WEBVTT - Bloomberg Surveillance TV: May 2, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.400 with Lisa Bromwitz and am Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:36.519 Bloomberg Terminal and the Bloomberg Business App. I'm want to 0:00:36.520 --> 0:00:39.400 bringing Stephanie Roth of Wolf Research into the conversation. Stephanie 0:00:39.400 --> 0:00:41.840 in morning, Good morning, your reaction to this one please? 0:00:42.640 --> 0:00:44.640 It was a strong one, Gren. 0:00:44.720 --> 0:00:47.280 We had some you know, down revisions to the prior month, 0:00:47.320 --> 0:00:50.199 but the net trend is pretty strong. The challenge is 0:00:50.240 --> 0:00:53.320 looking forward. There's a pretty big cliff from an economic 0:00:53.360 --> 0:00:56.400 perspective in heading into the next couple of months, and 0:00:56.480 --> 0:01:00.240 if we don't get a significant downward shift in the 0:01:00.280 --> 0:01:03.120 tariff rate from China, then things like the strength and 0:01:03.160 --> 0:01:06.160 transportation and warehousing is going to very much shut off. 0:01:06.520 --> 0:01:08.440 If I were a pessimist, not that I am. But 0:01:08.520 --> 0:01:10.560 if I were a pessimist, if I wanted to look 0:01:10.560 --> 0:01:12.679 at the negative side of this, I would say it 0:01:12.720 --> 0:01:14.560 gives a FED no excuse to even come close to 0:01:14.560 --> 0:01:17.160 cutting rates, and that potentially they have no reason to 0:01:17.160 --> 0:01:19.680 signal that they are concerned about a true weakening in 0:01:19.720 --> 0:01:22.240 the economy that is politically fraught as well as not 0:01:22.319 --> 0:01:25.640 represented in the data. How much does that increase the 0:01:25.680 --> 0:01:27.720 backside of the year and the potential weakness that you 0:01:27.720 --> 0:01:30.560 could see down the line if the FED is disinclined 0:01:30.760 --> 0:01:32.960 to really make any movement, I think that's right. 0:01:33.080 --> 0:01:34.600 There's no reason for the FED to be cutting or 0:01:34.640 --> 0:01:36.800 signaling that they're going to be cutting anytime soon. At 0:01:36.800 --> 0:01:38.720 this point, the economy is fine. They have to be 0:01:38.760 --> 0:01:42.000 reacting to the unemployment rate, which is kind of steady 0:01:42.040 --> 0:01:44.560 as the four to two, and they're concerned about the 0:01:44.640 --> 0:01:46.520 inflation backdrop, but for now they just have to sit 0:01:46.560 --> 0:01:48.320 and wait. They have to wait until they see an 0:01:48.360 --> 0:01:51.440 actual rise in the unemployment rate before they can make 0:01:51.480 --> 0:01:54.040 notable changes. And at this point the economy is okay 0:01:54.080 --> 0:01:56.240 and consumption has been okay up until this point, so 0:01:56.360 --> 0:01:57.640 it's just wait and see for the FED. 0:01:57.760 --> 0:01:59.520 On the flip side, to Muhammed's point, and this is 0:01:59.520 --> 0:02:01.640 the reason why this is such a mentally twisting kind 0:02:01.640 --> 0:02:04.560 of moment. You could say, well, the economy has a 0:02:04.560 --> 0:02:07.080 lot of momentum. We're coming into this very strong. We 0:02:07.160 --> 0:02:08.840 might get something of a hip, but it might be 0:02:08.880 --> 0:02:11.880 a disinflationary shock of anything, which might help out the FED, 0:02:12.160 --> 0:02:14.079 and then we end up back in the soft landing 0:02:14.120 --> 0:02:17.040 type of narrative. How much does this give you confidence 0:02:17.200 --> 0:02:20.120 that we still have that potential even amid all of 0:02:20.160 --> 0:02:20.880 the uncertainty. 0:02:21.240 --> 0:02:23.480 So base case at this point is the economy Ken 0:02:23.880 --> 0:02:28.400 Averter session, although barely if policymakers actually start to change 0:02:28.400 --> 0:02:29.720 their tune a little bit, which we are starting to 0:02:29.720 --> 0:02:31.800 see out of Washington to Stoma extent and the headlines 0:02:31.800 --> 0:02:35.079 around potentially some of the conversations with China certainly helps. 0:02:35.560 --> 0:02:37.640 So base cases that they'll change their tune a little bit. 0:02:37.639 --> 0:02:39.880 If we end up with ten percent across the board 0:02:39.960 --> 0:02:44.840 tariffs and tariffs on China fifty percent maybe forty percent, 0:02:45.120 --> 0:02:47.000 then the economy can be okay. This year you just 0:02:47.000 --> 0:02:50.040 have a one percent or so shock on the economy, 0:02:50.080 --> 0:02:53.399 But having this solid momentum heading into this certainly does help. 0:02:53.600 --> 0:02:55.680 How much do you how much time do they have 0:02:55.800 --> 0:02:58.280 to change their tune, as you say, to avoid the 0:02:58.280 --> 0:03:00.760 most difficult damage. 0:03:01.200 --> 0:03:03.200 We have a couple of weeks, weeks, not months. 0:03:03.240 --> 0:03:04.679 We have weeks, not months. I was just talking to 0:03:05.160 --> 0:03:07.600 the guests from the Port of la just just just 0:03:07.600 --> 0:03:09.760 before this, and they were discussing the you know, the 0:03:09.919 --> 0:03:13.080 amount of time, especially smaller retailers have. They don't have 0:03:13.120 --> 0:03:14.000 these big warehouses. 0:03:14.040 --> 0:03:14.920 They have a couple of weeks. 0:03:15.080 --> 0:03:17.000 Take a bike shop, for example, they have just a 0:03:17.000 --> 0:03:19.120 couple of weeks worth of inventory and they wait for 0:03:19.160 --> 0:03:20.919 the next shipment, and if the shipments aren't coming in, 0:03:21.040 --> 0:03:22.480 it's going to become a problem. They're going to have 0:03:22.520 --> 0:03:24.360 to just shut down because they'll have one or two 0:03:24.400 --> 0:03:25.200 bikes left for sale. 0:03:25.360 --> 0:03:27.080 These are the empty shams that people worry about if 0:03:27.080 --> 0:03:29.040 you are just joining us. Seven minutes ago, we just 0:03:29.040 --> 0:03:31.440 got the payrolls report. It came in at one seventy seven. 0:03:31.800 --> 0:03:34.840 The media estimate our survey was one thirty eight. The 0:03:34.920 --> 0:03:37.440 unemployment rate expected to hold at four point two percent, 0:03:37.480 --> 0:03:39.839 and it did four point two percent. They're the two 0:03:39.840 --> 0:03:43.000 headline numbers we often think about, my McKey, you look 0:03:43.040 --> 0:03:45.200 beyond the headlines. Some up for us if you just 0:03:45.280 --> 0:03:47.360 missed it, what did you miss? Well? 0:03:47.440 --> 0:03:50.440 Right now, what I'm seeing is some impacts. It looks 0:03:50.520 --> 0:03:54.080 like in the tariff areas or two be tearifft areas. 0:03:54.480 --> 0:03:58.480 Computers lost four construction lost four thousand jobs, se my 0:03:58.600 --> 0:03:59.720 conductors lost. 0:03:59.480 --> 0:04:00.520 Eleven one hundred. 0:04:01.360 --> 0:04:04.680 Primary metal jobs were down by one hundred, apparel jobs 0:04:04.720 --> 0:04:09.080 down by three hundred, and government workers down by nine thousand. 0:04:09.200 --> 0:04:11.560 Leave out the postal service, but they got some dodge 0:04:11.600 --> 0:04:13.680 cuts too, and you have eight and a half thousand, 0:04:13.800 --> 0:04:17.880 so you are seeing some impacts from the administration's moves 0:04:17.920 --> 0:04:21.240 already in terms of the unemployment rate, the unemployment rate 0:04:21.320 --> 0:04:25.440 actually rises by a few basis points. The three digits 0:04:25.520 --> 0:04:27.720 is four point one eighty seven from four point one 0:04:27.880 --> 0:04:31.840 five to two. So we came very close to getting 0:04:31.920 --> 0:04:34.680 a four point three handle, but it didn't move. And 0:04:34.760 --> 0:04:37.919 as you're talking about, unless the fancies the unemployment rate moving, 0:04:38.279 --> 0:04:39.040 they're not moving. 0:04:39.200 --> 0:04:41.440 The equity bills get and everything they won this morning, Lisa, 0:04:41.520 --> 0:04:44.200 I better jobs put the potential for talks between the 0:04:44.279 --> 0:04:47.719 US and China, and potentially a ninth consecutive to have 0:04:47.760 --> 0:04:48.480 gains on the SMP. 0:04:48.839 --> 0:04:50.960 I guess I'm trying to understand, if you flip this 0:04:51.000 --> 0:04:53.120 of its head and you talk about real strength in 0:04:53.160 --> 0:04:55.359 the economy and you talk about the potential for a deal, 0:04:55.680 --> 0:04:59.200 are we underestimating the inflationary pressure? Are we underestimating just 0:04:59.279 --> 0:05:01.920 how much growth there is that potentially is not being 0:05:01.920 --> 0:05:04.719 accounted for by the Fed or by the rest of 0:05:04.720 --> 0:05:05.200 the universe. 0:05:05.200 --> 0:05:05.520 I don't know. 0:05:05.560 --> 0:05:06.159 I'm just wondering. 0:05:06.200 --> 0:05:08.240 Maybe people were saying there's a difference between the bond 0:05:08.320 --> 0:05:10.040 market and the stock market, and the bond market's so 0:05:10.040 --> 0:05:11.880 smart and it's always right. Maybe the stock market was 0:05:11.960 --> 0:05:13.880 right and all of a sudden you need to repose 0:05:13.960 --> 0:05:14.880 things on the other end. 0:05:14.800 --> 0:05:17.560 Pretzels, is that what we're making this smilet. Let me 0:05:17.600 --> 0:05:19.760 put it this way. Whether this number is weak or strong, 0:05:20.120 --> 0:05:22.760 the risk was always that we extrapolated it out. The 0:05:22.800 --> 0:05:24.800 policy shock that we've had in the last month is 0:05:24.839 --> 0:05:27.320 so large that the distortions you'll see in the data 0:05:27.400 --> 0:05:29.200 not just this month, the month after that, the month 0:05:29.240 --> 0:05:31.400 after that. Just to go back to Gen Soroka again 0:05:31.640 --> 0:05:34.080 at the Port of la he's telling you, he's basically 0:05:34.120 --> 0:05:36.400 telling you what things look like now and how long 0:05:36.440 --> 0:05:38.400 it'll take to get things back to normal. Even if 0:05:38.440 --> 0:05:40.360 you strike a deal tomorrow, which is. 0:05:40.279 --> 0:05:41.520 The reason why if you take a look at the 0:05:41.520 --> 0:05:44.000 two year yield, it's almost completely retraced back to where 0:05:44.040 --> 0:05:46.360 it was before this print. Because people are looking through this, 0:05:46.480 --> 0:05:48.760 they're saying, this is not what we're going to experience 0:05:48.839 --> 0:05:49.799 in the upcoming months. 0:05:49.920 --> 0:05:52.840 Jeff Rosenberg of Black Rock jumps into the conversation. Now, Jeff, 0:05:52.880 --> 0:05:55.240 welcome to the program. We want your thoughts on where 0:05:55.279 --> 0:05:57.640 things are, how we're set up going into the opening 0:05:57.680 --> 0:05:58.880 bow fifty minutes away. 0:06:00.120 --> 0:06:03.480 Yeah, you know, first point here, just agree with Muhammad's 0:06:03.480 --> 0:06:07.159 take that this is about where is the economy coming 0:06:07.200 --> 0:06:09.320 into the shock, and this is a good report, and 0:06:09.360 --> 0:06:13.279 that's important. You've got more resilience when you're coming to 0:06:13.400 --> 0:06:15.680 a shock from a place of strength. You know, you 0:06:15.720 --> 0:06:22.239 look through the report, across payrolls, across earnings, hourly hours worked, 0:06:22.400 --> 0:06:23.479 it's all strong. 0:06:23.520 --> 0:06:24.520 Now, that's that's the first point. 0:06:24.520 --> 0:06:27.960 The second point is, unfortunately, it's really less relevant to 0:06:28.080 --> 0:06:31.279 the go forward because this is kind of you know, yes, 0:06:31.320 --> 0:06:34.240 it's our first hard data, but it's really pre the 0:06:34.279 --> 0:06:37.240 tariff shock. And as we're discussing that tariff shock and 0:06:37.279 --> 0:06:39.920 the size and the scope and the amount of exemptions, 0:06:40.400 --> 0:06:44.360 that's evolving, but none of this data really reflects the 0:06:44.400 --> 0:06:46.160 impact of the shock, and we'll have to see that 0:06:46.240 --> 0:06:48.680 data show up. And that's the third point here, is 0:06:48.680 --> 0:06:51.440 that the FED and they're going to have to wait, 0:06:52.279 --> 0:06:54.080 and they're going to have to wait until they see 0:06:54.120 --> 0:06:57.200 any kind of impact in terms of arise in the 0:06:57.279 --> 0:06:59.680 unemployment rate. And until you see that, you're not going 0:06:59.760 --> 0:07:02.919 to really see any kind of expectations of FED intervention. 0:07:03.040 --> 0:07:05.039 And as the other guest was saying. 0:07:05.200 --> 0:07:08.320 It's very hard for them to be preemptive and to 0:07:08.360 --> 0:07:11.480 go to forecast dependence. This is data dependence, and this 0:07:11.520 --> 0:07:13.560 is lagging data, and so that will be, you know, 0:07:13.600 --> 0:07:16.360 really one of the last things to show up as 0:07:16.360 --> 0:07:18.480 we talk about that in months ahead. 0:07:18.880 --> 0:07:20.720 Traffic And if I may push you a little bit 0:07:20.720 --> 0:07:23.360 on what you just said, So how you're navigating all 0:07:23.480 --> 0:07:29.320 these serious puzzles soft data versus hot data. What about 0:07:29.320 --> 0:07:31.160 the sequencing You hear some people say, yeah, we're going 0:07:31.160 --> 0:07:34.320 to slow down, but don't worry, there's deregulation, there's tax 0:07:34.440 --> 0:07:37.600 cuts coming, We're going to bounce right up. There's so 0:07:37.760 --> 0:07:40.280 many issues right there that people are debating in a 0:07:40.400 --> 0:07:44.080 very genuine manner. When you put it all together when 0:07:44.120 --> 0:07:46.560 you look at the growth aight for the US. The 0:07:46.640 --> 0:07:49.760 IMF last week took it down from two point seven 0:07:50.000 --> 0:07:52.600 to one point eight for this year. A lot of 0:07:52.600 --> 0:07:55.800 people thought they would go further down. They will go 0:07:55.840 --> 0:07:58.800 more towards one percent. Where's blackrok right now in terms 0:07:58.840 --> 0:08:01.480 of how all this nets out in terms of growth 0:08:01.520 --> 0:08:02.600 for the US this year. 0:08:04.320 --> 0:08:08.440 You know, we have a very broad diversified group of investors, 0:08:08.200 --> 0:08:11.760 so Blackrock as a totality has a lot of different 0:08:11.760 --> 0:08:13.560 investors with a lot of different points of view. I'll 0:08:13.600 --> 0:08:15.680 tell you my point of view on this is that 0:08:15.720 --> 0:08:16.520 we've had a shock. 0:08:17.000 --> 0:08:18.160 Is the shock going. 0:08:17.920 --> 0:08:21.080 To be as big as you know the immediate market 0:08:21.080 --> 0:08:24.680 reaction in the post Liberation Day announcements. No, you see 0:08:24.720 --> 0:08:28.960 the walk back from that, But the shock has affected 0:08:29.080 --> 0:08:32.160 outcomes and the uncertainty. 0:08:31.520 --> 0:08:32.720 About how big that will be. 0:08:33.160 --> 0:08:38.200 Yes, we've probably cut off the tail because the administration's response, 0:08:38.840 --> 0:08:43.760 the concern about financial markets and the negative reception, the 0:08:43.840 --> 0:08:47.160 concern from the real economy participants, and the real effects 0:08:47.160 --> 0:08:51.600 that these very very initial tariff policies we're having. 0:08:51.679 --> 0:08:52.920 We're seeing that walked back. 0:08:53.240 --> 0:08:56.199 However, you still have the damage to be seen and 0:08:56.200 --> 0:08:59.840 that means likely some degree of slowdown. And even if 0:08:59.840 --> 0:09:03.920 the tariff rates are much reduced from the initial proposal, 0:09:04.120 --> 0:09:07.560 you're still talking about this kind of uncertainty. You know, 0:09:07.600 --> 0:09:11.679 the FED brought back into the language a transitory effect 0:09:11.920 --> 0:09:17.280 on inflation from the one time tariff increase. The big 0:09:17.360 --> 0:09:20.680 question will be in an environment that is much more 0:09:20.800 --> 0:09:23.439 used to price increases. You know, what are the second 0:09:23.520 --> 0:09:27.880 order effects on inflation and inflation expectations as you see that, 0:09:28.040 --> 0:09:30.040 you know, what should be a one time effect, is 0:09:30.040 --> 0:09:32.000 it really a one time effect? And those will be 0:09:32.320 --> 0:09:34.679 you know, the big focus I think you know in 0:09:34.679 --> 0:09:38.920 our outlook, the vulnerability here is is the markets have 0:09:39.000 --> 0:09:42.720 kind of repriced very quickly any kind of risk premium. 0:09:42.800 --> 0:09:44.640 You see it in the round trip inequities. You see 0:09:44.679 --> 0:09:46.400 it in the round trip and high yield spreads. 0:09:46.720 --> 0:09:49.640 So there's not a lot of margin for safety with 0:09:49.760 --> 0:09:51.599 respect to market pricing. 0:09:51.960 --> 0:09:53.160 So for us, that's meant. 0:09:53.080 --> 0:09:55.800 A little bit more of taking the opportunity is the 0:09:55.840 --> 0:09:58.640 market has kind of moved to very quickly price in 0:09:58.960 --> 0:10:02.480 more optimistic take to take a little more defensive positioning 0:10:02.520 --> 0:10:03.240 in our portfolio. 0:10:03.320 --> 0:10:05.719 Jeff, what does defensive positioning actually look like? What does 0:10:05.720 --> 0:10:09.959 that mean in today's market, Yeah, for us. 0:10:09.880 --> 0:10:13.319 You know, we run a liquid alternative fund that is 0:10:13.760 --> 0:10:18.000 positioned as an alternative diversifier. So when we're thinking about 0:10:18.080 --> 0:10:21.160 like our upside downside, we're going to be much more 0:10:21.559 --> 0:10:27.000 sensitive to downside protection. And so defensiveness means up in quality. 0:10:27.040 --> 0:10:30.600 For example, in our credit space, it means reducing some 0:10:30.679 --> 0:10:34.440 of the more equity sensitive areas within the portfolio that 0:10:34.520 --> 0:10:37.760 have the highest kind of beta, highest market reaction to 0:10:37.880 --> 0:10:42.000 economic sensitivity to the potential that tariffs actually end up 0:10:42.120 --> 0:10:46.160 leading to a much more adverse outcome for the economy. 0:10:46.160 --> 0:10:48.679 And it means on the duration side, on the interest 0:10:48.760 --> 0:10:52.280 rates side, because the flip side of the tariff piece 0:10:52.360 --> 0:10:54.720 for growth is as I was just talking about the 0:10:54.800 --> 0:10:57.640 kind of inflation and inflation uncertainty, and that leads to 0:10:57.720 --> 0:11:01.160 a very different kind of bond market reaction where you 0:11:01.200 --> 0:11:03.360 could have a twist steepening where you know, if the 0:11:03.440 --> 0:11:09.200 FED preferences growth over inflation in a stagflationary shock, you 0:11:09.280 --> 0:11:12.600 may have the back end longer maturity. 0:11:12.120 --> 0:11:13.920 Rates not doing what you expect them to do. 0:11:13.960 --> 0:11:17.080 And so that means kind of shortening our what we 0:11:17.120 --> 0:11:20.200 call key rate duration. Where are we getting our exposures 0:11:20.280 --> 0:11:23.920 for the diversification looking much more to the front end 0:11:23.920 --> 0:11:26.800 of the curve than historically you would have thought, Hey, 0:11:26.840 --> 0:11:29.920 the back end is really the best place. In today's environment, 0:11:29.960 --> 0:11:32.880 I think the back end is much more vulnerable and 0:11:32.920 --> 0:11:36.400 a stagflationary kind of outcome really changes how you think 0:11:36.400 --> 0:11:39.160 about defensive positioning and fixed income portfolio. 0:11:39.200 --> 0:11:42.040 You were talking to priamsra earlier JP Morgan Asset Management. 0:11:42.160 --> 0:11:44.600 She said that thirty year treasuries were the risk asset 0:11:44.720 --> 0:11:47.120 right now and doesn't really want to go there. 0:11:47.280 --> 0:11:47.760 Do you feel the. 0:11:47.760 --> 0:11:51.800 Same, Yeah, it's a similar it's a similar viewpoint. 0:11:51.840 --> 0:11:52.000 Now. 0:11:52.000 --> 0:11:53.480 You got to be careful because there are a lot 0:11:53.480 --> 0:11:54.320 of cross currents. 0:11:54.400 --> 0:11:57.120 There's a lot of potential for policy intervention and some 0:11:57.720 --> 0:12:00.040 other changes, and you have to also be careful that 0:12:00.120 --> 0:12:03.560 market positioning is preas talking about, it's a very popular, 0:12:03.640 --> 0:12:07.920 kind of crowded viewpoint that the back end is vulnerable. 0:12:07.960 --> 0:12:10.760 That being said, I think the base case is and 0:12:10.840 --> 0:12:12.560 we've seen it here. We saw it in the post 0:12:12.720 --> 0:12:16.520 tariff announcement, a big curve steepening that you do have 0:12:16.600 --> 0:12:18.880 the potential here. You know, it used to be in 0:12:18.960 --> 0:12:22.520 the zero interest rate environment post GFC flight to quality 0:12:22.640 --> 0:12:24.839 was a curve flattener you wanted to own the thirty year. 0:12:25.640 --> 0:12:28.400 In an earlier era, long before the GFC, we used 0:12:28.440 --> 0:12:31.120 to think flight to quality was a curve steepener, and 0:12:31.160 --> 0:12:33.800 I think we're back into that kind of environment. It 0:12:33.800 --> 0:12:36.440 makes it a little bit challenging for investors who are 0:12:36.800 --> 0:12:39.400 kind of cash limited because you don't get the same 0:12:39.600 --> 0:12:42.720 kind of return for a dollar investment. It means you 0:12:42.760 --> 0:12:45.640 need a little bit more flexibility in your portfolio toolkit 0:12:45.880 --> 0:12:48.959 to use things like futures and leverage to equate your 0:12:49.360 --> 0:12:53.160 diversification irrespective of where you are on the yield curve, 0:12:53.200 --> 0:12:55.680 And a little bit more flexibility in the toolkit allows 0:12:55.720 --> 0:12:57.560 investors like ourselves to be able to do that. 0:12:58.000 --> 0:13:00.839 Jeff, thanks for jopping buying Jeff rosenbook of black Rock. 0:13:00.880 --> 0:13:02.599 On the Latest in this Market, The Latest on the 0:13:02.679 --> 0:13:05.600 Jobs Market one hundred and seventy seven k An upside 0:13:05.640 --> 0:13:08.400 surprise on the jobs report with an industry breakdown. My 0:13:08.520 --> 0:13:10.240 mckageo on this now with more Mike, what do you 0:13:10.280 --> 0:13:11.320 go well. 0:13:11.160 --> 0:13:13.400 John, Looking at some of the areas where you would 0:13:13.440 --> 0:13:15.960 think the tariffs would have an impact, at least they 0:13:16.120 --> 0:13:21.280 might some point, they haven't yet Today retailers lost one 0:13:21.320 --> 0:13:26.000 point eight thousand jobs. But building materials, this is the 0:13:26.040 --> 0:13:28.840 time of year when people would hire more for building 0:13:28.880 --> 0:13:31.160 materials and garden centers. They were up by two point 0:13:31.280 --> 0:13:35.760 seven by two thousand, seven hundred, and as I mentioned, 0:13:35.760 --> 0:13:39.240 construction workers were up. Healthcare and social workers this is 0:13:39.280 --> 0:13:41.640 the category that would include some of the workers that 0:13:41.720 --> 0:13:44.880 would be laid off in terms of contractors or some 0:13:44.920 --> 0:13:47.679 of the aid programs that the administration is slashed. But 0:13:47.720 --> 0:13:52.520 they were up by seven point six thousand, seven six hundred. 0:13:52.880 --> 0:13:56.120 So we're still seeing people getting hired into areas in 0:13:56.160 --> 0:13:58.120 which you'd think there would be job cuts or that 0:13:58.160 --> 0:14:00.679 they may be coming at some point, but we haven't 0:14:00.679 --> 0:14:04.160 gotten there yet. Only two thousand people listed as job 0:14:04.200 --> 0:14:08.040 losers this past month. So right now it looks like 0:14:08.120 --> 0:14:10.959 the economy is still the labor market at least is 0:14:11.000 --> 0:14:11.760 still pretty strong. 0:14:11.880 --> 0:14:14.120 Mamma Kay, thank you. Breaking down the lap of market 0:14:14.160 --> 0:14:16.680 for us this morning. Breaking down the commentary from the 0:14:16.679 --> 0:14:19.360 White House, Amrie, the President with a few things to say, 0:14:19.400 --> 0:14:19.840 a few. 0:14:19.640 --> 0:14:21.560 Things to say, so about gasoline. He's saying it just 0:14:21.600 --> 0:14:24.560 broke a dollar ninety eight. I'm actually looking at what 0:14:24.600 --> 0:14:27.120 the national average is just above three dollars. He's talking 0:14:27.120 --> 0:14:29.920 about energy down, employment strong, and get to the punchline. 0:14:29.960 --> 0:14:32.480 Of course, he's saying this is a perfect moment for 0:14:32.520 --> 0:14:35.680 the Fed chair j Powell to lower interest rates. The 0:14:35.840 --> 0:14:37.280 job boning, Jonathan. 0:14:36.880 --> 0:14:39.440 Continues, Stephanie is at the perfect time for Japowe to 0:14:39.480 --> 0:14:40.360 lower interest rates. 0:14:40.440 --> 0:14:41.760 It is not the perfect time. 0:14:41.920 --> 0:14:45.640 It's the opposite. The economy is running okay right now. 0:14:45.760 --> 0:14:47.520 They don't want to get ahead of this. They're going 0:14:47.600 --> 0:14:49.000 to have to just wait and see what the impact 0:14:49.080 --> 0:14:51.520 is from an employment perspective, and then an inflation perspective. 0:14:51.520 --> 0:14:53.120 By the way, inflation could be running. 0:14:52.920 --> 0:15:04.560 Up towards four percent at most. 0:15:04.600 --> 0:15:07.040 Joins us now of Raymond James, and welcome to the program. 0:15:07.080 --> 0:15:08.520 I want to get your thoughts on some of the 0:15:08.600 --> 0:15:10.920 fiscal risk down in Washington, DC and how you think 0:15:10.920 --> 0:15:11.800 things are stacking up. 0:15:12.680 --> 0:15:15.080 Yeah, John, So, I think the number one goal of 0:15:15.120 --> 0:15:17.320 this budget today is to get all of us to 0:15:17.360 --> 0:15:20.520 repeat the point that it cuts or proposed to cut 0:15:20.680 --> 0:15:23.680 one hundred and sixty three billion dollars. When I look 0:15:23.720 --> 0:15:26.600 at the Hill and they're working on this reconciliation bill, 0:15:26.880 --> 0:15:29.160 if they do what they want to do, the final 0:15:29.240 --> 0:15:31.440 tab of this bill is going to be somewhere between 0:15:31.480 --> 0:15:34.400 five and seven trillion dollars. Were going to have some 0:15:34.480 --> 0:15:36.360 cuts and that may bring it down to three to 0:15:36.480 --> 0:15:39.640 five trillion dollars, but let's be clear, that's going to 0:15:39.640 --> 0:15:42.360 be the single most expensive bill in the history of 0:15:42.400 --> 0:15:44.400 the United States. And so if I'm the president of 0:15:44.400 --> 0:15:47.360 the United States and I'm asking Republicans to do that, 0:15:47.880 --> 0:15:51.760 I probably want to create a narrative through doze, through 0:15:51.800 --> 0:15:56.200 this budget, through tariffs, through the Treasury Secretary that we're 0:15:56.240 --> 0:15:59.120 trying to cut government spending, that we're trying to get 0:15:59.160 --> 0:16:01.840 a new revenue store, and with the Treasury Secretary telling 0:16:01.920 --> 0:16:05.800 everyone they're concerned about the bond market. So this is 0:16:05.840 --> 0:16:10.120 a political document as much as a budget. Today they'd like. 0:16:10.080 --> 0:16:13.120 To create a narrative, ed, but does that narrative become reality? 0:16:14.120 --> 0:16:18.200 Well, everything in politics, everything in life is compared to 0:16:18.360 --> 0:16:21.640 what and so this is where they're also kind of, 0:16:22.040 --> 0:16:24.360 you know, kind of laying this out amory where they're saying, 0:16:24.600 --> 0:16:27.520 you have a choice as a congressional Republican, which one 0:16:27.560 --> 0:16:30.040 do you want to vote for the largest tax increase 0:16:30.040 --> 0:16:32.720 in the United States history or the largest tax cut 0:16:32.920 --> 0:16:35.800 in the United States history, and if you vote for 0:16:36.200 --> 0:16:39.600 kind of the largest tax cut, you are supporting the president. 0:16:39.920 --> 0:16:43.760 And for Republicans, it's increasingly difficult to be opposed to 0:16:43.760 --> 0:16:47.320 this president. And so yes, they're creating that narrative, and 0:16:47.400 --> 0:16:51.480 they're creating a juxtaposition that most Republicans are going to take. 0:16:52.120 --> 0:16:55.200 And I totally understand the first level of narrative. But 0:16:55.240 --> 0:16:57.440 there's a second level of narrative, and that has to 0:16:57.480 --> 0:17:00.000 do with the composition of the budget and in particular 0:17:00.320 --> 0:17:06.280 the different impact of a significant spending cut and a 0:17:06.359 --> 0:17:10.240 tax cut. They operate differently, and there is a second 0:17:10.280 --> 0:17:12.879 narrative that says, you know what, this budget in the 0:17:12.960 --> 0:17:16.199 short term will tip us closer to a recession. What 0:17:16.240 --> 0:17:16.880 do you make of that? 0:17:17.800 --> 0:17:20.600 Yeah, Mohammed, I think what the narrative I get out 0:17:20.600 --> 0:17:23.760 of that is that this is administration who is very 0:17:23.880 --> 0:17:27.560 clearly focused on cuts on the domestic side of things, 0:17:27.800 --> 0:17:31.160 and yes, there are fiscal impacts of that, but they're 0:17:31.200 --> 0:17:33.439 also trying to send the message that they want to 0:17:33.600 --> 0:17:37.680 increase defense spending. This budget will be the first trillion 0:17:37.720 --> 0:17:41.480 dollar proposal for annual spending on the defense budget. In 0:17:41.520 --> 0:17:44.160 the reconciliation build. They want to add another one hundred 0:17:44.160 --> 0:17:47.679 and fifty billion dollars to front and load that. I 0:17:47.680 --> 0:17:50.320 think what we're seeing is historically in DC there's a 0:17:50.320 --> 0:17:53.600 bit of a balance and discretionary spending between defense in 0:17:53.720 --> 0:17:56.560 non defense, and this is a president who's saying, let's 0:17:56.600 --> 0:18:01.200 skew this more towards defense versus non defense. How that 0:18:01.240 --> 0:18:05.320 impacts the ultimate economy to be determined. But I think 0:18:05.359 --> 0:18:08.119 what Republicans would say is when you add up the 0:18:08.359 --> 0:18:12.080 kind of domestic R and D tax credit, bonus appreciation, 0:18:13.280 --> 0:18:15.719 no tax on tips, no tax on social security, they 0:18:15.720 --> 0:18:19.080 would say that's fiscal stimulus and could offset on the 0:18:19.680 --> 0:18:23.200 kind of private sector what the government might be cutting 0:18:23.200 --> 0:18:24.160 from this budget. 0:18:24.040 --> 0:18:26.560 Appreciate the updates, sir, as always, thanks for jumping on 0:18:26.600 --> 0:18:38.920 at MOS. There of Raymond James. Joining us now is 0:18:38.960 --> 0:18:42.160 Stephen Meyer and the chairman of the Council of Economic Advisors. 0:18:42.160 --> 0:18:44.440 Stephen Welcome back to the program, sir, thanks for making 0:18:44.480 --> 0:18:47.000 some time for us this morning. Let's just take a 0:18:47.000 --> 0:18:49.480 little assessment of where things are right now. So through 0:18:49.520 --> 0:18:53.120 the week, GDP first contraction since twenty twenty two, consumer 0:18:53.160 --> 0:18:56.800 confidence the week is since May twenty twenty, manufacturing shrinking 0:18:57.000 --> 0:18:59.000 on the m report, and then we just have this 0:18:59.200 --> 0:19:02.720 very solid payrolls report. What's your assessment, Stephen of where 0:19:02.760 --> 0:19:03.679 things are at the moment. 0:19:04.640 --> 0:19:06.359 Good morning, Thanks for having me, And let me just 0:19:06.359 --> 0:19:08.400