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Speaker 2: We want to get to this economic data. ISM manufacturing
Speaker 2: data came out. We're looking at the fifty point three.
Speaker 2: The consensus was fifty point seven, so a little bit
Speaker 2: weaker there. New orders kind of interesting. Consensus was fifty
Speaker 2: four point six. Came at forty eight point six, so
Speaker 2: a big miss there. Tim Fury joins his chairman of
Speaker 2: the Manufacturing Business Survey for the Institute for Supply Management, Tim,
Speaker 2: what do you make of this ISM data coming out
Speaker 2: here on our Manufacturing Buddies by Hi Paul Hilo.
Speaker 3: So hey, I think the real story here, let's get
Speaker 3: right to it, is the prices number sixty two points four.
Speaker 3: We're up seven point five points, and you know in
Speaker 3: December and January we had some price growth too. We
Speaker 3: really were putting our prices then for the twenty twenty
Speaker 3: five economic year, for the delivery year.
Speaker 4: So there's really no reason for this number to go
Speaker 4: up so high, except for the fact that.
Speaker 3: As soon as terifts were announced on the lunium and steel,
Speaker 3: the spot market immediately jumped up twenty percent. Now, our
Speaker 3: sixty two point four number is a measurement really.
Speaker 4: Of why the lake is, not how deep it is.
Speaker 3: So what this is really saying is a lot of
Speaker 3: companies were impacted by the stealing lunum increase that was
Speaker 3: almost immediate and had to carry over factor I think
Speaker 3: on what's happening in a new order level, because it's
Speaker 3: essentially frozen people from placing orders because suppliers and sellers
Speaker 3: are arguing amongst themselves about who's going to pay for this. Then,
Speaker 3: on top of that, the inventory number grew in part
Speaker 3: because of the Chinese lunar New Year materials being delivered,
Speaker 3: but also because people were pulling forward material in anticipation
Speaker 3: of tariffs. And then your supplier delivery number went up too,
Speaker 3: in part because suppliers may be refusing to deliver until
Speaker 3: customers agree to pay the increased costs. So you know, overall,
Speaker 3: this is the fifty point three look pretty good, But to.
Speaker 4: Gut to this doesn't look pretty good.
Speaker 3: Yeah, if you had if you had a stable input
Speaker 3: number Stummer wouldn't been in the forty eight range, so wow.
Speaker 5: Okay.
Speaker 6: Also, the employment number dipped significantly as well. I felt
Speaker 6: like the narrative before it was that we weren't seeing layoffs,
Speaker 6: but we weren't seeing hiring. Has that now changed?
Speaker 4: No, you're well, you're exactly right.
Speaker 3: We're continuing on the same cycle that we've been for
Speaker 3: the last three or four months. I think what's happening
Speaker 3: here is in the absence of some confidence that we're
Speaker 3: going to start to grow here and not have a burp.
Speaker 3: You know this, This does not support another rate cut.
Speaker 3: I think what's happening is people are continuing to release people,
Speaker 3: but they're not doing it so much. Alex's time on layoffs.
Speaker 3: It's more about attrition and freezes.
Speaker 4: So they're not overreacting here, but they are.
Speaker 3: Deciding that, well, let's continue to d staff. You're a slightly,
Speaker 3: but we're not going to use a layoff activity. We're
Speaker 3: just going to freeze and we're going to trip down
Speaker 3: until the environment becomes clearer.
Speaker 2: All right, Tim, thanks so much for joining us. Really
Speaker 2: appreciate it. Tim Furrey, he's the chairman of the Manufacturing
Speaker 2: Business Survey at the Institute for Supply Management. Smart kids
Speaker 2: call it IM. This may be, I guess, kind of
Speaker 2: one of the first concrete data points that will point
Speaker 2: back to us about the potential impact of some of
Speaker 2: these tariff discussions on actual manufacturing activities. So we'll keep
Speaker 2: that in mind.
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Speaker 6: Josh Wingrove is joining us Bloomberg Senior White House Reporter.
Speaker 6: He joins us now in the White House lawn. Hey, Josh,
Speaker 6: good to chat with you. We're clearly waiting for these
Speaker 6: tariffs to be put into effect tomorrow. My question, though,
Speaker 6: is how sensitive do you think the administration currently is
Speaker 6: to the market, which is saying some thing a little
Speaker 6: different than maybe we were expecting, say, four months ago.
Speaker 7: Yeah. I think that that is seen as the sort
Speaker 7: of one true guard rail that President Trump pays attention to.
Speaker 4: Now.
Speaker 7: That said, many of his aides have been saying, look like,
Speaker 7: in the first term, we did a lot of tariffs
Speaker 7: and things didn't really you know, go sideways. Although you
Speaker 7: know inde bend anailists will tell you there was a
Speaker 7: lot of sort of weakness periodically on the underrelly of
Speaker 7: the economy in the first term. The big question right
Speaker 7: now is, you know, is this all a bluff? And
Speaker 7: remember this is only one stream of tariffs, and if
Speaker 7: you've been having trouble keeping the plot, not that any
Speaker 7: of us have, obviously, but it would be understandable because
Speaker 7: you've got these ones. You've got ones next week on
Speaker 7: steel and aluminum, which by the way, would hit Canada
Speaker 7: and Mexico pretty hard, regardless of whether there's another delay
Speaker 7: tonight or not. And then of course in April you
Speaker 7: have not only the sectoral tariffs on autos, maybe lumber,
Speaker 7: maybe chips, maybe pharmaceutical drugs, all of which could hit
Speaker 7: Canada and or Mexico pretty hard. And and those other
Speaker 7: dare so so called reciprocal tariffs that would be on
Speaker 7: a country back country basis, including of course maybe Canada,
Speaker 7: Mexico and China on top of whatever does or does
Speaker 7: not happen tonight. So things are coming down multiple paths,
Speaker 7: and there's been going to be a lot of focus
Speaker 7: of course, to I know, whether these go in or not.
Speaker 7: It's you know, a bit unusual that we're sitting here.
Speaker 7: We don't know. A month ago we were in the
Speaker 7: same position of what happened. There were calls between President
Speaker 7: Trump and President Shinbaum in Mexico and Prime Minister Trudeau
Speaker 7: in Canada, who only has a few days left or
Speaker 7: so as Prime minister. We don't know right now whether
Speaker 7: those calls are on tap. That would do one thing
Speaker 7: to look for today as a signal of whether there'll
Speaker 7: be another deferral. Remember, of course, the China tariffs also
Speaker 7: could be doubled from ten to twenty percent today. No
Speaker 7: real sign of any indication that that would be put off.
Speaker 7: So you know, these things could all move into Pendley.
Speaker 7: It's maybe not all, sort of all three or none.
Speaker 2: Josh, We're going to hear from President Trump addressing the
Speaker 2: Joint Session of Congress tomorrow evening any preview there. What's
Speaker 2: kind of the agenda.
Speaker 7: I mean, he wants to take a victory lab he
Speaker 7: wants to talk about the things that they've done in
Speaker 7: the first month. I think we're going to talk about
Speaker 7: the border that is context for the tariffs, and really
Speaker 7: it's kind of an eye the beholder, think on how
Speaker 7: you choose to read that. He's been, you know, tweeting
Speaker 7: or posting about border numbers coming way down. Of course,
Speaker 7: the border is the justification for some of these tariffs,
Speaker 7: so you know he'll either be there to say, look,
Speaker 7: I just dropped tariffs on a trillion and a half
Speaker 7: in goods, and you know, here we are and we're
Speaker 7: into a trade fight now, or he can declare victory
Speaker 7: on the border. Maybe that gives him a window to
Speaker 7: defer at least some of these terraffs. But other than that,
Speaker 7: I think we'll hear a lot about the border. We're
Speaker 7: going to hear a lot about, of course, America first messaging.
Speaker 7: The backdrop of that, of course, will be the fallout
Speaker 7: from last Friday and the ongoing question of what will
Speaker 7: happen in Ukraine, Will there be a minerals deal? These
Speaker 7: are all just swirling in the air. So you know,
Speaker 7: Trump is a showman at heart, so I think a
Speaker 7: lot of this will be pomp and show and circumstance.
Speaker 7: Of course, he wants to point to what he's done,
Speaker 7: but there are questions, huge questions swirling about what comes next.
Speaker 6: So what's the off ramp?
Speaker 5: For the tariffs is.
Speaker 7: If Trump decides that Mexico and Canada in particular have
Speaker 7: done enough on the border, then he might defer them.
Speaker 7: Secretary Besson, of course, has talked about maybe reciprocal. That's
Speaker 7: maybe a bad word to choose, because we're reasoning another
Speaker 7: thing matching tariffs on China that Mexico and Canada have
Speaker 7: either talked about or in some cases already done. So
Speaker 7: that's been a bit of a puzzler. He's sort of
Speaker 7: asking for stuff that's already out the door. And if
Speaker 7: they can get sort of this Fortress North America type
Speaker 7: of idea into President Trump's sort of, you know, get
Speaker 7: his buy in on it, then maybe there's a deferral.
Speaker 7: We also don't know that these will move at the
Speaker 7: same time. Remember a month ago Mexico was deferred before
Speaker 7: Canada was. Trudeau and Trump had two calls. Trump has
Speaker 7: been very critical of Trudeau. So right now we don't
Speaker 7: know if anyone or all three will again move as one.
Speaker 7: I think this is a really important point. The way
Speaker 7: they've technically done it is by doing separate executive orders,
Speaker 7: so they can pull in punt and you adjust on
Speaker 7: the fly. One other quick thing to flag is last
Speaker 7: night they tweaked the can of their Mexico ones. It
Speaker 7: is either a signal that they plan to proceed or
Speaker 7: at least a signal that they want to be seen
Speaker 7: as threatening to plan to proceed with these terrats. And
Speaker 7: what it did is tweak some of the rules on
Speaker 7: deminimus change, which affects parcelshipping, basically punting that until they
Speaker 7: can figure out a way to collect terrafts from either
Speaker 7: individual retailers or mom and pop shipping things across the border.
Speaker 7: And so that is a if they're fine tuning, that
Speaker 7: suggests that they're at least holding open the option to
Speaker 7: go ahead with these terrats, if not planning to do
Speaker 7: so explicitly.
Speaker 6: I mean, in the meantime, President Trump, I'll be speaking
Speaker 6: later on today. He hinted that there'll be some economic
Speaker 6: policy rolled out. The Wall Street Journal now reporting that
Speaker 6: a TSMC is expected to announce one hundred billion dollar
Speaker 6: investment in the US for chip making facilities. You like,
Speaker 6: twenty seconds. Is this the kind of thing we can
Speaker 6: expect now at one o'clock.
Speaker 7: I mean, I will defer to my friends of the
Speaker 7: journal if they're reporting that Trump has loved to make
Speaker 7: these announcement big numbers. I will say, until now, the
Speaker 7: numbers have not always withstood the full life of day
Speaker 7: when you dig into the details. So we'll be looking
Speaker 7: for those details today.
Speaker 6: Well, so Josh appreciate that. Josh Winning Grow Bloomberg Senior
Speaker 6: White House reporter and Bloomberg. Of course, we'll be bringing
Speaker 6: you that live later on this afternoon. The Journal reporting
Speaker 6: that TSMC expected to announce one hundred billion dollars in
Speaker 6: investment in the US.
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Speaker 6: All right, The other stock on the move is Kroger.
Speaker 6: That stock down over one percent. Apparently the CEO resigns
Speaker 6: over quote, personal conduct after a board probe. Want to
Speaker 6: get more on this with Jaywon Kong, Bloomberg retail reporter
Speaker 6: joining us. Do we know Jaywon what this personal conduct was?
Speaker 5: We do not. It's pretty limited. You know what we
Speaker 5: know right now?
Speaker 8: We know that the CEO resigned after the the board
Speaker 8: conducted an investigation into his personal conduct. We know that
Speaker 8: it was a personal conduct and that the behavior did
Speaker 8: not involve the company's operations, but that it was inconsistent
Speaker 8: with their policy on business ethics. So now you know
Speaker 8: Brodney mcmull and he's resigned effective immediately. And Braun Sergeant,
Speaker 8: who's been on the board of the company for almost
Speaker 8: twenty years, he'll serve as in terms CEO.
Speaker 2: So how important is this CEO that did resign, mister McMullan,
Speaker 2: How important he has he has he been to the story.
Speaker 8: He's been in his role for you know, over a decade,
Speaker 8: and he's you know, led the company through really important moments,
Speaker 8: whether it's you know, really getting into the e commerce business,
Speaker 8: led the company through the pandemic, you know, the period
Speaker 8: of historic inflation that we've lived through, and most recently,
Speaker 8: he tried to merge with Albertson's in what could have
Speaker 8: been the biggest grocery deal in in the US and
Speaker 8: history of course.
Speaker 5: That you know did not come through after the government
Speaker 5: blocked it.
Speaker 8: But he's, you know, someone that's been at the Helm
Speaker 8: for for quite a while after a long tenure at
Speaker 8: the company, and is someone yeah that's you know what
Speaker 8: the company through a lot of important moments.
Speaker 6: How's Kroger doing otherwise? Did we just take that away
Speaker 6: for a second. What's it like to uh be in
Speaker 6: Kroger business right now?
Speaker 5: Yeah, So.
Speaker 8: It's you know, the company did really well during the
Speaker 8: pandemic and inflation, like a lot of its other peers
Speaker 8: in the retail business. That growth has started to moderate,
Speaker 8: partly as people.
Speaker 5: Look to save money.
Speaker 8: And you know, as we talked about the Albertson's deal,
Speaker 8: that had been sort of an overhang on on the company,
Speaker 8: you for the last few years as they tried to merge,
Speaker 8: you know, and then that deal about blocked by.
Speaker 5: D f TC.
Speaker 8: They had to go to court to defend it, and
Speaker 8: we know the result now, which is that it didn't
Speaker 8: you know, go through. But that's been you know, a
Speaker 8: bit of a distraction for for quite a while. And
Speaker 8: on top of that, the management team is also pretty new.
Speaker 8: The CFO left last year and joined a competitor at Costco.
Speaker 8: The chief merchant, which is of course a really important
Speaker 8: role in the retail business. He also left at the
Speaker 8: end of last year for a different opportunity, and so
Speaker 8: we're you know, kind of seeing both of those factors
Speaker 8: starting to play out now as they you know, tried
Speaker 8: to operate and.
Speaker 5: Navigate through a lot of macro uncertainties.
Speaker 2: So what's the Is there another m and a trade
Speaker 2: in there for the in that supermarket business? Again, you
Speaker 2: mentioned Kroger's had some success and they've had and deals blocked.
Speaker 2: Are they still in the market for growth of the acquisition.
Speaker 8: It's hard to say right now. I mean the Alberson
Speaker 8: theel just fell apart, you know, a few months ago.
Speaker 8: The expectation, I think from people who follow the company
Speaker 8: is that, you know, Kruger could look to do other
Speaker 8: deals down the line, But I think for now, the
Speaker 8: main priority is getting back to business and pursuing you know,
Speaker 8: organic growth.
Speaker 6: Thank you so much to in turn my Mike there,
Speaker 6: my bad man, It's Monday, Jay One. Thanks a lot,
Speaker 6: great reporting. We appreciated Jay Won Kong joining us a
Speaker 6: Bloomberg retail reporter.
Speaker 1: You're listening to the Bloomberg Intelligence Podcast. Catch us live
Speaker 1: weekdays at ten am Eastern on Apple, Cocklay and Android
Speaker 1: Auto with the Bloomberg Business app. Listen on demand wherever
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Speaker 2: Alex Steeve, Paul Sweening. We're live here in our Bloomberg
Speaker 2: Interactive Broker studio. We are streaming live on YouTube's ahead
Speaker 2: over YouTube dot com starts Bloomberg Podcast Live, and that's
Speaker 2: where you'll find it. I've seen, like I was mentioning
Speaker 2: Alex earlier, that in the last few weeks, we've heard
Speaker 2: from professional investors that there's growing concerns maybe about the
Speaker 2: US economic growth and the exceptionalism thereof. And if so,
Speaker 2: what do you do with your investments? Christina Hooper joins
Speaker 2: US here. She is chief Global market Strategist for Investco. Christina,
Speaker 2: how do you think about US economic growth over the
Speaker 2: last several weeks? Has your outlook change it all? And
Speaker 2: if so, how did you maybe change kind of the
Speaker 2: way you're looking at investment opportunities.
Speaker 9: Well, Paul, Alex, it's great to be with you. My
Speaker 9: outlook hasn't changed much. Our expectation when we put out
Speaker 9: our twenty twenty five outlook in November was that we're
Speaker 9: likely to see better performance from developed markets x US
Speaker 9: in twenty twenty five, and so that is playing out.
Speaker 9: The US has been doing so well for so long,
Speaker 9: and this seems to be a time in which we're
Speaker 9: likely to see key drivers like greater monetary policy easing
Speaker 9: and lower valuation supporting other markets. So my view is
Speaker 9: that we're likely to see some hiccups. It doesn't mean
Speaker 9: we're going to see a dramatic downturn, but we do
Speaker 9: have as a frame of reference the twenty eighteen twenty
Speaker 9: nineteen Terra force which were negative for US stocks, so
Speaker 9: we want to be careful there.
Speaker 6: So does that mean, Okay, we had someone else on
Speaker 6: the last hour that said by the dip, It sounds
Speaker 6: like it's more let it play out and see what
Speaker 6: happens by stealth elsewhere.
Speaker 9: So I think first and foremost it's about rebalancing. Most
Speaker 9: investors are likely overweight US equities and underweight European equities,
Speaker 9: UK equities, EM equities, so this is an opportunity to rebalance.
Speaker 9: US stocks have had a great run over multiple years,
Speaker 9: and it's about in doing so. In rebalancing, one is
Speaker 9: going to have an overall valuation on one's portfolio that's lower,
Speaker 9: that might be less vulnerable to some of the turmoil
Speaker 9: and uncertainty that we're seeing right now, and so essentially
Speaker 9: maintain exposure to the US. But this is not a
Speaker 9: time to be overweight the US, in my opinion.
Speaker 2: Interesting because I'm looking on a year to day basis
Speaker 2: the S and P five hundred up about one percent,
Speaker 2: but the stocks europe six hundred price indext which I
Speaker 2: think is kind of the broadest view of European investing,
Speaker 2: that's up eleven percent year to date. Do you expect
Speaker 2: that to continue, Christina?
Speaker 9: I do think so. We have some powerful drivers. First
Speaker 9: of all, we've got, you know, potentially significant ECB easing
Speaker 9: this year. But beyond that, what we have is low
Speaker 9: valuations and we have economic surprise. It's positive. Sentiment has
Speaker 9: been pretty negative on European equities and they're exceeding expectations.
Speaker 9: So I think this should be a good year for
Speaker 9: your inequities, and I think it could very well be
Speaker 9: a good year for UK equities, Japanese equities and in
Speaker 9: fact EAM equities as well.
Speaker 6: But what about the whole tariff thing, because that's going
Speaker 6: to hurt everybody, right, So is it just that because
Speaker 6: valuation is so much lower in Europe in the UK
Speaker 6: than the US and it can absorb that kind of hit.
Speaker 9: Well, I think that's certainly part of the story. Also,
Speaker 9: you of course have those other drivers that I think
Speaker 9: can soften the blow, For example, additional easing. If we
Speaker 9: look at emerging markets central banks, more easing was expected
Speaker 9: last year than we got, so I suspect that that
Speaker 9: is what will come this year. We had to wait
Speaker 9: a little bit, but I think this is probably good
Speaker 9: timing and should be supportive of any kind of headwinds
Speaker 9: created by tariffs.
Speaker 2: Walmart recently reported earnings, and people look to Walmart. It's
Speaker 2: just a great gauge of the US consumer here. What
Speaker 2: did you see from Walmart? What do you How do
Speaker 2: you feel about the US consumer here?
Speaker 9: So Walmart was I think very very rational and reasonable
Speaker 9: in saying that we don't know exactly what's going to
Speaker 9: happen this year. There's an awful lot of uncertainty, and
Speaker 9: I think that's the reality that the consumer has been
Speaker 9: quite resilient, but we don't know how things play out
Speaker 9: this year. And I think that makes sense. The US
Speaker 9: consumer is coming under greater pressure. Sentiment is down significantly,
Speaker 9: and we saw on Friday that personal spending was down.
Speaker 9: We have to be concerned that there are pressures now.
Speaker 9: Having said that, they could be very short term in nature,
Speaker 9: since they seem to be driven largely by tariffs and
Speaker 9: the potential for tearfors. So if this were to be
Speaker 9: behind us, it could be very similar to what we
Speaker 9: saw in twenty eighteen twenty nineteen, where as soon as
Speaker 9: as the bulk of the tear wars are over, there
Speaker 9: is a resumption in not just improved sentiment on the
Speaker 9: part of consumers and businesses, but improved spending.
Speaker 6: What are the most typical questions that you're getting right
Speaker 6: now from clients based on this global view that you.
Speaker 9: Have, Well, are we going into a recession in the US?
Speaker 9: And I think that's only been amplified by the Atlanta
Speaker 9: Fed GDP now estimate, which has shifted from growth expectations
Speaker 9: of over two percent to now a negative growth in
Speaker 9: the first quarter. My answer is that we need to
Speaker 9: wait and see. It's unclear. Our base case certainly has
Speaker 9: not been for a recession this year, but we are
Speaker 9: seeing a deterioration in economic data, so we want to
Speaker 9: follow this very closely. Now, it could very well be
Speaker 9: that we do see growth in the first quarter. Keep
Speaker 9: in mind that the Atlanta Fed GDP now here is
Speaker 9: real time, so it can easily shift. But I do
Speaker 9: think we want to be more on top of this,
Speaker 9: more cognizant of every data point and what it might
Speaker 9: be telling us. We want to find those canaries in
Speaker 9: the cold right now.
Speaker 5: Yep.
Speaker 6: And you're not alone in that. Michael Feroli over JP
Speaker 6: Morgan just cut his first quarter real GDP estimate from
Speaker 6: two point two five percent to one point five So
Speaker 6: like it's moving really fast, Christina, Thank you so much.
Speaker 6: Christina Hooper joining us from Invesco. Always wonderful to get
Speaker 6: your perspective.
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