Speaker 1: Bloomberg Audio Studios, podcasts, radio news.
Speaker 2: Jennifer Lee joins us. She's a senior Congress She's a
Speaker 2: managing director at BEMO Capital Markets. Jennifer, as we think
Speaker 2: about twenty twenty five, I'm not even sure where to start,
Speaker 2: I mean, let's just start. We've got a new administration
Speaker 2: coming in in the United States, We've got a new
Speaker 2: Congress about to be seated in the new year.
Speaker 1: What do you.
Speaker 2: Expect from again the new sheriff in town. From an
Speaker 2: economic perspective, I don't know if it's you know, tax policy,
Speaker 2: if it's if it's you know, tariffs, if it's you know,
Speaker 2: changes in immigration policy. There's a lot of moving parts.
Speaker 2: How does that impact your outlook for this US economy?
Speaker 1: Well, good morning, Happy holidays to both, and thank you
Speaker 1: very much for having me on. You know, this is
Speaker 1: a it's that key word uncertainty. You know, expect the unexpected.
Speaker 1: There is so much unknowns as we're heading into the
Speaker 1: new year with the new Trump administration. He's already talked
Speaker 1: about what he plans to do with everything that he
Speaker 1: wants to do on is to do list, whether or
Speaker 1: not he's going to be checking them all off on
Speaker 1: day one. That would be very interesting to see. But
Speaker 1: certainly tariffs are the key or is the key measure
Speaker 1: that he's planning to play out to roll out. He's
Speaker 1: already talking about the ten twenty percent blanket tariff on
Speaker 1: all three trillion dollars worth of goods coming into the US,
Speaker 1: and that will be already significant compared to what he
Speaker 1: did back in twenty seventeen, which was you know, targeted
Speaker 1: tariffs on about three hundred billion dollars worth of goods.
Speaker 1: So this is a bigger impact. And of course twenty
Speaker 1: five percent tariffs on Canada and Mexico, an extra ten
Speaker 1: percent on China. Maybe this is on top of the
Speaker 1: sixty percent, So I'm not sure what the figure is
Speaker 1: going to be. So there's a lot of uncertainy I
Speaker 1: think heading into into this new year. But terrorists is
Speaker 1: certainly or certainly the key factor. Taxes, corporate tax, targeted
Speaker 1: tax cuts, I think, which would be great for corporate America,
Speaker 1: and of course different tax relief measures for those who
Speaker 1: are you know, are reading overtime, social security, and of
Speaker 1: course all those other other issues like the biggest de
Speaker 1: quotation effort ever in the US, cleaning out all the
Speaker 1: extra stuff that you know doesn't need to be spent.
Speaker 1: That's where doage comes in. So a lot of things
Speaker 1: on his to do list. But how that is going
Speaker 1: to play out remains to be seen, and I think
Speaker 1: this is why we're expecting a lot of uncertainty as
Speaker 1: we start the new year.
Speaker 3: The latest estimate for the Atlanta Fed's GDP NOW model
Speaker 3: for the current fourth quarter actually above three percent Paul,
Speaker 3: And of course we were talking about earlier the economic
Speaker 3: growth projections. If you look at the ECFC function and
Speaker 3: the terminal that can pull it up for you on
Speaker 3: a quarterly as well as an annual basis. So Jennifer,
Speaker 3: I'm curious because year after year, especially coming out of COVID,
Speaker 3: there's so much doom and gloom even for the expectations
Speaker 3: in twenty twenty three, twenty twenty four that a lot
Speaker 3: of economists ended up being on the wrong side of
Speaker 3: that and getting it wrong. So what are people getting
Speaker 3: wrong about next year? Because I feel like once we
Speaker 3: wrap up a year and look ahead, we always have
Speaker 3: these kind of anticipations that never quite come to fruition
Speaker 3: when you look at year out.
Speaker 1: That is true, and we have been I think on
Speaker 1: too low on our growth expectations. We were never in
Speaker 1: the recession camp, thankfully, but we're you know, I think
Speaker 1: everyone was always too low on their growth expectations. We've
Speaker 1: got about about two and a quarter percent, just under
Speaker 1: two and a half percent pencils in for next year.
Speaker 1: Where I think where the myths has been is certainly
Speaker 1: from the US consumer. The US consumer continues to be
Speaker 1: the big driving force of the the broader US economy.
Speaker 1: That and of course over the past few years was
Speaker 1: all the business investment and government spending as well. Helped
Speaker 1: with the Chips Act in the IRA that's certainly helped
Speaker 1: boost the economy of the US consumer continues to surprise,
Speaker 1: and we should always say, never ever underestimate the US consumer.
Speaker 1: Just the last November data for personal income and spending
Speaker 1: showed continuing spending. It wasn't exactly super strong, but it
Speaker 1: was still spent. They were still spending. And also in
Speaker 1: those areas that if things are really tough and be
Speaker 1: spending on like regret, recreational goods and services, recreational vehicles,
Speaker 1: that area, there's a bit of a pullback on dining out,
Speaker 1: hotel stays, but overall still decent consumer spending still decent.
Speaker 1: Consumer wages savings raat just over four percent is still
Speaker 1: pretty decent as well. So I think that's where the
Speaker 1: mistake has been. So we'll have to see how things
Speaker 1: go in the coming year, just given that we are
Speaker 1: expecting inflation to take higher.
Speaker 2: So the dollar just in this last three months is up,
Speaker 2: you know, nearly seven percent. And for the tom Kings
Speaker 2: of the world that like the you know, vacation over
Speaker 2: in Rome or Parish or London, it's a good thing.
Speaker 2: What do you make of this strong dollar, Jennifer, So
Speaker 2: the strong.
Speaker 1: Dollar has been at the beginning, it was a function
Speaker 1: I think of the stronger US e climbing like throughout
Speaker 1: twenty twenty four. The mistake has I mean, I think
Speaker 1: everyone has already underestimated the global growth as well. I
Speaker 1: don't think there was one G seven country that had
Speaker 1: back to back negative GDP reading, so nobody was in
Speaker 1: an official recession. Things got revised a lot, which I
Speaker 1: felt was very interesting. It's just on the data front.
Speaker 1: But everyone ended up stronger I think than expected, especially
Speaker 1: in the US, So a lot of that US dollar
Speaker 1: strength was reflection of much stronger US strength relative to
Speaker 1: everyone else, and now over the last few months, it's
Speaker 1: been a reflection of I guess at FED expectations, at
Speaker 1: least over the last few weeks, in particular, just given
Speaker 1: how everyone's expecting the FED to not cut as quickly
Speaker 1: as originally had anticipation, just given again incoming Tearo's potential
Speaker 1: income impact on inflation, and now with the last dot
Speaker 1: plot showing only fifty bases points of great cuts penciled in,
Speaker 1: which by the way, I think m's sort of have
Speaker 1: to take with a grain of salt. That certainly put
Speaker 1: a little little new fire underneath the green back, and
Speaker 1: that's been very, very difficult to make calls good calls
Speaker 1: on the currency market, just given all this volatility. So
Speaker 1: the FED not cutting as quickly or as much, everyone
Speaker 1: else seeming to face lower growth as we're entering the
Speaker 1: new year, and more rate cuts coming like from the ECB,
Speaker 1: from the Bank of England, maybe not the Bake of Japan.
Speaker 1: The RBA is probably going to start cutting rates in February.
Speaker 1: That is going to also lower their weekend their currencies
Speaker 1: and put more strengths underneath the US dollar.
Speaker 3: I'm curious as the calendar flips to twenty twenty five,
Speaker 3: the Fed of COURUS will have new voters. Who are
Speaker 3: you keeping a close eye on for as we get
Speaker 3: closer to what people are arguing debatably that neutral rate.
Speaker 3: Who do you think is more of a close callumn
Speaker 3: to cents here?
Speaker 1: Well, you know what I think. I think I'm going
Speaker 1: to go back to just to see what i think.
Speaker 1: Fedhair pal is going to be the key FED policy
Speaker 1: maker of course, that makes the key decisions, and he's
Speaker 1: whatever he says sort of reflects I think the broader consensus.
Speaker 1: So I think it's just I'm going to keep listening
Speaker 1: to what the FED chair says. I mean, everyone else
Speaker 1: has their own opinion, everyone has their own dots. But
Speaker 1: I think ultimately it's going to be up to the
Speaker 1: FED chair to make that deciding factor. So I'm just
Speaker 1: going to go straight to the box and say it's
Speaker 1: going to be feed schair Pal.
Speaker 2: Jennifer, you're up there in Toronto. How are our good
Speaker 2: friends in Canada thinking about this new administration? Maybe some
Speaker 2: terroriffs because last I checked, we do a lot of
Speaker 2: trading with you guys up there.
Speaker 1: Yes, the US is our biggest trading partner. Seventy five
Speaker 1: percent of our experts head down to the US. So
Speaker 1: obviously the you know, we are we were already pretty
Speaker 1: nervous because the US MCA is upFrom renegotiation in May
Speaker 1: of twenty twenty six, so we already knew that there
Speaker 1: is something going on on that front. And now with
Speaker 1: the new threats of a twenty five percent tariff on
Speaker 1: both of the US's trading partners from that deal, from
Speaker 1: both Mexico and Canada obviously makes us very nervous and
Speaker 1: we're going to have to see if we are going
Speaker 1: to be able to do some you know, decent negotiations
Speaker 1: that will hopefully, you know, soften the blow and hopefully
Speaker 1: we won't see this play out even if it's you know,
Speaker 1: it's also going to depend on how long if he
Speaker 1: does do what he threatens, which is the twenty five
Speaker 1: percent tariff on Canadian imports, how long that's going to
Speaker 1: stick around for and you know, hopefully it's not going
Speaker 1: to come to fruition, but they will be very bad
Speaker 1: news for a Canadian economy. But we've got a two
Speaker 1: percent penciled in for Canadian GDP growth this year or
Speaker 1: for next year at least. Ray kusers still have had
Speaker 1: a good impact, but all that could be erased if
Speaker 1: we do see a blanket twenty five percent tear up
Speaker 1: on all Canadian imports.
Speaker 2: All right, we'll stay on top of that for everyone. Jenniferly,
Speaker 2: Senior e comress Managing director at Bimal Capital Markets. You
Speaker 2: appreciate getting some of your time