1 00:00:02,400 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio news. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,400 Speaker 2: with Lisa Bromwitz and a Marie Hordern. Join us each 4 00:00:18,480 --> 00:00:21,360 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,400 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,760 --> 00:00:27,400 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,480 --> 00:00:31,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,479 --> 00:00:37,080 Speaker 2: Bloomberg Terminal and the Bloomberg Business app. Barbara Duran of 10 00:00:37,159 --> 00:00:40,680 Speaker 2: BDA Capital writing, any legitimate threat to the independence of 11 00:00:40,680 --> 00:00:44,279 Speaker 2: the FED is to be taken seriously and negatively, as 12 00:00:44,280 --> 00:00:46,879 Speaker 2: it has the potential to undermine both the dollar and 13 00:00:47,040 --> 00:00:50,320 Speaker 2: US assets as safe havens for investment. Barbara Johnt is 14 00:00:50,400 --> 00:00:52,519 Speaker 2: now for more. Barbara and Mornch, Good morning. Let's talk 15 00:00:52,560 --> 00:00:55,720 Speaker 2: about that first line in that quote. Any legitimate threat 16 00:00:56,120 --> 00:00:57,480 Speaker 2: is to say legitimate threats. 17 00:00:57,560 --> 00:00:58,840 Speaker 3: Yeah, that's the question. 18 00:00:59,040 --> 00:01:01,760 Speaker 4: I mean in the past, you would think, no, it's 19 00:01:01,800 --> 00:01:05,440 Speaker 4: not legitimate because it's so obvious the negative ramifications of this. 20 00:01:05,880 --> 00:01:11,120 Speaker 4: But given the unpredictability we've seen in this president anything's possible. 21 00:01:11,200 --> 00:01:13,080 Speaker 4: And if the Supreme Court, we know this as you 22 00:01:13,120 --> 00:01:16,280 Speaker 4: mentioned earlier, the cases before them, if they ruled that 23 00:01:16,319 --> 00:01:20,240 Speaker 4: the president can replace people in these other independent agencies, 24 00:01:20,440 --> 00:01:23,160 Speaker 4: then I think you might consider it. But if Besson 25 00:01:23,240 --> 00:01:25,040 Speaker 4: is in there, and Besson does seem to be gaining 26 00:01:25,040 --> 00:01:27,840 Speaker 4: an influence with the president, hopefully it's not legitimate. 27 00:01:28,000 --> 00:01:30,600 Speaker 2: We started this year with the rebalancing towards assets out 28 00:01:30,640 --> 00:01:34,000 Speaker 2: sweat European equities ready to sounded to perform. Dollar weakness 29 00:01:34,120 --> 00:01:36,080 Speaker 2: kicked in. This seems to have taken on a new 30 00:01:36,120 --> 00:01:38,480 Speaker 2: phase over the last month or so. What do you 31 00:01:38,520 --> 00:01:40,480 Speaker 2: make of the new leg of this? What's behind it? 32 00:01:40,760 --> 00:01:41,800 Speaker 2: Of the past few weeks? 33 00:01:41,880 --> 00:01:43,959 Speaker 4: Well, I think with the tariff uncertainty, I mean, we 34 00:01:44,040 --> 00:01:46,120 Speaker 4: had the pause. You saw what happened with the market. 35 00:01:46,319 --> 00:01:48,160 Speaker 4: But I think there is a real question about the 36 00:01:48,160 --> 00:01:51,720 Speaker 4: credibility and legitimacy of this as a safe havement. As 37 00:01:51,760 --> 00:01:55,120 Speaker 4: we've seen and everybody's observed, we've had very unusual behavior. 38 00:01:55,200 --> 00:01:56,880 Speaker 4: You know, as terifts go up, we really shouldn't have 39 00:01:56,920 --> 00:01:59,400 Speaker 4: the dollar getting stronger as a flight to safety. It's 40 00:01:59,440 --> 00:02:02,120 Speaker 4: not happening, and in fact, the dollar is down five 41 00:02:02,160 --> 00:02:05,600 Speaker 4: percent against the euro and the pound, and also six 42 00:02:05,640 --> 00:02:08,320 Speaker 4: percents again at the end since early April, that's a lot. 43 00:02:08,440 --> 00:02:10,120 Speaker 4: I mean, as you said earlier, it's just it's been 44 00:02:10,160 --> 00:02:13,359 Speaker 4: parody just relatively recently, a few months ago. So it's 45 00:02:13,360 --> 00:02:15,320 Speaker 4: a real question and it's hard to see that changing 46 00:02:15,400 --> 00:02:17,560 Speaker 4: because even though we have this ninety day. 47 00:02:17,480 --> 00:02:19,040 Speaker 3: Pause, it is just temporary. 48 00:02:19,440 --> 00:02:21,240 Speaker 4: And so we also are waiting to see what they 49 00:02:21,280 --> 00:02:24,200 Speaker 4: decide on semis, on pharma, on lumber and copper and 50 00:02:24,280 --> 00:02:27,000 Speaker 4: all sorts of things. So there's really there's no way 51 00:02:27,160 --> 00:02:29,920 Speaker 4: yet to gauge the impact of these policies. Businesses are 52 00:02:29,960 --> 00:02:33,080 Speaker 4: still on hold, consumers are and every survey that's coming 53 00:02:33,120 --> 00:02:36,200 Speaker 4: in is showing, you know, sentiment is continues to decline, 54 00:02:36,320 --> 00:02:39,080 Speaker 4: so you know, we'll see what happens, but it's it's 55 00:02:39,160 --> 00:02:39,480 Speaker 4: not good. 56 00:02:39,600 --> 00:02:42,600 Speaker 1: Well, this speaks to the macroprolysis that Jim Zelter of 57 00:02:42,639 --> 00:02:46,360 Speaker 1: Apoloighen was mentioning earlier, talked about how do you gauge 58 00:02:46,480 --> 00:02:49,560 Speaker 1: your longer term acid allocation at a time or so 59 00:02:49,680 --> 00:02:52,680 Speaker 1: much has yet to be determined, Have we seen enough 60 00:02:53,040 --> 00:02:56,480 Speaker 1: to say definitively that you need to diversify away from 61 00:02:56,520 --> 00:03:01,200 Speaker 1: dollars de nominated assets versus traditional portfolio of say five 62 00:03:01,280 --> 00:03:02,000 Speaker 1: years ago. 63 00:03:03,000 --> 00:03:05,520 Speaker 4: Maybe, you know, because the problem here is the question 64 00:03:05,600 --> 00:03:07,799 Speaker 4: is always how much is the market discounting? All right, 65 00:03:07,880 --> 00:03:11,400 Speaker 4: the nastik is down fifteen percent plus a year to date, 66 00:03:11,720 --> 00:03:15,320 Speaker 4: SMP down ten percent. It's probably discounting a lot, but 67 00:03:15,400 --> 00:03:17,760 Speaker 4: we don't know the worst case. It seems that the 68 00:03:17,760 --> 00:03:20,400 Speaker 4: worst case is probably over in terms of the tariffs, 69 00:03:20,560 --> 00:03:21,000 Speaker 4: but there. 70 00:03:20,880 --> 00:03:21,600 Speaker 3: Is no way to judge. 71 00:03:21,680 --> 00:03:24,040 Speaker 4: So, you know, gold continues to make new highs. I 72 00:03:24,040 --> 00:03:26,639 Speaker 4: think it will continue because that the move toward gold 73 00:03:26,720 --> 00:03:29,520 Speaker 4: started before this, and that was really twenty two when 74 00:03:29,520 --> 00:03:32,359 Speaker 4: we froze the assets in Russia and treasure is suddenly like, oh, 75 00:03:32,440 --> 00:03:35,800 Speaker 4: maybe treasuries aren't the safe haven. And I think this continues. 76 00:03:35,840 --> 00:03:38,800 Speaker 4: It So problem with diversifying away, say to Europe all 77 00:03:38,840 --> 00:03:41,440 Speaker 4: the economies, if our worst case tariffs do come in, 78 00:03:41,600 --> 00:03:43,840 Speaker 4: they're going to be hurt as well, so their growth 79 00:03:43,880 --> 00:03:46,760 Speaker 4: is going to slow. So I think that for now 80 00:03:46,960 --> 00:03:49,720 Speaker 4: you just have to sort of diversify a bit, you know. 81 00:03:49,760 --> 00:03:51,480 Speaker 4: And I think a lot of investors are trying to 82 00:03:51,480 --> 00:03:54,880 Speaker 4: reorient their stock portfolios to more dividend, more high quality, 83 00:03:55,360 --> 00:03:57,520 Speaker 4: you know, and including gold. 84 00:03:57,560 --> 00:04:00,160 Speaker 1: At a time when so many people seem to be 85 00:04:00,200 --> 00:04:03,000 Speaker 1: a whip side by sentiment, what's the guiding light? 86 00:04:03,440 --> 00:04:05,320 Speaker 3: Data is messy, The soft data and. 87 00:04:05,240 --> 00:04:07,520 Speaker 1: The hard data aren't cohering, and we're hearing about the 88 00:04:07,560 --> 00:04:08,880 Speaker 1: lag time between the two. 89 00:04:09,320 --> 00:04:11,000 Speaker 3: Earnings are kind of pick. 90 00:04:10,800 --> 00:04:13,119 Speaker 1: Your own adventure, throw a dart and figure. 91 00:04:12,800 --> 00:04:14,000 Speaker 5: Out what your projection is. 92 00:04:14,520 --> 00:04:17,160 Speaker 1: Where is this sense of your north star? 93 00:04:18,040 --> 00:04:19,400 Speaker 3: You know, there isn't, you know? 94 00:04:19,480 --> 00:04:21,720 Speaker 4: I think because right now, all the data that's been 95 00:04:21,720 --> 00:04:26,000 Speaker 4: coming in, whether it's the CPIPPI looks good. Retail still good. 96 00:04:26,279 --> 00:04:29,880 Speaker 4: Balance sheets for both consumers and managements are good. But 97 00:04:29,920 --> 00:04:32,599 Speaker 4: that's looking backwards, and what you're starting to see earning 98 00:04:32,680 --> 00:04:34,480 Speaker 4: season started in earnest as we know a couple of 99 00:04:34,480 --> 00:04:37,360 Speaker 4: weeks ago with the banks, and the banks you know, 100 00:04:37,480 --> 00:04:40,599 Speaker 4: again looking forward, they see no problems as yet and 101 00:04:40,640 --> 00:04:42,760 Speaker 4: are not really increased in the reserves. But a lot 102 00:04:42,760 --> 00:04:45,400 Speaker 4: of company manager are starting to add, well, we can't 103 00:04:45,440 --> 00:04:49,320 Speaker 4: really give great guidance. There's this macro uncertainty read tariffs, 104 00:04:49,760 --> 00:04:52,320 Speaker 4: so it is really hard. I mean, for instance, in 105 00:04:52,360 --> 00:04:55,000 Speaker 4: our portfolios, we're not selling because in the in the 106 00:04:55,000 --> 00:04:57,240 Speaker 4: space of a tweet, the stock market could be up 107 00:04:57,240 --> 00:05:00,320 Speaker 4: a thousand points, and that's the real problem. Here there 108 00:05:00,360 --> 00:05:03,920 Speaker 4: is no predictability, but you have to say, Okay, I 109 00:05:03,960 --> 00:05:05,920 Speaker 4: think the worst is over, so we're holding. 110 00:05:06,240 --> 00:05:07,240 Speaker 3: If you have cash. 111 00:05:07,600 --> 00:05:10,600 Speaker 4: You know, there are opportunities at individual stocks coming up. 112 00:05:10,720 --> 00:05:12,520 Speaker 4: You can selectively take nibbles. 113 00:05:12,560 --> 00:05:14,400 Speaker 3: But I would not I would not be buying in 114 00:05:14,440 --> 00:05:15,880 Speaker 3: a wholesale way. There's just no way. 115 00:05:15,920 --> 00:05:21,320 Speaker 6: What would make you want to buy. 116 00:05:18,560 --> 00:05:22,400 Speaker 4: If we had some certainty in tariffs, which is hard 117 00:05:22,400 --> 00:05:24,680 Speaker 4: to see right now we've got ninety days, and if 118 00:05:24,720 --> 00:05:25,400 Speaker 4: we had more of. 119 00:05:25,360 --> 00:05:27,039 Speaker 3: A process, I mean, as we saw there. 120 00:05:27,279 --> 00:05:29,520 Speaker 4: There's a real question about the methodology when he brought 121 00:05:29,520 --> 00:05:31,960 Speaker 4: out his famous chart there, and I think there's been 122 00:05:32,000 --> 00:05:34,360 Speaker 4: a lot of questions about that. You know, if for 123 00:05:34,400 --> 00:05:37,600 Speaker 4: some reason in the next few months we saw more stability, 124 00:05:37,600 --> 00:05:40,280 Speaker 4: we had the tariffs that were settled, and we're sure 125 00:05:40,320 --> 00:05:42,200 Speaker 4: that they were settled, and it was a way to 126 00:05:42,240 --> 00:05:44,400 Speaker 4: measure the impact, then you. 127 00:05:44,360 --> 00:05:45,880 Speaker 3: Know, and again depending what that is. 128 00:05:46,000 --> 00:05:48,480 Speaker 4: You know, if they're too high, even at this ten percent, 129 00:05:48,720 --> 00:05:51,400 Speaker 4: how inflationary are they? You know, the Fed has said 130 00:05:51,400 --> 00:05:53,600 Speaker 4: they can't act because they don't know, you know, how 131 00:05:53,680 --> 00:05:55,800 Speaker 4: much is going to impact inflation, how much will grow slow? 132 00:05:55,839 --> 00:05:58,080 Speaker 4: And you're seeing around the street every house is taking 133 00:05:58,080 --> 00:06:01,400 Speaker 4: down their estimates on GDP growth helping their inflation, but 134 00:06:01,480 --> 00:06:03,600 Speaker 4: we really don't know how big it will be. 135 00:06:03,760 --> 00:06:06,320 Speaker 7: Terry Haynes joined us earlier from Washington, and he basically 136 00:06:06,320 --> 00:06:09,320 Speaker 7: said the market's way too focus on tariffs. Jay Powell's 137 00:06:09,360 --> 00:06:12,040 Speaker 7: not going anywhere, and that you have to start focusing 138 00:06:12,040 --> 00:06:16,400 Speaker 7: on tax cuts. This extension of TCGA and maybe another sweetener. 139 00:06:16,480 --> 00:06:18,640 Speaker 6: Is that enough to be excited about your end. 140 00:06:18,640 --> 00:06:20,840 Speaker 4: Not for me, you know, you know, I think they 141 00:06:20,839 --> 00:06:23,200 Speaker 4: were right to focus on the tariffs, and what they're 142 00:06:23,279 --> 00:06:25,480 Speaker 4: the administration is trying to get is to focus on 143 00:06:25,560 --> 00:06:26,400 Speaker 4: coming tax cuts. 144 00:06:26,440 --> 00:06:27,960 Speaker 3: But really, how deep can the cuts be? 145 00:06:28,279 --> 00:06:31,200 Speaker 4: I mean, we're talking really an extension of the cuts, 146 00:06:31,279 --> 00:06:32,560 Speaker 4: and there'll be some of there's a give and take 147 00:06:32,600 --> 00:06:35,360 Speaker 4: going on right now, but I don't see them being draconian, 148 00:06:35,600 --> 00:06:37,840 Speaker 4: and how can they be. I mean, for that exploding 149 00:06:37,839 --> 00:06:41,120 Speaker 4: the deficit even more so in deregulation. I mean, certainly 150 00:06:41,160 --> 00:06:44,919 Speaker 4: the capital one, the approval of capital one taking over discovery. 151 00:06:45,160 --> 00:06:48,920 Speaker 4: That's also will give some investors hope that okay, a 152 00:06:49,160 --> 00:06:52,480 Speaker 4: deregulation is starting, but that will help on the margin. 153 00:06:52,520 --> 00:06:54,560 Speaker 4: But I think the tariffs are so important because that 154 00:06:54,640 --> 00:06:55,719 Speaker 4: infects the entire world. 155 00:06:55,880 --> 00:06:57,560 Speaker 2: You touched on something that I've heard quite a few 156 00:06:57,600 --> 00:07:00,240 Speaker 2: times after the last week, people who are super badish 157 00:07:00,240 --> 00:07:03,080 Speaker 2: but aren't selling because they're worried about one positive headline 158 00:07:03,120 --> 00:07:05,600 Speaker 2: cross in the Bloomberg at least to some massive upside 159 00:07:05,640 --> 00:07:08,360 Speaker 2: move on the S and P. And I wonder, actually, 160 00:07:08,360 --> 00:07:10,880 Speaker 2: what's going to make people start selling again, because in 161 00:07:10,920 --> 00:07:13,880 Speaker 2: the meantime the data seems to be distorted by what 162 00:07:13,880 --> 00:07:16,640 Speaker 2: we're seeing in a pull forward of purchases by consumers 163 00:07:16,680 --> 00:07:19,320 Speaker 2: companies alike, that maybe that data is flattered for the 164 00:07:19,360 --> 00:07:21,560 Speaker 2: time being. What would it take to start selling again 165 00:07:21,880 --> 00:07:22,960 Speaker 2: in the sancuity market. 166 00:07:22,960 --> 00:07:24,760 Speaker 4: Well, that is a good question because I think, you know, 167 00:07:24,800 --> 00:07:27,040 Speaker 4: what we've seen to date and certain venture on retail 168 00:07:27,080 --> 00:07:30,000 Speaker 4: behavior is buying on weakness, which has not not been 169 00:07:30,040 --> 00:07:32,560 Speaker 4: a good thing. And so I think that once we 170 00:07:32,640 --> 00:07:36,120 Speaker 4: get some established you know, presence here or even anytime 171 00:07:36,400 --> 00:07:38,520 Speaker 4: we have a sudden tweet they sends the market one thousand, 172 00:07:38,560 --> 00:07:40,720 Speaker 4: you've got to be lightening up. So and I think 173 00:07:40,760 --> 00:07:42,560 Speaker 4: that's you know, look, last week, you didn't have time 174 00:07:42,920 --> 00:07:44,600 Speaker 4: or in two weeks ago what had happened. Mark was 175 00:07:44,640 --> 00:07:46,560 Speaker 4: teve thousand and gave back half of that the next day. 176 00:07:46,920 --> 00:07:49,440 Speaker 4: So the rapidity of these moves, it's very hard. Unless 177 00:07:49,440 --> 00:07:51,880 Speaker 4: you're a trader or your algorithmic trader, it's very hard 178 00:07:51,960 --> 00:07:54,520 Speaker 4: to take action. So you know, I think you know 179 00:07:54,600 --> 00:07:56,920 Speaker 4: for us, it's just you are in good stocks, you're 180 00:07:56,960 --> 00:08:00,000 Speaker 4: in good fundamentals, high quality. You just have to wait 181 00:08:00,080 --> 00:08:01,320 Speaker 4: out the storm and storm. 182 00:08:01,320 --> 00:08:03,680 Speaker 2: It is futures right now down about one percent on 183 00:08:03,720 --> 00:08:05,880 Speaker 2: the SMP. Barmbara, good to see you as always, thanks 184 00:08:05,880 --> 00:08:16,880 Speaker 2: to drop and bite. Barmba A on the of BDA 185 00:08:18,000 --> 00:08:20,760 Speaker 2: to extend the conversation, Terry Haynes of Panchee Policy joined 186 00:08:20,800 --> 00:08:22,840 Speaker 2: us now for more. Terry, welcome to the program. A 187 00:08:22,880 --> 00:08:25,640 Speaker 2: lot of bark here. How strong is the potential bite? 188 00:08:26,520 --> 00:08:29,880 Speaker 8: I think not that strong, John, Thanks, Uh, you know. 189 00:08:29,960 --> 00:08:34,199 Speaker 8: I My summary of this really comes down to about 190 00:08:34,240 --> 00:08:37,880 Speaker 8: three things. One is that Trump is trying to pass 191 00:08:37,960 --> 00:08:41,720 Speaker 8: the buck to Pal for whatever market problems exist. Markets 192 00:08:41,720 --> 00:08:44,240 Speaker 8: aren't going to bite on that, of course, they're very 193 00:08:44,280 --> 00:08:48,120 Speaker 8: fixed on Trump. Secondly, you've got a situation where as 194 00:08:48,160 --> 00:08:53,200 Speaker 8: you've been reporting, the Wall Street community is already reacting 195 00:08:53,679 --> 00:08:56,839 Speaker 8: this time to the possibility of PALS removal in a 196 00:08:56,880 --> 00:09:00,319 Speaker 8: way that they haven't before. So that's a real con 197 00:09:00,600 --> 00:09:04,960 Speaker 8: And finally, as Lisa mentioned earlier, you had the folks 198 00:09:05,000 --> 00:09:08,360 Speaker 8: in Congress on the Sunday shows all basically providing a 199 00:09:08,360 --> 00:09:12,360 Speaker 8: little bit of subtle pushback. So there's I think there's 200 00:09:12,400 --> 00:09:16,000 Speaker 8: at least three reasons of why the bark is worse 201 00:09:16,040 --> 00:09:16,520 Speaker 8: than the bite. 202 00:09:16,640 --> 00:09:16,840 Speaker 9: Terry. 203 00:09:16,880 --> 00:09:18,520 Speaker 7: I love to get your thoughts though on what Kevin 204 00:09:18,600 --> 00:09:21,400 Speaker 7: Hassett said, the NEC director, and he said that they're 205 00:09:21,480 --> 00:09:22,760 Speaker 7: studying that option. 206 00:09:23,000 --> 00:09:25,160 Speaker 6: He basically left the door open. 207 00:09:26,320 --> 00:09:28,600 Speaker 9: Well, I think he should, right. 208 00:09:29,880 --> 00:09:32,559 Speaker 8: He's a lot of things, but fundamentally, he's a staffer, 209 00:09:32,720 --> 00:09:36,160 Speaker 8: and if he publicly descends from whatever the President's doing, 210 00:09:36,200 --> 00:09:37,920 Speaker 8: he's going to be out of there pretty quickly. So 211 00:09:38,800 --> 00:09:40,440 Speaker 8: you know, I look at that as a matter of 212 00:09:40,480 --> 00:09:43,000 Speaker 8: staff loyalty and not much else. You know, they've been 213 00:09:43,000 --> 00:09:45,800 Speaker 8: studying this since twenty eighteen or twenty nineteen, by the way, 214 00:09:45,880 --> 00:09:48,400 Speaker 8: so I welcome their continued study. 215 00:09:48,920 --> 00:09:51,560 Speaker 5: I want to get your thoughts. What I also asked 216 00:09:51,640 --> 00:09:52,240 Speaker 5: Marvin Lowe. 217 00:09:52,280 --> 00:09:54,880 Speaker 7: The fact that we're having this discussion out loud, the 218 00:09:54,880 --> 00:09:57,160 Speaker 7: fact that the President didn't make clear what he said 219 00:09:57,480 --> 00:09:59,640 Speaker 7: last week, which talking about his termination. 220 00:10:00,480 --> 00:10:01,840 Speaker 6: Is that enough to do. 221 00:10:01,840 --> 00:10:07,720 Speaker 9: Damage to damage to Trump or to Powell, to Trump. 222 00:10:07,720 --> 00:10:10,600 Speaker 6: To the position as well as to financial market. 223 00:10:11,400 --> 00:10:13,800 Speaker 8: I think it doesn't help financial markets. I certainly don't 224 00:10:13,800 --> 00:10:15,640 Speaker 8: think it helps the president. I mean, you know, you 225 00:10:15,720 --> 00:10:19,040 Speaker 8: can parse the statement that you all have been running 226 00:10:19,040 --> 00:10:21,520 Speaker 8: in the bumpers and you know, if I want him 227 00:10:21,520 --> 00:10:22,719 Speaker 8: out of there, he'll be out of there. 228 00:10:22,720 --> 00:10:24,600 Speaker 9: Well, you know, he's not out of there. 229 00:10:24,600 --> 00:10:27,839 Speaker 8: And you don't like his policies, so you know, so 230 00:10:27,920 --> 00:10:32,080 Speaker 8: he's staying, so you must like his policies. So there's 231 00:10:32,760 --> 00:10:36,440 Speaker 8: that kind of circularity. And number one and number two, 232 00:10:36,520 --> 00:10:38,839 Speaker 8: you know, the last thing that the Trump needs right 233 00:10:38,880 --> 00:10:41,760 Speaker 8: now is is Wall Street fleeing on him when he's 234 00:10:41,760 --> 00:10:43,400 Speaker 8: in the middle of when he's in the middle of 235 00:10:43,440 --> 00:10:46,920 Speaker 8: the terrified firstly, and secondly when tax cuts, which are 236 00:10:46,960 --> 00:10:49,720 Speaker 8: still very very likely at eighty percent having come online. 237 00:10:49,760 --> 00:10:52,080 Speaker 1: Yet it feels like President Trump is playing good cop, 238 00:10:52,120 --> 00:10:53,600 Speaker 1: bad cop with markets right now. 239 00:10:53,840 --> 00:10:54,520 Speaker 9: Bad cop, I. 240 00:10:54,480 --> 00:10:56,480 Speaker 1: Don't know about your own Powell, good cop, Let's make 241 00:10:56,520 --> 00:10:58,360 Speaker 1: a deal. All of a sudden, all of these deals 242 00:10:58,360 --> 00:11:01,080 Speaker 1: potentially are on the table with Japan, with EU. And 243 00:11:01,120 --> 00:11:03,360 Speaker 1: that's the upside that people are looking for. What if 244 00:11:03,360 --> 00:11:06,719 Speaker 1: this actually leads to some sort of resolution. How much 245 00:11:06,800 --> 00:11:09,520 Speaker 1: to expect that to really take the brunt of oxygen. 246 00:11:09,920 --> 00:11:14,120 Speaker 8: This week, well, I think this week the White House 247 00:11:14,160 --> 00:11:18,640 Speaker 8: would be smart to continue to bring out the prospect 248 00:11:18,640 --> 00:11:21,760 Speaker 8: of deals being done. And I think they were reasonably 249 00:11:21,800 --> 00:11:23,800 Speaker 8: effective at that the last couple of weeks. 250 00:11:23,920 --> 00:11:25,679 Speaker 9: And that's all of the good. 251 00:11:26,800 --> 00:11:30,440 Speaker 8: The better it is for what's best for the White 252 00:11:30,480 --> 00:11:32,360 Speaker 8: House and what's best for the markets at this point 253 00:11:32,360 --> 00:11:35,000 Speaker 8: are really the same thing, which are to see progress 254 00:11:35,080 --> 00:11:39,760 Speaker 8: being made on the tariff deals, and to clarify what 255 00:11:39,840 --> 00:11:42,040 Speaker 8: I always think of as kind of the best and 256 00:11:42,160 --> 00:11:45,640 Speaker 8: descendant role here, which is that these things are supposed 257 00:11:45,640 --> 00:11:48,480 Speaker 8: to be path dependent, and if we do deals, tariff 258 00:11:48,600 --> 00:11:52,319 Speaker 8: rates to excuse me, tariff barriers and ex tariff barriers 259 00:11:52,320 --> 00:11:56,559 Speaker 8: come down for the United States and for others benefiting markets. 260 00:11:56,600 --> 00:11:57,319 Speaker 9: That's all good. 261 00:11:57,800 --> 00:11:59,640 Speaker 8: By the time you get to next week, what you're 262 00:11:59,640 --> 00:12:03,280 Speaker 8: going to say is more progress being made on tax cuts, 263 00:12:03,600 --> 00:12:06,120 Speaker 8: the idea of a third quarter, fourth quarter deal, and 264 00:12:06,960 --> 00:12:09,120 Speaker 8: you know, hopefully that helps them get through this patch. 265 00:12:09,400 --> 00:12:09,679 Speaker 3: Terry. 266 00:12:09,720 --> 00:12:12,160 Speaker 1: Should and will are two very different things, and it 267 00:12:12,240 --> 00:12:15,000 Speaker 1: seems like you believe that markets do have some sort 268 00:12:15,040 --> 00:12:17,439 Speaker 1: of I don't want to say veto power, but certainly 269 00:12:17,520 --> 00:12:21,160 Speaker 1: wait in the president's mind what gives you that concrete sense, 270 00:12:21,200 --> 00:12:22,760 Speaker 1: Given the fact that there have been a number of 271 00:12:22,840 --> 00:12:25,760 Speaker 1: occasions where President Trump has come out and pushed back 272 00:12:25,800 --> 00:12:29,480 Speaker 1: against caring whatsoever about the move in the markets, I. 273 00:12:29,480 --> 00:12:33,000 Speaker 8: Think it's really this, you know, I was one of 274 00:12:33,000 --> 00:12:34,800 Speaker 8: the first, maybe the first, to say that I think 275 00:12:34,840 --> 00:12:37,880 Speaker 8: Trump cared about markets on tariffs with respect to to 276 00:12:38,120 --> 00:12:39,000 Speaker 8: imposing them. 277 00:12:39,679 --> 00:12:40,439 Speaker 9: Tariffs, in my. 278 00:12:40,480 --> 00:12:43,040 Speaker 8: View, have always been part of a much broader economic 279 00:12:43,760 --> 00:12:46,680 Speaker 8: plan that includes tax cuts and some other things. They've 280 00:12:46,679 --> 00:12:49,520 Speaker 8: been I think, very clear about that. But at the 281 00:12:49,520 --> 00:12:53,400 Speaker 8: same time, it is not in the President's political interest 282 00:12:53,480 --> 00:12:56,800 Speaker 8: at all to have markets go seriously wobbly on him 283 00:12:56,800 --> 00:12:58,600 Speaker 8: at a time where he's trying to impose a lot 284 00:12:58,640 --> 00:13:01,480 Speaker 8: of those things. So I think I think that market 285 00:13:01,559 --> 00:13:06,520 Speaker 8: pressure actually helps define the situation a little bit better 286 00:13:06,559 --> 00:13:08,400 Speaker 8: politically as well as economically. 287 00:13:08,520 --> 00:13:10,960 Speaker 7: Terry, you keep mentioning tax cuts, the market is pricing 288 00:13:10,960 --> 00:13:12,360 Speaker 7: an extension of TCGA. 289 00:13:12,520 --> 00:13:13,719 Speaker 5: What cuts are you. 290 00:13:13,720 --> 00:13:15,520 Speaker 6: Talking about now? 291 00:13:15,600 --> 00:13:18,160 Speaker 8: I'm talking about the extension of the twenty seventeen cuts, 292 00:13:18,160 --> 00:13:20,720 Speaker 8: And then you're going to see a bunch of a 293 00:13:20,760 --> 00:13:23,640 Speaker 8: bunch of tweaks to that, not just the taxes on 294 00:13:23,679 --> 00:13:26,959 Speaker 8: tips thing that President keeps talking about and other things. 295 00:13:27,080 --> 00:13:29,160 Speaker 8: But I think you're also going to see a restructuring 296 00:13:29,920 --> 00:13:37,559 Speaker 8: to really favor increased US manufacturing and including reshoring, among 297 00:13:37,600 --> 00:13:38,040 Speaker 8: other things. 298 00:13:38,440 --> 00:13:40,720 Speaker 2: Terry, I appreciate your input as always. Thanks for catching 299 00:13:40,800 --> 00:13:50,800 Speaker 2: up with this this morning. Terry Hanes there Panchaia policy, 300 00:13:53,200 --> 00:13:56,839 Speaker 2: Johnna's Commas Ministry writing, if such a situation occurs, China 301 00:13:57,040 --> 00:14:00,800 Speaker 2: will never accept it and will resolutely take reciprocal countermeasures. 302 00:14:00,920 --> 00:14:02,920 Speaker 2: Lada middle of the China basebook joins us now for 303 00:14:03,080 --> 00:14:05,360 Speaker 2: more Leada and welcome to the program. So let's talk 304 00:14:05,360 --> 00:14:07,920 Speaker 2: about China. The President keeps saying China wants to come 305 00:14:07,920 --> 00:14:09,640 Speaker 2: to the table and make a deal. Are you seeing 306 00:14:09,720 --> 00:14:12,800 Speaker 2: any sign that China is willing to come to the table. 307 00:14:14,520 --> 00:14:16,839 Speaker 10: Not yet, But I don't think coming to the table 308 00:14:16,920 --> 00:14:18,840 Speaker 10: is that big a lift for either side. You know, 309 00:14:18,840 --> 00:14:20,440 Speaker 10: if you if you read the headlines, it makes it 310 00:14:20,480 --> 00:14:22,760 Speaker 10: look like the United States is spiraling in one direction, 311 00:14:23,160 --> 00:14:25,920 Speaker 10: China's spiraling in the other direction. There's just nothing that 312 00:14:25,960 --> 00:14:28,800 Speaker 10: could bridge the gap. But the real gap right now 313 00:14:28,880 --> 00:14:31,960 Speaker 10: is these enormously high teriffs. But there's there's just not 314 00:14:32,000 --> 00:14:34,240 Speaker 10: that much difference between one hundred and forty five percent 315 00:14:34,280 --> 00:14:37,000 Speaker 10: tariffs one hundred and forty five thousand percent terraffs because 316 00:14:37,000 --> 00:14:39,080 Speaker 10: you just don't have Chinese goods that are competitive at 317 00:14:39,120 --> 00:14:41,920 Speaker 10: anywhere near that level. So there is a you know, 318 00:14:41,920 --> 00:14:44,440 Speaker 10: whether it's one forty five down to some other level, 319 00:14:44,480 --> 00:14:46,560 Speaker 10: to one twenty five, one oh five eighty five, there's 320 00:14:46,720 --> 00:14:50,560 Speaker 10: these are arbitrary levels. There's nothing economically significant about staying 321 00:14:50,560 --> 00:14:53,440 Speaker 10: at these levels, which means the President could take these 322 00:14:53,520 --> 00:14:56,840 Speaker 10: levels down, not be giving up anything of economic substance, 323 00:14:56,880 --> 00:14:59,200 Speaker 10: but bring the Chinese back to the table. Are they 324 00:14:59,200 --> 00:15:01,680 Speaker 10: prepared to do that? Maybe not yet, but they have 325 00:15:01,800 --> 00:15:03,280 Speaker 10: that card in their pocket. And I think that if 326 00:15:03,400 --> 00:15:06,040 Speaker 10: if that was something that the White House dangled, then 327 00:15:06,040 --> 00:15:07,720 Speaker 10: I think that the Chinese would be recepted to it. 328 00:15:07,760 --> 00:15:09,800 Speaker 2: And Lena one that it goes once the negotiations began, 329 00:15:09,920 --> 00:15:12,440 Speaker 2: what would you anticipate the negotiations would be over. 330 00:15:13,640 --> 00:15:15,920 Speaker 10: Well, that is the big question, and that's actually the 331 00:15:15,960 --> 00:15:17,960 Speaker 10: big question with every trade deal, you know, the you. 332 00:15:17,920 --> 00:15:19,360 Speaker 9: Know, the talk. 333 00:15:19,160 --> 00:15:21,600 Speaker 10: Coming out a lot of these these uh these negotiation 334 00:15:21,720 --> 00:15:23,920 Speaker 10: rooms is what in the world does the United States want? 335 00:15:23,920 --> 00:15:25,520 Speaker 10: Does it simply want to narrow the trade deve sit 336 00:15:25,560 --> 00:15:28,320 Speaker 10: does it want some sort of other uh you know, uh, 337 00:15:28,360 --> 00:15:28,720 Speaker 10: you know. 338 00:15:28,840 --> 00:15:32,200 Speaker 9: Victories in other lanes. Nobody really knows. 339 00:15:32,480 --> 00:15:35,360 Speaker 10: I would say that the US China trade negotiations could 340 00:15:35,360 --> 00:15:38,320 Speaker 10: go in two different directions. You could have a you know, 341 00:15:38,360 --> 00:15:41,800 Speaker 10: a TikTok, a feednel cooperation, and you know, maybe some 342 00:15:41,840 --> 00:15:46,280 Speaker 10: concessions about Panama Canal look, you know, uh, properties, along 343 00:15:46,320 --> 00:15:48,800 Speaker 10: with some more buying, which is basically phase one plus. 344 00:15:49,320 --> 00:15:50,640 Speaker 9: That's something that Chinese. 345 00:15:50,360 --> 00:15:52,800 Speaker 10: Are probably very interested in coming to the table with 346 00:15:52,840 --> 00:15:55,320 Speaker 10: if they can get a receptive audience to the US side. 347 00:15:55,520 --> 00:15:58,200 Speaker 10: If it's more than that, if there are more uss 348 00:15:58,200 --> 00:16:00,520 Speaker 10: this becomes a lot more difficult certainly the United States 349 00:16:00,560 --> 00:16:01,680 Speaker 10: and not gon to be able to tell China to 350 00:16:01,760 --> 00:16:05,440 Speaker 10: restructure and have that happen. So basically, the administration has 351 00:16:05,480 --> 00:16:06,840 Speaker 10: to come out with a list of demands and then 352 00:16:06,880 --> 00:16:09,200 Speaker 10: the Chinese can see whether they're serious or not. Until 353 00:16:09,240 --> 00:16:11,320 Speaker 10: that happens, you know, they're talking past each. 354 00:16:11,200 --> 00:16:13,800 Speaker 1: Other leland who has the more leverage at this point, 355 00:16:13,920 --> 00:16:16,960 Speaker 1: Given the fact that some people believe that the US 356 00:16:16,960 --> 00:16:20,520 Speaker 1: would be disproportionately hurt by some of the export bands 357 00:16:20,600 --> 00:16:23,280 Speaker 1: or the export restrictions put on by China. 358 00:16:24,240 --> 00:16:26,720 Speaker 10: Well it's tricky because if this were a bilateral spat, 359 00:16:26,760 --> 00:16:31,400 Speaker 10: the US would have considerably more leverage because of the 360 00:16:31,440 --> 00:16:34,600 Speaker 10: size of the of the trade deficit. That doesn't mean 361 00:16:34,600 --> 00:16:37,200 Speaker 10: that China hasn't worked for years in order to create 362 00:16:37,240 --> 00:16:41,000 Speaker 10: supply chain choke points to create other vulnerabilities, you know, 363 00:16:41,000 --> 00:16:44,400 Speaker 10: in US supply chains. That's absolutely true, But I think 364 00:16:44,440 --> 00:16:46,280 Speaker 10: the United States would have more in a one on 365 00:16:46,280 --> 00:16:48,400 Speaker 10: one matchup. The problem is this is going on in 366 00:16:48,440 --> 00:16:52,680 Speaker 10: the backdrop of huge dislocations around the globe in trade. 367 00:16:52,680 --> 00:16:55,120 Speaker 10: As tariffs are being weighed. Are they going to stay lower, 368 00:16:55,160 --> 00:16:57,560 Speaker 10: are they going to be much much higher? Nobody really knows. 369 00:16:57,600 --> 00:17:00,400 Speaker 10: So with the uncertainty, it's create another complica shi for 370 00:17:00,400 --> 00:17:03,800 Speaker 10: the administration in saying we're solid here, We're going to 371 00:17:03,840 --> 00:17:07,040 Speaker 10: force this on you. It just muddies the picture in 372 00:17:07,080 --> 00:17:08,719 Speaker 10: a way that would not be true if this were 373 00:17:08,760 --> 00:17:09,639 Speaker 10: a one on one battle. 374 00:17:09,800 --> 00:17:12,879 Speaker 1: Adding on to the muddied pictures, some people are speculating 375 00:17:12,920 --> 00:17:15,679 Speaker 1: that in the United States, as the government looks to 376 00:17:15,760 --> 00:17:19,320 Speaker 1: a trench spending and start to really just get its 377 00:17:19,359 --> 00:17:22,280 Speaker 1: balance seat in order, China's expanding and you're going to 378 00:17:22,280 --> 00:17:23,879 Speaker 1: see the growth on the back end of that, and 379 00:17:24,000 --> 00:17:27,000 Speaker 1: you're already starting to see consumer activity picking back up, 380 00:17:27,320 --> 00:17:29,520 Speaker 1: I know that Leland, you track this really well in 381 00:17:29,600 --> 00:17:33,840 Speaker 1: terms of anecdotal and non government sources, in terms of 382 00:17:33,880 --> 00:17:37,360 Speaker 1: the economic activity. How much is the truth matching the narrative. 383 00:17:38,720 --> 00:17:41,600 Speaker 10: Well, you'll be shocked to hear the truth right now 384 00:17:41,680 --> 00:17:45,399 Speaker 10: is not matching the narrative. Obviously, Beijing has a reason 385 00:17:45,480 --> 00:17:47,960 Speaker 10: to look like they have fortified their economy for whatever 386 00:17:48,040 --> 00:17:49,840 Speaker 10: is to come. And I think to some degree they 387 00:17:49,880 --> 00:17:52,560 Speaker 10: have preped prepped the system for being able to do 388 00:17:52,600 --> 00:17:54,040 Speaker 10: bigger fiscal etc. 389 00:17:54,359 --> 00:17:56,520 Speaker 9: If they need to do it down the line. 390 00:17:56,640 --> 00:17:59,000 Speaker 10: But you look at our data and you see consumption 391 00:17:59,040 --> 00:18:01,680 Speaker 10: conse sometion is very weak. You know, Q one wasn't 392 00:18:01,720 --> 00:18:05,520 Speaker 10: a terrible quarter, but March was weak. Consumption was weak. 393 00:18:05,760 --> 00:18:08,200 Speaker 9: Why why were some of the things not worse off? 394 00:18:08,280 --> 00:18:10,600 Speaker 10: Because you had a sort of rebound in property and 395 00:18:10,640 --> 00:18:14,760 Speaker 10: you had a rebound in parts of industry. The consumption, 396 00:18:14,960 --> 00:18:17,080 Speaker 10: the consumption side of things do not look good. So 397 00:18:17,200 --> 00:18:19,640 Speaker 10: nothing they're doing on that side is showing a real effect. 398 00:18:19,880 --> 00:18:22,480 Speaker 10: So I don't think that they're not falling off a cliff. 399 00:18:22,480 --> 00:18:25,480 Speaker 9: They're not. They're not in doomsday yet, but they're certainly not. 400 00:18:26,480 --> 00:18:28,400 Speaker 10: The consumer is not coming to the rescue right now 401 00:18:28,440 --> 00:18:30,520 Speaker 10: and probably in China never will leland. 402 00:18:30,520 --> 00:18:33,240 Speaker 7: When can we expect a call between President Trump and 403 00:18:33,240 --> 00:18:34,040 Speaker 7: Shuji Pain. 404 00:18:35,720 --> 00:18:37,399 Speaker 9: When the ten years sends the right signal? 405 00:18:37,480 --> 00:18:40,680 Speaker 10: I mean, look to their credit, the administration came into 406 00:18:40,720 --> 00:18:42,600 Speaker 10: this saying we're going to do what we want to 407 00:18:42,640 --> 00:18:44,480 Speaker 10: do on tariffs, and we're not going to be dissuaded 408 00:18:44,520 --> 00:18:47,399 Speaker 10: by short term market movements. That's the equities market, and 409 00:18:47,400 --> 00:18:49,600 Speaker 10: that's true, but the bond market has a much more 410 00:18:49,600 --> 00:18:52,160 Speaker 10: restraining effect on everyone, and that includes the White House. 411 00:18:52,200 --> 00:18:53,920 Speaker 10: And so I think what you're going to see is 412 00:18:53,960 --> 00:18:57,720 Speaker 10: the bond market talking. If it continues to show displeasure, 413 00:18:57,760 --> 00:19:01,480 Speaker 10: there's going to be increasing pressure on administration to do something, 414 00:19:01,840 --> 00:19:04,440 Speaker 10: not necessarily peel back in a massive way on this 415 00:19:04,560 --> 00:19:06,240 Speaker 10: or that, but show that they. 416 00:19:06,080 --> 00:19:07,200 Speaker 9: Have a game plan. 417 00:19:07,320 --> 00:19:09,320 Speaker 10: And the game plan is not to abandon the US 418 00:19:09,440 --> 00:19:11,920 Speaker 10: dollar as a reserve currency. So they have to move 419 00:19:11,960 --> 00:19:16,119 Speaker 10: towards solidifying something that has hard themes that markets can trust, 420 00:19:16,440 --> 00:19:18,360 Speaker 10: and to the extent that they need to give concessions 421 00:19:18,520 --> 00:19:22,200 Speaker 10: with rates at ten percent everywhere around the globe except China. 422 00:19:22,400 --> 00:19:24,600 Speaker 9: That's one place that they may end up moving. 423 00:19:24,880 --> 00:19:27,600 Speaker 7: It feels like when you hear from the president or 424 00:19:27,720 --> 00:19:28,720 Speaker 7: the Press secretary. 425 00:19:28,960 --> 00:19:31,000 Speaker 5: They're saying, we're waiting for she to call. 426 00:19:31,040 --> 00:19:33,800 Speaker 7: We're going to be very gracious when the Chinese reach out. 427 00:19:34,040 --> 00:19:35,760 Speaker 6: Are you saying that if we see a. 428 00:19:35,760 --> 00:19:37,959 Speaker 7: Higher ten year yield, it's going to be the United 429 00:19:38,000 --> 00:19:40,440 Speaker 7: States trying to get on the phone with Hijinpaning, not 430 00:19:40,520 --> 00:19:41,320 Speaker 7: the other way around. 431 00:19:43,520 --> 00:19:45,119 Speaker 10: I think there's a lot more trying to get on 432 00:19:45,119 --> 00:19:47,040 Speaker 10: the phone between the two of them than people are 433 00:19:47,040 --> 00:19:50,040 Speaker 10: talking about. The narrative is always going to be not us, 434 00:19:50,080 --> 00:19:52,160 Speaker 10: it was them, and that's going to be the story 435 00:19:52,160 --> 00:19:52,520 Speaker 10: in China. 436 00:19:52,520 --> 00:19:53,920 Speaker 9: That's going to be the story of the United States. 437 00:19:54,040 --> 00:19:56,159 Speaker 10: But all they really need to do is put something 438 00:19:56,200 --> 00:19:58,280 Speaker 10: on the table that looks like that there are be 439 00:19:58,320 --> 00:20:00,520 Speaker 10: tariff concessions on the US side, and that there's a 440 00:20:00,560 --> 00:20:03,040 Speaker 10: willingness to talk on the Chinese side. I'm not saying 441 00:20:03,040 --> 00:20:05,560 Speaker 10: that they're they're there yet, but this is because the 442 00:20:05,640 --> 00:20:08,800 Speaker 10: rates are arbitrary. As we discussed before, there's nothing that's 443 00:20:08,960 --> 00:20:12,080 Speaker 10: that that you know, it pushes the White House to 444 00:20:12,200 --> 00:20:14,000 Speaker 10: keep the rates at one hundred and forty five or 445 00:20:14,000 --> 00:20:16,399 Speaker 10: one five or one oh five or eighty five or 446 00:20:16,400 --> 00:20:18,920 Speaker 10: any particular amount that means that there is wiggle room, 447 00:20:18,960 --> 00:20:21,280 Speaker 10: and I think if you have market pressures, particularly from 448 00:20:21,280 --> 00:20:23,400 Speaker 10: the bond market, then you're going to have the two 449 00:20:23,480 --> 00:20:26,439 Speaker 10: sides magically find reasons to come together. 450 00:20:26,680 --> 00:20:29,040 Speaker 2: Hey, Leidan, got ahea from you? Leida meta that of 451 00:20:29,119 --> 00:20:41,639 Speaker 2: China and Iceberg. Cameron Dilson in New West twelth Sanga 452 00:20:41,680 --> 00:20:44,520 Speaker 2: lack of fend independence is a quote bad scenario for 453 00:20:44,560 --> 00:20:47,600 Speaker 2: the US economy and what we call a zoo statement 454 00:20:47,880 --> 00:20:50,080 Speaker 2: by the supposed statement on the show and a best 455 00:20:50,080 --> 00:20:52,320 Speaker 2: state now on the lunk end camera joins just now 456 00:20:52,320 --> 00:20:54,360 Speaker 2: for me for more, Cameron, good to see you, Good 457 00:20:54,359 --> 00:20:56,520 Speaker 2: to see you zoo statement. I've never heard that before 458 00:20:56,560 --> 00:20:56,960 Speaker 2: in my life. 459 00:20:56,960 --> 00:20:57,760 Speaker 9: Where did that come from? 460 00:20:58,119 --> 00:21:00,080 Speaker 11: So the idea is that you get both a ball 461 00:21:00,080 --> 00:21:02,359 Speaker 11: and a bear steepener. It's very much a welcome to 462 00:21:02,400 --> 00:21:04,520 Speaker 11: the jungle kind of moment because we think it is 463 00:21:04,560 --> 00:21:07,240 Speaker 11: a bad scenario for the US economy as you have 464 00:21:07,280 --> 00:21:09,640 Speaker 11: a bowl sleeper on the front end, shortened yields fall 465 00:21:10,040 --> 00:21:13,440 Speaker 11: that hurts cash interest income on money market accounts. Think 466 00:21:13,440 --> 00:21:17,040 Speaker 11: about those record money market balances that had been generating big, 467 00:21:17,160 --> 00:21:21,159 Speaker 11: huge cash interest for individuals. Then on the long end 468 00:21:21,160 --> 00:21:23,000 Speaker 11: of the curve, if you get a bear steepener the 469 00:21:23,040 --> 00:21:25,720 Speaker 11: long end moving higher. You don't get the benefit to 470 00:21:25,800 --> 00:21:28,520 Speaker 11: the mortgage market, you don't get a benefit to corporate finance. 471 00:21:28,760 --> 00:21:31,040 Speaker 11: So the end result is that you get pinched on 472 00:21:31,119 --> 00:21:33,359 Speaker 11: both sides, with lower yields at the front end and 473 00:21:33,440 --> 00:21:34,600 Speaker 11: higher yields at the back end. 474 00:21:34,720 --> 00:21:37,080 Speaker 2: Do you think this nervousness around FED independence is a 475 00:21:37,080 --> 00:21:39,080 Speaker 2: reason to step away from the long end. 476 00:21:39,480 --> 00:21:41,840 Speaker 11: It certainly seems that that's how the market is trading now. 477 00:21:41,880 --> 00:21:44,560 Speaker 11: I would note that the tenure treasury yield is effectively 478 00:21:44,640 --> 00:21:48,000 Speaker 11: exactly where it was pre Liberation Day. So for all 479 00:21:48,040 --> 00:21:50,600 Speaker 11: of this volatility where we had yields move much lower 480 00:21:50,640 --> 00:21:53,320 Speaker 11: than move much higher, we're right back where we started. 481 00:21:53,400 --> 00:21:56,040 Speaker 11: So if we really do see a de anchoring of 482 00:21:56,080 --> 00:21:58,400 Speaker 11: the long end of the yield curve, that would be notable. 483 00:21:58,400 --> 00:22:01,000 Speaker 11: But at this point it's just all involve volatility and 484 00:22:01,040 --> 00:22:02,119 Speaker 11: a lot of sideways chop. 485 00:22:02,359 --> 00:22:05,680 Speaker 1: Given all of the volatility, where are the comforting matras 486 00:22:05,800 --> 00:22:09,760 Speaker 1: like don't fight the FED or watch the data and 487 00:22:09,840 --> 00:22:12,600 Speaker 1: data dependency? What's your north star? As we were talking 488 00:22:12,640 --> 00:22:13,840 Speaker 1: about earlier in the show. 489 00:22:14,880 --> 00:22:15,880 Speaker 5: Look, it's really difficult. 490 00:22:15,920 --> 00:22:18,080 Speaker 11: If this were a movie, we would say how to 491 00:22:18,160 --> 00:22:21,800 Speaker 11: lose exceptionalism in less than ten trading days, meaning that 492 00:22:21,880 --> 00:22:25,040 Speaker 11: you have called into question these economic world orders that 493 00:22:25,080 --> 00:22:28,440 Speaker 11: have been so powerful for US companies and being able 494 00:22:28,480 --> 00:22:31,520 Speaker 11: to benefit from falling interest rates, from the ability to 495 00:22:31,720 --> 00:22:34,880 Speaker 11: benefit from rising margins over time, and so the end 496 00:22:34,920 --> 00:22:38,960 Speaker 11: result is that we're all asking huge, major tectonic shift questions. 497 00:22:39,160 --> 00:22:40,000 Speaker 3: Well, okay, so then. 498 00:22:39,920 --> 00:22:40,480 Speaker 5: What do you do with that? 499 00:22:40,520 --> 00:22:42,120 Speaker 1: I mean, this is sort of the big question, right 500 00:22:42,600 --> 00:22:45,280 Speaker 1: can you follow that or do you start saying you 501 00:22:45,359 --> 00:22:48,440 Speaker 1: can't change the world in ten days. There are going 502 00:22:48,480 --> 00:22:51,040 Speaker 1: to be some checks and balances and things that will 503 00:22:51,040 --> 00:22:53,359 Speaker 1: take time, and so you can't throw it away. 504 00:22:54,080 --> 00:22:56,920 Speaker 5: I think that diversification is your friend, and. 505 00:22:56,920 --> 00:22:59,439 Speaker 11: If you look at the ability to be able to 506 00:22:59,480 --> 00:23:02,280 Speaker 11: have a diverseified global equity portfolio, I think it's even 507 00:23:02,320 --> 00:23:05,520 Speaker 11: more powerful today than it was over the last fifteen years. 508 00:23:05,680 --> 00:23:08,159 Speaker 11: You've been in a fifteen year relative bear market for 509 00:23:08,240 --> 00:23:10,920 Speaker 11: non US stocks, and so you're finally starting to ask 510 00:23:10,960 --> 00:23:14,200 Speaker 11: the question of is are these non US companies having 511 00:23:14,240 --> 00:23:17,000 Speaker 11: a better place and role in a portfolio? Simply because 512 00:23:17,080 --> 00:23:22,240 Speaker 11: we're seeing these dynamics of potentially potentially money moving out 513 00:23:22,280 --> 00:23:23,840 Speaker 11: of the US into the rest of the world. 514 00:23:23,920 --> 00:23:25,800 Speaker 7: What does this mean for the US economy real large, 515 00:23:26,000 --> 00:23:26,920 Speaker 7: the zoo steepener. 516 00:23:27,600 --> 00:23:29,160 Speaker 11: We do think it weighs on growth, and we think 517 00:23:29,160 --> 00:23:30,760 Speaker 11: that growth estimates are still too high. 518 00:23:30,800 --> 00:23:32,040 Speaker 5: You're sitting at a level of. 519 00:23:32,000 --> 00:23:35,000 Speaker 11: GDP estimates for twenty twenty five at one point seven percent. 520 00:23:35,520 --> 00:23:38,280 Speaker 11: That's down from two point three percent. That's down from 521 00:23:38,320 --> 00:23:41,560 Speaker 11: twenty twenty four and twenty twenty three numbers, but it 522 00:23:41,640 --> 00:23:43,639 Speaker 11: certainly is not to the point where you're pricing in 523 00:23:43,680 --> 00:23:46,400 Speaker 11: some kind of recession. So we think that also translates 524 00:23:46,400 --> 00:23:48,720 Speaker 11: to corporate earnings that are likely too high as well. 525 00:23:48,760 --> 00:23:51,240 Speaker 11: You have nine percent growth this year, thirteen percent growth 526 00:23:51,280 --> 00:23:53,760 Speaker 11: next year, so trading at nineteen and a half times, 527 00:23:54,000 --> 00:23:56,720 Speaker 11: this market hasn't fully calibrated to a lower growth world. 528 00:23:56,960 --> 00:23:58,640 Speaker 7: Do you think that's because the market is still waiting 529 00:23:58,640 --> 00:23:59,600 Speaker 7: on deals to come out of the. 530 00:23:59,560 --> 00:24:00,879 Speaker 5: White House one hundred percent. 531 00:24:00,960 --> 00:24:03,320 Speaker 11: There's still a lot of optimism that this could just 532 00:24:03,400 --> 00:24:06,600 Speaker 11: be a short term bargaining tactic. But if you actually 533 00:24:06,640 --> 00:24:09,360 Speaker 11: see these tariffs get applied, we think that growth estimates 534 00:24:09,359 --> 00:24:10,639 Speaker 11: again are just far too high. 535 00:24:10,760 --> 00:24:12,239 Speaker 2: We hear so much of this. I saw it from 536 00:24:12,320 --> 00:24:14,800 Speaker 2: Jonathan Krinsky of BTICH for the weekend. We still get 537 00:24:14,800 --> 00:24:17,000 Speaker 2: the sense that many assume a tweet about tariffs can 538 00:24:17,040 --> 00:24:19,399 Speaker 2: eraise all the damage that has been done. When do 539 00:24:19,440 --> 00:24:20,760 Speaker 2: you think we get in the wake cup cool? Because 540 00:24:20,760 --> 00:24:22,320 Speaker 2: at the moment the date is being flattened by a 541 00:24:22,359 --> 00:24:24,760 Speaker 2: pull forward a purchases. We saw that and retail sales 542 00:24:25,000 --> 00:24:26,600 Speaker 2: in the last week. When is the way cup cool 543 00:24:26,600 --> 00:24:27,919 Speaker 2: come deeper into summer? 544 00:24:28,160 --> 00:24:30,359 Speaker 11: Yeah, we think it actually will take longer. So we 545 00:24:30,400 --> 00:24:33,040 Speaker 11: do think that hard data is going to soften. Hard 546 00:24:33,119 --> 00:24:35,560 Speaker 11: data is certainly being flattering by a lot of pull forward. 547 00:24:35,840 --> 00:24:38,440 Speaker 5: Look at the Dallas Activity. 548 00:24:38,000 --> 00:24:40,960 Speaker 11: Index, it's having some of its best time since November. 549 00:24:41,080 --> 00:24:43,639 Speaker 11: You've also seen big upticks in things like autos as 550 00:24:43,640 --> 00:24:46,320 Speaker 11: well as imports. None of that will last. We think 551 00:24:46,359 --> 00:24:49,360 Speaker 11: that that will eventually slow. But the challenge you have 552 00:24:49,560 --> 00:24:51,960 Speaker 11: is that it's going to take time, and that means 553 00:24:52,000 --> 00:24:53,919 Speaker 11: that the FED is going to take time because the 554 00:24:53,960 --> 00:24:56,560 Speaker 11: FED has been very explicit they're waiting for hard data 555 00:24:56,600 --> 00:24:58,480 Speaker 11: to slow in a more meaningful way to take action, 556 00:24:58,880 --> 00:25:00,879 Speaker 11: which just means that they will be late to the 557 00:25:00,920 --> 00:25:01,919 Speaker 11: game this time around. 558 00:25:02,080 --> 00:25:06,159 Speaker 1: What does the wake up call look like in equity markets? 559 00:25:07,640 --> 00:25:10,280 Speaker 11: We do think that you're in an environment where you 560 00:25:10,320 --> 00:25:13,320 Speaker 11: can see short term rallies because positioning has gotten so light. 561 00:25:13,440 --> 00:25:17,000 Speaker 11: It's incredibly important to note Deutsche Bank consolidated positioning is 562 00:25:17,000 --> 00:25:19,440 Speaker 11: in the second percentile, so it doesn't get much worse 563 00:25:19,440 --> 00:25:21,880 Speaker 11: than that. That allows you to lift in the short run, 564 00:25:22,119 --> 00:25:24,520 Speaker 11: but you are in a down trend. You have a 565 00:25:24,720 --> 00:25:27,199 Speaker 11: death cross that happened last week. You have momentum that 566 00:25:27,240 --> 00:25:30,280 Speaker 11: has faded, which means that you can have these rallies, 567 00:25:30,320 --> 00:25:33,560 Speaker 11: but they likely roll over and that will then result 568 00:25:33,600 --> 00:25:36,399 Speaker 11: in people starting to finally move out of equities and 569 00:25:36,440 --> 00:25:40,600 Speaker 11: potentially reduce equity positions, which adds to further volatility, so. 570 00:25:40,800 --> 00:25:44,639 Speaker 1: Lower and potentially a lot lower. This really goes to 571 00:25:44,640 --> 00:25:46,800 Speaker 1: the ultimate question, and it's kind of where we started, 572 00:25:46,960 --> 00:25:49,560 Speaker 1: which is how much at that point if you do 573 00:25:49,600 --> 00:25:53,359 Speaker 1: see true economic weakening, do bonds attract that cash back. 574 00:25:53,920 --> 00:25:57,160 Speaker 11: I think eventually they do, but you have to see 575 00:25:57,359 --> 00:26:00,679 Speaker 11: yields move higher to draw people back into this market 576 00:26:00,720 --> 00:26:03,840 Speaker 11: before people see them as a safe haven trade, which 577 00:26:03,920 --> 00:26:07,159 Speaker 11: just means that bonds don't play the same kind of 578 00:26:07,480 --> 00:26:10,560 Speaker 11: volatility dampening role in portfolios that they used to. We 579 00:26:10,600 --> 00:26:13,320 Speaker 11: think once you start seeing hard data weekend, that's when 580 00:26:13,320 --> 00:26:16,000 Speaker 11: people will step into bonds. But it's one of those 581 00:26:16,040 --> 00:26:18,879 Speaker 11: moments where it has to get worse before it gets better. 582 00:26:19,119 --> 00:26:20,160 Speaker 6: What's playing that role now? 583 00:26:20,240 --> 00:26:21,520 Speaker 3: Is it just gold for everyone? 584 00:26:21,680 --> 00:26:23,600 Speaker 5: Yeah, it certainly seems that way. 585 00:26:23,800 --> 00:26:25,399 Speaker 11: The one thing we'd note about gold is that it 586 00:26:25,480 --> 00:26:28,959 Speaker 11: is technically overbought and you have seen very aggressive inflows 587 00:26:28,960 --> 00:26:32,159 Speaker 11: into gold, which suggests that you could see a breather, 588 00:26:32,320 --> 00:26:34,840 Speaker 11: but the uptrend is very very powerful. 589 00:26:35,160 --> 00:26:38,240 Speaker 2: Race is the question, what does diversification make in twenty 590 00:26:38,280 --> 00:26:41,000 Speaker 2: twenty five versus years gone by? We hear the day 591 00:26:41,000 --> 00:26:45,000 Speaker 2: would all the time diversify, diversify into wa and away 592 00:26:45,040 --> 00:26:46,560 Speaker 2: from What What does that mean now? 593 00:26:46,680 --> 00:26:49,320 Speaker 5: Yeah, so it means that you have to get really creative. 594 00:26:49,440 --> 00:26:51,159 Speaker 11: At the end of last year, we've said that we 595 00:26:51,200 --> 00:26:54,560 Speaker 11: thought equities would be higher volatility and lower return. So 596 00:26:54,600 --> 00:26:58,320 Speaker 11: we launched an uncorrelated strategy with looked at everything from 597 00:26:58,520 --> 00:27:02,760 Speaker 11: water rates to lit gaition finance to infrastructure, things that 598 00:27:02,880 --> 00:27:06,359 Speaker 11: don't derive their return streams from traditional equity markets or 599 00:27:06,359 --> 00:27:09,480 Speaker 11: what the FED is doing. But again, its creativity. It 600 00:27:09,560 --> 00:27:12,360 Speaker 11: is not something that is typically in your sixty forty portfolio. 601 00:27:12,600 --> 00:27:14,760 Speaker 2: Karon, I appreciate your time. Cameron Dawson of New h 602 00:27:14,800 --> 00:27:18,280 Speaker 2: WELF with a so called zoo Stiegner. This is the 603 00:27:18,320 --> 00:27:22,520 Speaker 2: Bloomberg Surveillance Podcast, bringing you the best in markets, economics, 604 00:27:22,560 --> 00:27:25,520 Speaker 2: an geopolitics. You can watch the show live on Bloomberg 605 00:27:25,560 --> 00:27:28,720 Speaker 2: TV weekday mornings from six am to nine am Eastern. 606 00:27:29,000 --> 00:27:32,320 Speaker 2: Subscribe to the podcast on Apple, Spotify, or anywhere else 607 00:27:32,400 --> 00:27:35,040 Speaker 2: you listen, and, as always, on the Bloomberg Terminal and 608 00:27:35,119 --> 00:27:36,320 Speaker 2: the Bloomberg Business app.