European equities,

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Speaker 9: UK equities, EM equities, so this is an opportunity to rebalance.

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Speaker 9: US stocks have had a great run over multiple years,

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Speaker 9: and it's about in doing so. In rebalancing, one is

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Speaker 9: going to have an overall valuation on one's portfolio that's lower,

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Speaker 9: that might be less vulnerable to some of the turmoil

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Speaker 9: and uncertainty that we're seeing right now, and so essentially

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Speaker 9: maintain exposure to the US. But this is not a

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Speaker 9: time to be overweight the US, in my opinion.

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Speaker 2: Interesting because I'm looking on a year to day basis

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Speaker 2: the S and P five hundred up about one percent,

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Speaker 2: but the stocks europe six hundred price indext which I

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Speaker 2: think is kind of the broadest view of European investing,

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Speaker 2: that's up eleven percent year to date. Do you expect

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Speaker 2: that to continue, Christina?

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Speaker 9: I do think so. We have some powerful drivers. First

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Speaker 9: of all, we've got, you know, potentially significant ECB easing

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Speaker 9: this year. But beyond that, what we have is low

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Speaker 9: valuations and we have economic surprise. It's positive. Sentiment has

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Speaker 9: been pretty negative on European equities and they're exceeding expectations.

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Speaker 9: So I think this should be a good year for

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Speaker 9: your inequities, and I think it could very well be

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Speaker 9: a good year for UK equities, Japanese equities and in

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Speaker 9: fact EAM equities as well.

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Speaker 6: But what about the whole tariff thing, because that's going

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Speaker 6: to hurt everybody, right, So is it just that because

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Speaker 6: valuation is so much lower in Europe in the UK

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Speaker 6: than the US and it can absorb that kind of hit.

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Speaker 9: Well, I think that's certainly part of the story. Also,

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Speaker 9: you of course have those other drivers that I think

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Speaker 9: can soften the blow, For example, additional easing. If we

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Speaker 9: look at emerging markets central banks, more easing was expected

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Speaker 9: last year than we got, so I suspect that that

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Speaker 9: is what will come this year. We had to wait

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Speaker 9: a little bit, but I think this is probably good

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Speaker 9: timing and should be supportive of any kind of headwinds

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Speaker 9: created by tariffs.

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Speaker 2: Walmart recently reported earnings, and people look to Walmart. It's

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Speaker 2: just a great gauge of the US consumer here. What

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Speaker 2: did you see from Walmart? What do you How do

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Speaker 2: you feel about the US consumer here?

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Speaker 9: So Walmart was I think very very rational and reasonable

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Speaker 9: in saying that we don't know exactly what's going to

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Speaker 9: happen this year. There's an awful lot of uncertainty, and

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Speaker 9: I think that's the reality that the consumer has been

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Speaker 9: quite resilient, but we don't know how things play out

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Speaker 9: this year. And I think that makes sense. The US

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Speaker 9: consumer is coming under greater pressure. Sentiment is down significantly,

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Speaker 9: and we saw on Friday that personal spending was down.

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Speaker 9: We have to be concerned that there are pressures now.

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Speaker 9: Having said that, they could be very short term in nature,

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Speaker 9: since they seem to be driven largely by tariffs and

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Speaker 9: the potential for tearfors. So if this were to be

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Speaker 9: behind us, it could be very similar to what we

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Speaker 9: saw in twenty eighteen twenty nineteen, where as soon as

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Speaker 9: as the bulk of the tear wars are over, there

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Speaker 9: is a resumption in not just improved sentiment on the

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Speaker 9: part of consumers and businesses, but improved spending.

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Speaker 6: What are the most typical questions that you're getting right

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Speaker 6: now from clients based on this global view that you.

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Speaker 9: Have, Well, are we going into a recession in the US?

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Speaker 9: And I think that's only been amplified by the Atlanta

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Speaker 9: Fed GDP now estimate, which has shifted from growth expectations

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Speaker 9: of over two percent to now a negative growth in

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Speaker 9: the first quarter. My answer is that we need to

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Speaker 9: wait and see. It's unclear. Our base case certainly has

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Speaker 9: not been for a recession this year, but we are

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Speaker 9: seeing a deterioration in economic data, so we want to

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Speaker 9: follow this very closely. Now, it could very well be

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Speaker 9: that we do see growth in the first quarter. Keep

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Speaker 9: in mind that the Atlanta Fed GDP now here is

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Speaker 9: real time, so it can easily shift. But I do

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Speaker 9: think we want to be more on top of this,

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Speaker 9: more cognizant of every data point and what it might

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Speaker 9: be telling us. We want to find those canaries in

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Speaker 9: the cold right now.

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Speaker 5: Yep.

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Speaker 6: And you're not alone in that. Michael Feroli over JP

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Speaker 6: Morgan just cut his first quarter real GDP estimate from

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Speaker 6: two point two five percent to one point five So

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Speaker 6: like it's moving really fast, Christina, Thank you so much.

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Speaker 6: Christina Hooper joining us from Invesco. Always wonderful to get

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Speaker 6: your perspective.

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