WEBVTT - Federal Reserve Still on a Path Toward Lower Interest Rates 0:00:02.520 --> 0:00:08.039 Bloomberg Audio Studios, Podcasts, radio news. 0:00:08.640 --> 0:00:12.680 This is Bloomberg business Week, Insight from the reporters and 0:00:12.800 --> 0:00:16.800 editors that bring you America's most trusted business magazine, plus 0:00:17.000 --> 0:00:20.799 global business, finance and tech news. The Bloomberg Business Week 0:00:20.840 --> 0:00:25.760 Podcast with Carol Masser and Tim Stenovek on Bloomberg Radio. 0:00:26.920 --> 0:00:30.480 It's one day after the latest FED decision, the second 0:00:30.520 --> 0:00:33.120 decision of twenty twenty five. We're President Trump posting on 0:00:33.159 --> 0:00:36.360 social media that the FED should cut interest rates, splitting 0:00:36.400 --> 0:00:38.960 with the US Central Bank as officials way the economic 0:00:39.000 --> 0:00:41.440 cost of his tariff push. As you know, the FED 0:00:41.440 --> 0:00:44.279 did not cut rates as expected yesterday, but they did 0:00:44.280 --> 0:00:47.720 sharply reduce their twenty twenty five growth projections. Meantime, one 0:00:47.760 --> 0:00:50.519 former FED official, former New York FED President Bill Dudley, 0:00:50.600 --> 0:00:53.600 and a Bloomberg opinion columnist telling us right after the 0:00:53.640 --> 0:00:55.520 decision that the FED is in a bit of a 0:00:55.560 --> 0:00:56.120 tough place. 0:00:57.280 --> 0:00:59.320 You know, I think the reality is they're flying blind. 0:01:00.000 --> 0:01:02.000 They don't really know what's going to happen the growth. 0:01:02.040 --> 0:01:03.600 They don't know what it's going to happen to inflation, 0:01:05.080 --> 0:01:07.600 and you know, that increases the risk of making a 0:01:07.600 --> 0:01:09.600 policy mistake or just being late. 0:01:10.360 --> 0:01:12.600 Tough place to be Former New York President Bill Dudley, 0:01:12.600 --> 0:01:15.679 Bloomberg opinion columnist as well yesterday and Bloomberg Surveillance. The 0:01:15.720 --> 0:01:18.520 FED decides all right to talk about the day after 0:01:18.640 --> 0:01:21.240 and also go over some US economic data points that 0:01:21.280 --> 0:01:23.280 we got this morning back with us as Bloomberg News 0:01:23.319 --> 0:01:26.760 Economics editor Molly Smith. She's here joining me and Tim. 0:01:26.840 --> 0:01:29.440 She is here in our New York studio. Molly as 0:01:29.560 --> 0:01:35.080 always so much coming at the economic universe and just 0:01:35.120 --> 0:01:38.200 investors in general. Today's US economic data looks like the 0:01:38.280 --> 0:01:41.520 labor market, okay, housing market bounce back from some weakness. 0:01:41.800 --> 0:01:42.560 What do we need to know? 0:01:42.959 --> 0:01:45.560 Yeah, the job was claims numbers have really just been 0:01:45.600 --> 0:01:47.440 in a bit of like a holding pattern in this 0:01:48.000 --> 0:01:50.040 kind of like no nothing state. You know, they're really 0:01:50.200 --> 0:01:52.680 very much in line with pre COVID levels, like hovering 0:01:52.680 --> 0:01:55.520 in this two twenty thousand area on the initial claims 0:01:55.880 --> 0:01:57.960 and that's nothing really to. 0:01:58.040 --> 0:01:59.200 Worry about, which is great. 0:02:00.080 --> 0:02:02.400 Of course, there are other data that we get later 0:02:02.480 --> 0:02:07.040 today that are referring to federal workers specifically, and those 0:02:07.080 --> 0:02:09.480 have been drifting higher as we would expect to see 0:02:10.160 --> 0:02:12.959 per all of the government firings. That we've been having, 0:02:13.080 --> 0:02:14.160 So that's. 0:02:14.040 --> 0:02:15.360 What is that data that we get later. 0:02:15.480 --> 0:02:18.600 So that's still from the jobless claims data, it's just 0:02:18.639 --> 0:02:22.080 published a little bit later for the federal workers. Specifically 0:02:22.160 --> 0:02:25.200 that the Department Labor also puts this out later on Thursday. 0:02:25.400 --> 0:02:28.000 So we've been starting to pay closer attention for that. 0:02:28.320 --> 0:02:30.240 Not something we used to look at before, but obviously 0:02:30.320 --> 0:02:32.360 makes a lot more sense now. And then on the 0:02:32.360 --> 0:02:35.280 housing front, we saw existing home sales up beat all 0:02:35.400 --> 0:02:36.639 estimates in February. 0:02:36.720 --> 0:02:38.200 I think a lot of this was really due. 0:02:38.080 --> 0:02:40.959 To the weather though that coming back from remember in 0:02:41.080 --> 0:02:44.400 January we had the wildfires in La. We had really 0:02:44.440 --> 0:02:46.480 bad winter weather across a lot of the South. So 0:02:46.520 --> 0:02:49.480 those were the two regions in February that really bounced back, 0:02:49.480 --> 0:02:51.680 whereas the Northeast and the Midwest not as much. 0:02:52.200 --> 0:02:54.400 But why was this such a surprise, Molly, Because we 0:02:54.440 --> 0:02:57.520 actually saw equity markets turn higher as a result of 0:02:57.520 --> 0:03:01.320 this stronger than expected housing data. Why did this surprise analysts? 0:03:01.360 --> 0:03:02.640 They knew about the weather already. 0:03:02.919 --> 0:03:05.600 Yeah, you know, this was above the reading was above 0:03:05.680 --> 0:03:09.120 all estimates in the Bloomberg survey. I think that you know, 0:03:09.160 --> 0:03:11.600 the expectation for the housing market right now is really 0:03:11.680 --> 0:03:14.960 just so grim. Like you know, it's very much like 0:03:15.000 --> 0:03:18.000 we're just going to be in this really steady state 0:03:18.120 --> 0:03:21.280 of like you know, pretty tepid sales. Mortgage rates, yes, 0:03:21.320 --> 0:03:23.240 have come down a bit in recent weeks, but are 0:03:23.320 --> 0:03:27.320 still in that six point seven percent area, and home 0:03:27.320 --> 0:03:29.600 prices are still really high. Even though you're getting more 0:03:29.639 --> 0:03:33.160 inventory coming on the market, it still hasn't really made 0:03:33.240 --> 0:03:35.840 much of a dent in prices. So the outlook for 0:03:35.880 --> 0:03:38.760 housing isn't great right now. That said, we're going into 0:03:38.800 --> 0:03:41.480 this season where home sales do typically pick up in 0:03:41.520 --> 0:03:42.800 the spring, so that's going to be really. 0:03:42.680 --> 0:03:43.280 Key to watch. 0:03:43.840 --> 0:03:46.320 Okay, we have that economic data. We talked about the 0:03:46.360 --> 0:03:48.880 economic data. Now that we've had about a day to 0:03:49.360 --> 0:03:52.240 really digest what we heard from j Powell and the 0:03:52.240 --> 0:03:55.040 Federal Reserve yesterday, what are your thoughts, Molly. I was 0:03:55.040 --> 0:03:57.440 a little surprised to see the market reaction yesterday given 0:03:57.640 --> 0:04:01.160 the uncertainty that Powell express but what it was the 0:04:01.160 --> 0:04:04.360 best fed day market going all the way back to 0:04:04.440 --> 0:04:05.400 July of last year. 0:04:06.160 --> 0:04:08.160 I think what Powell's job a lot of the time 0:04:08.240 --> 0:04:12.280 is to do is understandably not induce panic or to 0:04:12.400 --> 0:04:15.800 downplay where there might be perceptions of panic and the 0:04:16.080 --> 0:04:19.520 SEP or Summary of Economic Projections yesterday that came out 0:04:19.560 --> 0:04:22.599 before Powell spoke, For me, that would have been a 0:04:22.600 --> 0:04:25.280 bit panic inducing. I think you know that sharp cuts 0:04:25.360 --> 0:04:28.560 rvery sharp cuts to growth, you know, marked up unemployment 0:04:28.640 --> 0:04:33.800 pretty noticeably, marked up risks to inflation as well, very much. 0:04:33.839 --> 0:04:35.920 So those are things that all right now, you know, 0:04:36.000 --> 0:04:38.440 add up to what we say is statflation risks, and 0:04:38.480 --> 0:04:41.159 that was really the big word going into the press 0:04:41.160 --> 0:04:43.800 conference yesterday. But then Powell gets up there and seems 0:04:43.800 --> 0:04:46.520 to downplay all of these risks, doesn't seem to phase 0:04:46.600 --> 0:04:48.360 by it. I think something for me that was really 0:04:48.440 --> 0:04:52.760 bizarre was his idea that the marking down of growth 0:04:52.800 --> 0:04:56.640 projections and higher risks to inflation somehow balance each other out. 0:04:57.160 --> 0:04:59.880 That part I still don't really have great understanding on. 0:05:00.040 --> 0:05:02.360 But I think the market rally was really just because 0:05:02.760 --> 0:05:05.440 the Fed still sees two rate cuts this year. And 0:05:05.480 --> 0:05:07.600 I think there was a real case where what if 0:05:07.600 --> 0:05:10.279 you saw the dots price in more than that, because 0:05:10.680 --> 0:05:12.720 normally we would love to see that and that would be, 0:05:12.880 --> 0:05:14.760 you know, a good news rally. But I think in 0:05:14.800 --> 0:05:17.200 this case, if you saw more cuts priced in. That 0:05:17.240 --> 0:05:19.280 would have really clued in to say that the FED 0:05:19.360 --> 0:05:22.000 is very worried about growth and that they would have 0:05:22.040 --> 0:05:24.400 been expecting more cuts even though inflation's going to be 0:05:24.440 --> 0:05:24.880 so high. 0:05:24.960 --> 0:05:27.599 What's the analysis after we kicked it off? Mentioning what 0:05:27.640 --> 0:05:30.440 Bill Dudley, former New York FED President, said on the 0:05:30.480 --> 0:05:33.599 Bloomberg broadcast yesterday following the FED decision, saying, you know, 0:05:33.600 --> 0:05:35.960 I think the reality is that the FED is flying blind. 0:05:35.960 --> 0:05:38.360 They don't really know what's going to happen to growth, 0:05:38.360 --> 0:05:40.360 they don't know what's going to happen to inflation, and 0:05:40.360 --> 0:05:42.720 how that increases the risk of making a policy mistake. 0:05:43.080 --> 0:05:45.599 Do most folks that you talk to in the economic 0:05:45.640 --> 0:05:47.880 community feel like we just don't know what's next. I 0:05:47.880 --> 0:05:50.760 feel like there is a growing chorus of business leaders 0:05:51.120 --> 0:05:53.160 who are kind of saying that, and it's why you're 0:05:53.160 --> 0:05:54.960 seeing maybe m and a pull back, lots of things 0:05:55.040 --> 0:05:55.479 pull back. 0:05:55.600 --> 0:05:56.719 Yeah, it's totally fair. 0:05:56.800 --> 0:05:57.920 I mean, I think it's. 0:05:58.320 --> 0:06:00.680 One of the funny parts of the press conference yesterday too, 0:06:00.800 --> 0:06:03.320 was when Powell had said back to a reporter when. 0:06:03.200 --> 0:06:04.680 He broke out into the Grateful Dead song, No. 0:06:04.880 --> 0:06:12.479 Just that part. There was one part where he had 0:06:12.560 --> 0:06:14.280 like put it back to a reporter saying, you know, 0:06:14.320 --> 0:06:16.680 like forecasting is really hard, Like what would you put down? 0:06:17.080 --> 0:06:20.560 It was like, okay, that's more your job than like hours, 0:06:20.640 --> 0:06:21.960 but it's really hard. 0:06:22.080 --> 0:06:23.880 To his credit, it is very hard right now. 0:06:24.279 --> 0:06:27.880 So and you saw that very much in the economic 0:06:27.960 --> 0:06:31.800 projections as well. Yeah, all of the heightened uncertainty around growth, 0:06:31.880 --> 0:06:34.080 around the labor market, around inflation. 0:06:34.520 --> 0:06:35.239 He's not wrong. 0:06:35.600 --> 0:06:36.800 I think none of us really know. 0:06:37.000 --> 0:06:39.839 And you know, to Michael McKee's great question of how 0:06:39.839 --> 0:06:42.000 long are you going to wait to see the totality 0:06:42.360 --> 0:06:43.440 of these policies? 0:06:44.080 --> 0:06:45.240 Who the heck knows right? 0:06:45.279 --> 0:06:46.279 And will it be too late? 0:06:46.360 --> 0:06:46.480 Right? 0:06:46.480 --> 0:06:48.680 Because you have to be so preactive, I got to say, 0:06:48.720 --> 0:06:50.720 I sow, I've you know, put buttons and like, you know, 0:06:50.760 --> 0:06:52.320 things that fall off, and threading a needle can be 0:06:52.360 --> 0:06:54.000 really tough. And I feel like that's where the FED 0:06:54.080 --> 0:06:56.640 is right now. Threading a needle into terms of what 0:06:56.839 --> 0:06:58.680 we need for monetary policy. 0:06:58.720 --> 0:07:00.560 Not easy right now, not at all. I don't want 0:07:00.560 --> 0:07:03.640 their job. We'll just sit here and try to decipher it. Well. 0:07:03.960 --> 0:07:06.440 His job getting a little harder too, with President Trump 0:07:06.480 --> 0:07:09.080 saying last night that the FED should cut interest rates. 0:07:09.880 --> 0:07:12.080 Splitting with the US Central Bank is officials way the 0:07:12.080 --> 0:07:14.640 economic cost of his tariff push. This is a post 0:07:14.680 --> 0:07:17.960 on his social media network. The FED would be much 0:07:17.960 --> 0:07:20.920 better off cutting rates as US tariffs start to transition 0:07:21.200 --> 0:07:23.120 their way to the economy. Do the right thing. April 0:07:23.160 --> 0:07:26.360 second is Liberation Day in America. How does that complicate 0:07:26.840 --> 0:07:27.560 Powell's job? 0:07:28.200 --> 0:07:31.360 Well, Well, one thing, it totally breaks with a long 0:07:31.400 --> 0:07:34.120 standing practice that you know, the FED is an independent 0:07:34.160 --> 0:07:35.120 institution that. 0:07:35.200 --> 0:07:38.440 Yes, going all the way back to d eighteen, right. 0:07:39.680 --> 0:07:42.080 A long time, and Powell has been a very staunch 0:07:42.120 --> 0:07:45.000 supporter as it did this last time, right. Yeah, Like 0:07:45.080 --> 0:07:48.040 presidents don't usually comment on monetary policy, that's not their 0:07:48.120 --> 0:07:51.640 job justice, Powell will often say real comments on fiscal policy. 0:07:51.720 --> 0:07:52.520 So that's one thing. 0:07:52.840 --> 0:07:55.400 The other thing is that if the as I was 0:07:55.440 --> 0:07:57.280 kind of saying before, if the FED was going to 0:07:57.360 --> 0:08:01.760 price in more rate cut ex expectations this year, I 0:08:01.800 --> 0:08:04.240 think it honestly would have the inverse effect of what 0:08:04.280 --> 0:08:06.880 Trump is going for. I think more people would perceive 0:08:06.960 --> 0:08:09.960 that as the FED is really worried about growth and 0:08:10.000 --> 0:08:13.520 that even though inflation's projected to be elevated, we need 0:08:13.560 --> 0:08:15.880 to step in to save the economy, So I don't 0:08:15.880 --> 0:08:18.200 think that would honestly have the effect that Trump is 0:08:18.200 --> 0:08:18.640 going for. 0:08:18.720 --> 0:08:20.640 All Right, lots to keep on our mind, Molly, Thanks 0:08:20.680 --> 0:08:23.320 so much, Bloomberg News Economics editor, Molly Smith. All right, 0:08:23.360 --> 0:08:26.280 that is your economic update on this Thursday. Now what 0:08:26.360 --> 0:08:28.280 it all means for those who have to invest in 0:08:28.320 --> 0:08:32.360 this market where instability seems to be the norm. Volatility 0:08:32.360 --> 0:08:35.080 we see it today due to trade war uncertainties, and 0:08:35.280 --> 0:08:38.079 despite as we just talked about with Molly, a bounce 0:08:38.120 --> 0:08:41.200 back in some housing and certainly job data looking pretty positive, 0:08:41.320 --> 0:08:43.640 we do get a big test tomorrow with the expiration 0:08:43.720 --> 0:08:46.720 of four and a half trillion dollars worth of options contracts. 0:08:46.840 --> 0:08:48.920 So helping make sense of the trade for us here 0:08:48.920 --> 0:08:52.199 at Bloomberg is Bloomberg Opinion columnist Connor Sen. He is 0:08:52.240 --> 0:08:56.400 founder of Peachtree Creek Investments. He joins us from Atlanta. Hey, Connor, 0:08:56.440 --> 0:08:58.400 good to have you back here with Tim and myself. 0:08:58.480 --> 0:09:01.000 You know, there are always buyers and sellers in the market, right, 0:09:01.040 --> 0:09:03.200 and whether there's more or less of one really kind 0:09:03.200 --> 0:09:06.920 of helps develop, you know, or determine the flows, the demand, 0:09:06.960 --> 0:09:09.559 the pricing. But I do think about and with the 0:09:09.640 --> 0:09:13.000 acknowledgement that there's always buyers and sellers. Is today's market 0:09:13.000 --> 0:09:14.440 investable in your view? 0:09:16.080 --> 0:09:18.400 I think so, just that the market we had coming 0:09:18.400 --> 0:09:20.560 into the year was very momentum driven a lot of 0:09:20.600 --> 0:09:23.480 optimism about the Trump administration, and I think we've seen 0:09:23.520 --> 0:09:25.320 over the past month that that momentum has really come 0:09:25.320 --> 0:09:27.800 out of the market. The Trump optimism is more mixed, 0:09:27.960 --> 0:09:31.480 and so that sort of fast money trade, hot money 0:09:31.480 --> 0:09:33.680 trade has really come out of the market, but sort 0:09:33.679 --> 0:09:35.400 of a lot of parts of the market are still 0:09:35.440 --> 0:09:38.600 not really that concerned about recession, and so basically you're 0:09:38.600 --> 0:09:41.000 getting better valuations on stocks than need a month ago 0:09:41.480 --> 0:09:44.920 without yet the kind of recession concern that you've gotten 0:09:45.080 --> 0:09:47.320 over the past two years. A few times. 0:09:47.320 --> 0:09:49.800 Color, what about the rotation that we're seeing out of 0:09:49.920 --> 0:09:53.720 US equities into international equities. I've spoken to two friends. 0:09:53.800 --> 0:09:56.240 They're not in finance. They're normal people who are thinking 0:09:56.240 --> 0:09:59.400 about their own retirement. They have nothing to do with 0:09:59.559 --> 0:10:01.840 investing day to day in the market. But both of 0:10:01.840 --> 0:10:04.800 them have said to me, I'm selling US equities and 0:10:04.840 --> 0:10:07.439 I'm investing outside of the US. I think that it's 0:10:07.440 --> 0:10:10.319 a little turbulent here right now, and I think the 0:10:10.360 --> 0:10:12.240 opportunities outside of the US. What do you make of that? 0:10:14.160 --> 0:10:16.240 I think from a narrative standpoint, I get it in 0:10:16.280 --> 0:10:18.520 that sort of over the past few years, the US 0:10:18.600 --> 0:10:21.679 was seen as the only game in town globally to invest, 0:10:21.800 --> 0:10:23.559 and I think that explains a lot of the valuations 0:10:23.559 --> 0:10:25.760 you saw in US large cap stocks last year, when 0:10:25.760 --> 0:10:28.320 you had Costco at fifty five times earnings and Walmart 0:10:28.360 --> 0:10:30.920 at thirty five times earnings. It wasn't just the tech stocks, 0:10:30.920 --> 0:10:33.319 so sort of a belief that don't bet against America. 0:10:33.480 --> 0:10:35.680 American companies are going to win, and there's no growth 0:10:35.679 --> 0:10:37.640 anywhere else in the world. And so I think now 0:10:37.720 --> 0:10:39.880 you're seeing, well, you know, there is a need for 0:10:39.920 --> 0:10:42.280 capital in Europe and we're seeing the stock market perform 0:10:42.320 --> 0:10:45.240 better there. I'm sure globally a lot of investors who 0:10:45.640 --> 0:10:47.400 were sort of betting on the US or I feel 0:10:47.480 --> 0:10:51.240 kind of just you know, deceived, and so they're looking 0:10:51.280 --> 0:10:53.920 to repatriot capital. And at least for now, I get 0:10:53.920 --> 0:10:56.120 the story of well, Europe's going to grow faster, the 0:10:56.200 --> 0:10:58.000 US is more mixed, So let's rotate money out of 0:10:58.000 --> 0:10:59.480 the US to other parts of the world. 0:11:00.240 --> 0:11:01.760 Hey, one of the things I wanted to ask you 0:11:01.800 --> 0:11:03.720 here we are Connor one day after the FED and 0:11:03.800 --> 0:11:05.760 Tim was kidding or we kid it at the top 0:11:05.800 --> 0:11:07.640 of the broadcast, like, don't look at your four oh 0:11:07.640 --> 0:11:11.280 one k right now. I, however, did And I am 0:11:11.320 --> 0:11:14.560 wondering about you know a column you wrote that gets 0:11:14.559 --> 0:11:17.240 into where the stock market goes, the economy will follow. 0:11:17.559 --> 0:11:20.560 We have seen a pullback in stock so far, certainly 0:11:20.640 --> 0:11:23.400 this year. So based on that, where do you think 0:11:23.440 --> 0:11:25.600 the US economy has had in your view? It sounds 0:11:25.600 --> 0:11:27.720 like you're not talking about recession, but I am curious 0:11:27.760 --> 0:11:29.440 how you kind of tie these together. 0:11:31.000 --> 0:11:33.040 We've had a negative momentum in the US economy, I 0:11:33.040 --> 0:11:34.720 would say for about a year. I think the soft 0:11:34.840 --> 0:11:37.560 landing ended last spring full employment and the bus spring. 0:11:37.920 --> 0:11:40.000 But the acceleration and growth we're seeing is just very, 0:11:40.080 --> 0:11:42.160 very slow, and it's not fall off a cliff like 0:11:42.160 --> 0:11:44.200 we saw with Lehman Brothers in two thousand and eight 0:11:44.280 --> 0:11:46.960 or with COVID, and so I think that's a case 0:11:47.000 --> 0:11:49.200 where I don't think we're gonna have recession over the 0:11:49.200 --> 0:11:52.000 next six months. For I think housing's already kind of dead, 0:11:52.040 --> 0:11:54.920 so it's hard to kill housing again. And AI is 0:11:54.960 --> 0:11:56.520 the other risk at economy that I see, and that 0:11:56.559 --> 0:11:58.680 seems like more of a twenty twenty six story. With 0:11:58.760 --> 0:12:01.040 all the CAPEX spent, what's going to happen this year? 0:12:01.400 --> 0:12:03.559 And so I do think that high end consumption growth 0:12:03.559 --> 0:12:06.360 could be slower, maybe pretty stagnant this year. But you're 0:12:06.400 --> 0:12:08.520 not really seeing signs of growth falling off a table 0:12:09.000 --> 0:12:10.640 or the kinds of fragilities that would lead to a 0:12:10.679 --> 0:12:12.320 recession at least over the next few months. 0:12:12.640 --> 0:12:15.160 What's the AI risk that you see. I'm here in 0:12:15.200 --> 0:12:18.320 San Francisco right now, everybody's talking about Nvidia GtC. We're 0:12:18.360 --> 0:12:20.040 going to be hearing from ED in just a few minutes. 0:12:20.040 --> 0:12:21.000 What's the AI risk? 0:12:22.480 --> 0:12:22.680 For me? 0:12:22.679 --> 0:12:25.000 It's just sort of the dollars being spent. So if 0:12:25.040 --> 0:12:26.920 tens or hundreds of billion of dollars are being spent 0:12:26.960 --> 0:12:30.439 on chips and data centers and power generation the utilities, 0:12:30.480 --> 0:12:33.800 it's really that going away that would create the recession risk. 0:12:33.880 --> 0:12:36.280 And I think just the lead times to cutting spending 0:12:36.280 --> 0:12:38.840 on that are more than a few months, a few quarters, 0:12:39.240 --> 0:12:41.720 and so it's really companies have committed to spend money 0:12:41.760 --> 0:12:44.080 in twenty twenty five, it's really twenty twenty six that 0:12:44.160 --> 0:12:45.800 the question mark is, and we're just not going to 0:12:45.840 --> 0:12:47.439 know about that for at least six months. So I 0:12:47.480 --> 0:12:50.240 think in twenty five maybe markets don't do well, but 0:12:50.800 --> 0:12:53.720 the economy probably a stagnation is the worst case scenario 0:12:53.880 --> 0:12:54.440 rather than. 0:12:54.640 --> 0:12:57.360 A bad recession, but not stagflation. 0:12:58.600 --> 0:13:00.360 I don't think so. I'm kind of with the that 0:13:00.559 --> 0:13:02.920 the tariffs are likely more of a one time impact, 0:13:03.080 --> 0:13:05.360 and it might be a significant one time impact, depending 0:13:05.360 --> 0:13:08.320 on how sizable they are, but it's just not going 0:13:08.360 --> 0:13:10.560 to be a nineteen seventies thing, even a twenty twenty 0:13:10.559 --> 0:13:13.080 two thing. It'll just be, you know, some prices went 0:13:13.160 --> 0:13:15.120 up for a few months, and then after that one 0:13:15.160 --> 0:13:18.280 time price shock, it sort of happened. And that's even 0:13:18.400 --> 0:13:20.720 if companies feel like they can pass along those prices, 0:13:20.760 --> 0:13:22.640 and that's not clear the moment that they're willing to 0:13:22.640 --> 0:13:22.880 do so. 0:13:23.000 --> 0:13:24.120 All right, So I'm going to get a bunch of 0:13:24.120 --> 0:13:26.720 hate mail, but I'm only, you know, pigging back on 0:13:27.160 --> 0:13:30.440 what fed Jo J. Powell said about tariff's like transitory, 0:13:30.960 --> 0:13:33.320 We never get that wrong. Not a hot word here, 0:13:33.400 --> 0:13:36.320 but I mean, truly, do you believe that the impact 0:13:36.360 --> 0:13:39.440 of tariffs will be transitory even if they stay and 0:13:39.480 --> 0:13:41.880 don't go away, or is it only if they stay 0:13:41.960 --> 0:13:44.000 don't go away, and there is it more piled on 0:13:44.559 --> 0:13:48.440 and we get using regulatory environment and we get tax cuts. 0:13:49.880 --> 0:13:52.240 It kind of depends on the underlying conditions in the economy. 0:13:52.320 --> 0:13:55.360 And when Russia invaded Ukraine in early twenty twenty two, 0:13:55.440 --> 0:13:58.360 we had a very overheated economy, low interest rates. That 0:13:58.440 --> 0:14:00.800 was kind of the perfect dynamic for that inflation to 0:14:00.840 --> 0:14:03.880 stick around and be amplified. Right now, you have an 0:14:03.880 --> 0:14:06.880 economy where the cyclical parts that are pretty weak. The 0:14:07.320 --> 0:14:10.240 hiring last year that was strong was government, healthcare and education. 0:14:10.440 --> 0:14:12.440 That looks to week in this year. There's just not 0:14:12.480 --> 0:14:14.920 a lot of underlying growth momentum in the economy, so 0:14:14.920 --> 0:14:17.280 it's not clear that companies are in a position to 0:14:17.320 --> 0:14:20.040 pass longst price increases. So I think it's the economy 0:14:20.080 --> 0:14:21.880 is weaker and that's why I think it's more likely 0:14:21.920 --> 0:14:22.640 to be transitory. 0:14:22.920 --> 0:14:27.480 Okay, so twenty seconds, don't be worried investors. Is that 0:14:27.520 --> 0:14:28.320 your final line? 0:14:28.320 --> 0:14:30.840 I mean, I think you know, if you were super 0:14:30.880 --> 0:14:32.800 invested heading into the year, that was probably a mistake. 0:14:32.920 --> 0:14:35.760 After this selloff, I think you need sort of more 0:14:35.800 --> 0:14:37.480 bad things to happen this year. 0:14:37.640 --> 0:14:38.840 Than just spooks. 0:14:38.960 --> 0:14:40.480 I think the spook move has already happened. 0:14:40.560 --> 0:14:42.160 All right, we're gonna leave with our Hey, Connor, thanks 0:14:42.160 --> 0:14:44.480 so much. Glad we could check in with you. Bloomberg 0:14:44.480 --> 0:14:47.920 Opinion Columbus Connorson. He's the founder of Peachtree Creek Investments. 0:14:48.880 --> 0:14:52.440 You're listening to the Bloomberg Business Week podcast. Catch us 0:14:52.520 --> 0:14:55.960 live weekday afternoons from two to five pm Eastern. Listen 0:14:56.000 --> 0:14:58.720 on Apple CarPlay and the Android Auto with the Bloomberg 0:14:58.800 --> 0:15:01.600 Business at or watch us live on YouTube. 0:15:02.480 --> 0:15:04.560 Well, some big news in the world of sports, and 0:15:04.640 --> 0:15:07.440 no it's not March Madness, although that is also big, 0:15:07.480 --> 0:15:09.240 and we'll get to that in just a moment. But 0:15:09.280 --> 0:15:11.680 among our most read stories on the Bloomberg terminal at 0:15:11.680 --> 0:15:15.040 this hour is a consortium reaching a deal to buy 0:15:15.040 --> 0:15:18.480 the NBA's Boston Celtics for six point one billion dollars. 0:15:18.520 --> 0:15:21.840 Takeover makes it the biggest NBA deal ever, surpassing the 0:15:21.840 --> 0:15:24.440 four billion dollar valuation for the Phoenix Suns back in 0:15:24.520 --> 0:15:27.600 late twenty twenty two. So let's talk about this. Joining 0:15:27.680 --> 0:15:30.520 us is Bloomberg News US sports business reporter Randall Williams. 0:15:30.560 --> 0:15:33.880 He's here in studio along with Bloomberg Originals Chief correspondent 0:15:34.000 --> 0:15:37.320 Jason Kelly. Guys, I want to kick it off, Randall, 0:15:37.440 --> 0:15:40.240 first talk to us about this deal. A lot of money, 0:15:40.640 --> 0:15:41.320 A lot of money. 0:15:41.320 --> 0:15:43.680 It's the most ever paid for a sports franchise. It 0:15:43.760 --> 0:15:46.960 edges out Josh Harris's purchase of the Commanders and NBA 0:15:47.040 --> 0:15:49.280 owners in the league is happy he got the six billion. 0:15:49.960 --> 0:15:54.640 Uh. Jason is shaking his head. Why are you taking Mead? 0:15:54.880 --> 0:15:59.160 It's unbelievable when you think about the last even during 0:15:59.160 --> 0:16:01.680 the period where these guys have owned the Boston Celtics, 0:16:01.720 --> 0:16:03.920 they bought it for three hundred and sixty million dollars 0:16:04.040 --> 0:16:05.680 correct back in. 0:16:05.800 --> 0:16:09.800 Twenty twenty two and two thousand and two. Forget me, yeah, 0:16:09.840 --> 0:16:10.360 two and. 0:16:10.320 --> 0:16:12.920 Two won a couple championships. They put it on the 0:16:12.920 --> 0:16:16.000 market for essentially a state planning on the part of 0:16:16.000 --> 0:16:19.640 the Grouseback family. You know, I don't know what you heard, Randall. 0:16:20.560 --> 0:16:22.320 It wasn't a certainty that they were going to get 0:16:22.320 --> 0:16:23.760 to this price, but they did. 0:16:24.040 --> 0:16:24.160 No. 0:16:24.240 --> 0:16:26.520 I mean when they don't own their own stadium, and 0:16:26.560 --> 0:16:28.040 you know, the stadium is a big part of this 0:16:28.160 --> 0:16:31.960 because basketball in the NBA you fill up the stadium 0:16:31.960 --> 0:16:33.680 forty one times a year. But there's three hundred and 0:16:33.680 --> 0:16:35.320 sixty five days in a year. You want to fill 0:16:35.320 --> 0:16:37.920 that with concerts. You want to fill that with other events, festivals, 0:16:38.040 --> 0:16:39.800 and so when you don't own that, you lose out 0:16:39.840 --> 0:16:42.920 on revenue. For the Celtics to reach six billion dollars 0:16:43.000 --> 0:16:46.160 without owning their own stadium, it sets the precedent for 0:16:46.360 --> 0:16:48.800 the NBA expansion owners who are going to be bidding 0:16:48.840 --> 0:16:51.000 for this, who will own their stadium. And it's like, oh, 0:16:51.040 --> 0:16:53.360 they sold for that without a stadium. 0:16:53.480 --> 0:16:56.160 Oh, I'm good, But that begs the question, why did 0:16:56.200 --> 0:16:58.080 they pay so much without the stadium. 0:16:58.840 --> 0:17:02.440 Well, there's a lot of reasons why, I insult, right, 0:17:02.760 --> 0:17:04.199 there's a lot of reasons why. But the first thing 0:17:04.200 --> 0:17:06.120 I would say is that when you're buying a sports team, 0:17:06.160 --> 0:17:07.600 you do want to get to a price. And I 0:17:07.640 --> 0:17:12.520 think that for the league and for the Boston Basketball group, 0:17:12.800 --> 0:17:14.600 they wanted that six billion, they got it. And there's 0:17:14.640 --> 0:17:17.119 someone there's some unhappy people too, like Steve Pagliyuga. He 0:17:17.119 --> 0:17:19.160 put out a statement and said, look, we're gonna pay 0:17:19.160 --> 0:17:21.879 pat We're gonna excuse me, we're going to pay cash 0:17:21.920 --> 0:17:24.960 into this. And he lost and we're seeing that Bill 0:17:25.000 --> 0:17:28.200 Chisholms Group, which has Sixth Street and Rob Hale and 0:17:28.320 --> 0:17:33.080 Bruce A. Beal Junior from relative companies they won Come. 0:17:32.960 --> 0:17:36.680 On, Jason, Yeah yeah, Jason, does does the deal make 0:17:36.720 --> 0:17:38.800 sense to you? I mean somebody who's who's looked at 0:17:38.800 --> 0:17:41.879