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Speaker 1: Bloomberg Audio Studios, Podcasts, radio News.

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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each

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Speaker 2: day for insight from the best in markets, economics, and

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Speaker 2: geopolitics from our global headquarters in New York City. We

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Speaker 2: are live on Bloomberg Television weekday mornings from six to

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Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify

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Speaker 2: or anywhere else you listen, and as always on the

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Speaker 2: Bloomberg Terminal and the Bloomberg Business app. We begin this

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Speaker 2: hour with stockslower, adding to three days of losses as

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Speaker 2: President Trump says, levies on Canada and Mexico and moving

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Speaker 2: forward on time on schedule. Joining us now is Sharon

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Speaker 2: Bell of GOLMD sach. Sharon, Welcome to the program. Given

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Speaker 2: the rerating we've seen on European equities over the past

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Speaker 2: month or so, how vulnerable are they to a tariff

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Speaker 2: here over the next month.

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Speaker 1: Yeah.

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Speaker 3: I mean, I think, as you see on your screens now,

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Speaker 3: that everyone is a little bit vulnerable to upping uncertainty Again.

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Speaker 3: We clearly don't know what Trump will will do when

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Speaker 3: it comes to tariff plans, even for for Canadera Mexico

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Speaker 3: will will they will they restart again? And is the

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Speaker 3: tariffs that he's talking about sort of a negotiation tool

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Speaker 3: or something that that he plans to use permanently.

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Speaker 1: So it's a lot of uncertainty.

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Speaker 3: I think that's extremely unhelpful, unhelpful for growth, unhelpful for

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Speaker 3: inflation as well. But you're right, European markets have done

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Speaker 3: very well this year, but I don't think that's necessarily

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Speaker 3: related to tariffs. I think it's because the valuation gap

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Speaker 3: to the US have just got so large, and European

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Speaker 3: companies are benefiting from a view that maybe there'll be

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Speaker 3: peace in Ukraine, maybe we'll have more physical spend from

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Speaker 3: Germany for example.

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Speaker 1: Well that was really the question.

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Speaker 4: Is it just a low bar or are there shoots

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Speaker 4: signs that maybe in Europe there are going to be

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Speaker 4: some moves to in gender growth?

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Speaker 1: How much, Sharon, are you seeing.

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Speaker 4: Some of those hopes come to fruition with the latest

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Speaker 4: information about the possibility of expediting some sort of amendment

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Speaker 4: in Germany to get some extra military spending.

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Speaker 3: So I completely agree that Germany absolutely needs to spend more.

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Speaker 3: Germany is one of the very few places in Europe

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Speaker 3: where debt to GDP is not extremely stretched, and that's

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Speaker 3: because of the constitutional debt break really having prevented our

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Speaker 3: rise in levels of debt in recent years. So their deficit,

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Speaker 3: their debt certainly could be expanded. Now why would they

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Speaker 3: do that because growth has been so weak. We just

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Speaker 3: again had wheat growth members out of Germany. We know

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Speaker 3: that a lot of industry has been reducing exposure to Germany.

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Speaker 3: We also know Germany needs to spend more on defense.

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Speaker 3: So I do think I mean exactly what, guys, It

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Speaker 3: tasts difficult to know what I do think the new

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Speaker 3: German administration as it forms, will be looking to spend more,

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Speaker 3: both on infrastructure spend in Germany, but also on defense

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Speaker 3: as well.

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Speaker 4: Shanon, I gotta say this is one of the most

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Speaker 4: confusing markets to try to understand. From a macro perspective,

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Speaker 4: I could possibly a Madge and let alone the tariff uncertainty,

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Speaker 4: let alone whether Germany starts to spend more.

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Speaker 1: There's a question of what this means for.

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Speaker 4: Interest rates in Europe and how this rebalanced into stocks.

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Speaker 4: The consensus heading into this year was that European rates

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Speaker 4: the ECB would be cutting rates more aggressively than in

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Speaker 4: the United States. Now you have a potential growth shock

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Speaker 4: in the United States and the fear of one, and

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Speaker 4: in Europe you have the potential for more fiscal spending

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Speaker 4: that actually ascending yields at least yesterday marginally higher. How

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Speaker 4: does that factor into the bullish call on European equities.

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Speaker 3: Yeah, I think in the case of Europe, you're talking

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Speaker 3: about more fiscal spend in an environment of pretty much

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Speaker 3: no economic growth. So it's really to boost infrastructure or

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Speaker 3: reform the supply side of the economy, get growth and

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Speaker 3: productivity improving. I don't think even of itself it's going

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Speaker 3: to be hugely inflationary, given that you've got other disinflationary

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Speaker 3: things going on. For example, the labor market loosening a

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Speaker 3: little bit. If there is peace between Ukraine and Russia,

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Speaker 3: you may see more energy supplies into Europe. So I

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Speaker 3: think the ECP would be looking at all of those things.

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Speaker 3: We do expect them to be cutting every meeting, just

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Speaker 3: given how weak economic growth is.

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Speaker 5: Sharon, given where we have the Trump administration and their

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Speaker 5: policy perspectives. You talk about in your note this idea

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Speaker 5: for deregulation driving of growth. We've heard this from a

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Speaker 5: lot of number of European leaders, but is the rhetoric

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Speaker 5: actually matching what you feel on the ground in Europe

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Speaker 5: and what may be beneficial for equities.

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Speaker 1: Yeah.

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Speaker 3: I think there are some big leavers you can pull

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Speaker 3: in Europe. One of them is for Germany to spend

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Speaker 3: a bit more fiscally on infrastructure. Another one is potentially

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Speaker 3: try and bring down energy prices, getting more gas supplying

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Speaker 3: to Europe. Another one, potentially would be some deregulation. Europe

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Speaker 3: does have more regulations than you see in the US,

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Speaker 3: where you certainly hear companies complain. Regulation levels are extremely

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Speaker 3: high in Europe, but it does take a long time

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Speaker 3: to move that, and you've got a lot of different

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Speaker 3: countries with different incentives to regulate. So I'm more skeptical

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Speaker 3: about that one. I feel that more spending on fiscal

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Speaker 3: and defense by all countries in Europe and especially in Germany,

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Speaker 3: and maybe lower gas are really the things that are

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Speaker 3: going to move the needle for Europe.

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Speaker 4: This year.

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Speaker 5: We have the UK Prime Minister of Cure Starmer, coming

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Speaker 5: to Washington this week. He's going to a meeting with

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Speaker 5: President Trump. The two have seemingly had somewhat of a

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Speaker 5: good relationship, having a number of meetings. Do you think

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Speaker 5: there's an investment case for a UK outside of the

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Speaker 5: EU right now, especially if they can get you a

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Speaker 5: comprehensive trade deal.

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Speaker 3: Yeah, I mean the.

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Speaker 1: UK's got some advantages.

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Speaker 3: One advantage, ironically, is it's not a large manufacturing economy.

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Speaker 1: It's mainly in services.

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Speaker 3: It's not that exposed to therefore tariffs, and Trump has

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Speaker 3: already said that UK is not a special target either

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Speaker 3: of those tariffs. So given those things, the UK is

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Speaker 3: probably less vulnerable to the trade war, to the tower risk, etc.

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Speaker 3: But it is nonetheless a small, open economy and it

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Speaker 3: will have some vulnerability to all of that. So I

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Speaker 3: think that's one helpful point on the UK. The other

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Speaker 3: helpful point on the UK, again is if you did

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Speaker 3: see it ultimately a cease far in Ukraine, if you

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Speaker 3: ultimately saw gas prices come down, the UK, particularly the

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Speaker 3: consumer in the UK is very gas dependent, so those

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Speaker 3: things would certainly have so there are some elements that

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Speaker 3: could be better for the UK. And then final point

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Speaker 3: on this is the UK indice stock markets are on

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Speaker 3: a particularly large valuation discount to the US, even more

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Speaker 3: so than the rest of Europe. So again that may

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Speaker 3: look attractive.

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Speaker 4: Sharon, just want to wrap it together with the sense

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Speaker 4: of what your highest conviction trade is after you got

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Speaker 4: it right to start this year.

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Speaker 1: The idea that Europe.

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Speaker 4: Would outperform US equity is simply because of evaluation gap.

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Speaker 1: Is that trade done or are you leaning into that?

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Speaker 3: Yeah, this is number one question that I'm getting from

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Speaker 3: clients really at the moment. This is what investors really

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Speaker 3: want to know. Can European out performance persist? Particularly given

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Speaker 3: that we've seen all this before, haven't we? You know,

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Speaker 3: Europe has been a long term perma underperformer every now

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Speaker 3: and again. Of course it has pops of good performance,

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Speaker 3: but will these last? I think this one could be

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Speaker 3: a little bit longer, just because you've got this huge

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Speaker 3: valuation differential between the US and Europe, and maybe it's

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Speaker 3: closed a bit, but even adjusted for growth, which is

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Speaker 3: lower in Europe, for sure, we still find that Europe

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Speaker 3: is on quite a big discount. We've had some institutional

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Speaker 3: flows come back into Europe, but they're still quite minor

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Speaker 3: compared to the outflows in the last few years. You

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Speaker 3: do need the politics to go the right way in

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Speaker 3: Europe and the stuff we talked about before were spending

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Speaker 3: et cetera by Germany, more defense spending, et cetera. But yeah,

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Speaker 3: I think there possibly a little bit more to go.

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Speaker 2: Hey, Sharon, I appreciate your time. Sharon Valda of gone

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Speaker 2: A sax on the latest out of Europe joining US

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Speaker 2: now John Lieber of the Eurasia Group. John, just a

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Speaker 2: recap and welcome to the program, sir. As always, these

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Speaker 2: are the proposals right now. Next week twenty five percent

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Speaker 2: on Canada and Mexico. A week later steel and aluminum.

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Speaker 2: The following month, we're talking about reciprocal tariffs. John, just

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Speaker 2: to recap your base case. What is your base case

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Speaker 2: for what does and does not happen over the next

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Speaker 2: month or so.

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Speaker 6: So I think that April first deadline is the really

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Speaker 6: important one to watch. There's a bunch of investigations directed

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Speaker 6: across the entire government that will be coming out on

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Speaker 6: April first, the reciprocal tariffs that were just talked about

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Speaker 6: the unfair trade practices of America's many trade partners, and

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Speaker 6: I'm sure that we'll see some allegations against countries like

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Speaker 6: Vietnam and Japan and Germany all coming out on April first,

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Speaker 6: and then that is going to kickstart a process which

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Speaker 6: eventually will lead to higher tariffs on quite a few

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Speaker 6: of these countries. But in the meantime, this on negotiation

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Speaker 6: is going to be ongoing, so you know, over the

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Speaker 6: next month. I mean, you know, you listened to Trump

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Speaker 6: last night. He was responding to a question from a

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Speaker 6: reporter and he started talking about Canada and Mexico, and

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Speaker 6: he ended up talking about reciprocal tariffs, which are much

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Speaker 6: broader than Canada and Mexico. So I'm not sure. You know,

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Speaker 6: the President has a way of weaving when he talks,

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Speaker 6: so I'm not sure we necessarily can take this as

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Speaker 6: real guidance as to what's going to happen next week.

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Speaker 6: Our view is that those broad tariffs on Canada and

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Speaker 6: Mexico are unlikely to be avoided because the two countries

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Speaker 6: are doing enough to avoid them. But April first remains

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Speaker 6: the real day to watch because of these other investigations,

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Speaker 6: and the sectorial tariffs are probably going to end up

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Speaker 6: being more meaningful for the North American countries than these

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Speaker 6: broad tariff threat song.

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Speaker 5: It was a question from our own Jordan Fabian, and

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Speaker 5: the President's response this weave if you will. He did

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Speaker 5: talk about the fact that the agreement under place now

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Speaker 5: is not working, but that deal USMCA was negotiated when

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Speaker 5: he was the forty fifth president. What doesn't he like

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Speaker 5: about USMCA right now so that he's so willing to

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Speaker 5: put twenty five percent tariffs on Canada Mexico.

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Speaker 6: You know, the grievances on USMCA, I think are relatively

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Speaker 6: narrow and specific, and I think they have to do

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Speaker 6: with China. Everything else about the USMCA, there hasn't really

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Speaker 6: been in any controversy about its implementation. There was an

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Speaker 6: energy case that was brought against the Americans, there was

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Speaker 6: a case brought on some labor issues in Mexico. There's

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Speaker 6: been a few other disputes that have been brought, but

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Speaker 6: they've all been working basically as the plan was sketched out.

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Speaker 6: I think the American grievance here is about Chinese goods

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Speaker 6: in the Mexican supply chain. But of course, because it's Trump,

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Speaker 6: they're also using the thread of tariffs to broaden it

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Speaker 6: out on issues like fentanyl and immigration. So I have

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Speaker 6: not heard the administration lay out a reasonable case of

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Speaker 6: what exactly is broken in USMCA. The Mexico points an

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Speaker 6: obvious one. You can raise North American content requirements, But

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Speaker 6: it really seems like Trump is using the thread of

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Speaker 6: tariffs to leverage this for other policy goals.

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Speaker 7: Well.

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Speaker 5: Behind the scenes are reportings that the Trump administration told

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Speaker 5: Mexican officials they should put tariffs on Chinese goods coming

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Speaker 5: into Mexico. They're concerned about Chinese goods getting through the border.

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Speaker 5: John is at your base case, then Trump is a

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Speaker 5: negotiating mode when it comes to the tariffs due next week.

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Speaker 6: Yeah, I mean yes, but I don't think it's about

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Speaker 6: The China issue is going to be settled in the

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Speaker 6: USMCA review, which is not due to the middle of

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Speaker 6: next year. But all of this is happening in the

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Speaker 6: background of that review. They want to force changes to

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Speaker 6: Mexican laws, and they want to force changes to USMCA

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Speaker 6: that will make it harder for Chinese goods to get

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Speaker 6: in the supply chain. That I think is the context

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Speaker 6: for all of these things. In the near term, though,

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Speaker 6: Trump is trying to fight over these unrelated policy issues

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Speaker 6: that really matter to his political agenda. Immigration, fetanyl crime,

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Speaker 6: the whole suite of issues with Mexico John chaos.

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Speaker 4: Maybe the point it might be the strategy that Donald

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Speaker 4: Trump uses to try to break through and get some change.

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Speaker 4: At the same time, that kind of chaos is creating

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Speaker 4: uncertainty in c suites at companies. You're seeing that some

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Speaker 4: of the earning expectations going forward. How much are some

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Speaker 4: of the rank and file Republicans in Congress right now

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Speaker 4: getting concerned about that?

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Speaker 6: I think there's quite a bit of concern. And right now,

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Speaker 6: I think that the focus is on economic policy, is

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Speaker 6: around the budget, and it's around extending the Trump tax

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Speaker 6: cuts at the end of the year. The real issue

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Speaker 6: that's caused concern in Washington right now among Republicans is

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Speaker 6: Trump's approach on Ukraine, which seems to be taking the

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Speaker 6: Russian position, and that is causing quite a bit of

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Speaker 6: consternation and is taking up a lot of the oxygen

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Speaker 6: in the room. But when it comes to the budget

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Speaker 6: cuts and DOGE, I think these issues actually have quite

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Speaker 6: a bit of support among Republicans who continue to look

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Speaker 6: at this deficit challenge that the US has and see

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Speaker 6: it as a generational issue that there's no real solution

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Speaker 6: for because they're not willing to raise taxes, so the

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Speaker 6: spending cuts, despite the uncertainty, are relatively popular. I think

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Speaker 6: the tariffs everybody in Washington could do without, except for

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Speaker 6: Trump and his team. But this is just the reality

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Speaker 6: of what happens when you elect a tariff man as president.

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Speaker 4: John, you said that the pivot toward Russia has gotten

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Speaker 4: a lot of attention among Republicans.

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Speaker 1: What's the explanation for it? How are people understanding it?

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Speaker 6: I think the president is once day in the war,

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Speaker 6: is succeptable to his has a relationship with Putin's susceptible

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Speaker 6: to the Russian message on Putin, excuse me on Ukraine,

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Speaker 6: and is sympathetic to what's coming out of Russia right now.

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Speaker 6: And I don't I mean, I think that there's a

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Speaker 6: that's a pretty disturbing explanation. I don't know if there's

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Speaker 6: a better explanation for it.

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Speaker 2: However, John, I appreciate your perspective as old ways. John

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Speaker 2: Lafer that if you're your grapes of westburst joins us

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Speaker 2: now to extend the conversation, don bomb down and down

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Speaker 2: had the ideas ideas out of China listed in the

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Speaker 2: United States. How investible I.

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Speaker 8: Think well said, I think Boba over sold here. I

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Speaker 8: mean there's gonna be some fear factor. But when it

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Speaker 8: comes to cloud, when it comes to who's going to

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Speaker 8: be the winner in Ai in China, I think names

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Speaker 8: like a Bob and those are names that you own here.

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Speaker 7: I think Bar's gonna be a little worse than bite here.

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Speaker 8: I think that's actually the best reaction that we're seeing

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Speaker 8: in China in terms of some of these names.

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Speaker 4: There are two different things, though, Dan, the idea of

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Speaker 4: buying in China if you are in mainland China versus

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Speaker 4: buying the ADRs in the US at a time where

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Speaker 4: there is increasing focus on whether some of these companies

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Speaker 4: should be raising money in the United States, do you

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Speaker 4: think that there will be an increasing divide between the

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Speaker 4: depositary receipts and what we see in mainland China or

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Speaker 4: Hong Kong.

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Speaker 8: Well, I think there will be, just because the worry

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Speaker 8: here in terms of what could come out of Trump

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Speaker 8: in the Beltway. And then I think the other focus is,

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Speaker 8: even though we're hearing jitters and obviously going to in

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Speaker 8: video tomorrow, I think more and more investors would rather

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Speaker 8: own big tech.

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Speaker 7: Obviously there's regulatory.

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Speaker 8: Risk, but that continues to be I think at the

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Speaker 8: top of the mountain when it comes to Ai Revolution.

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Speaker 5: Dan evercore I put out a note saying the sell

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Speaker 5: off what's going on in China is more about sell

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Speaker 5: first and ask questions later. Given this directive from the

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Speaker 5: the president, is just that a directive. It's a place

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Speaker 5: of travel where they want to go. How much of

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Speaker 5: this do you read as leverage for some sort of

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Speaker 5: deal potentially Trump might want to do with Beijing.

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Speaker 7: Well, God was just in Hong Kong, you know, over

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Speaker 7: the last week.

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Speaker 8: I do think that this is all game of high

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Speaker 8: stakes poker to ultimately where you get to some sort

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Speaker 8: of deal.

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Speaker 7: Well, I think given the movements, I get it.

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Speaker 8: But I do think that you're going to get to

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Speaker 8: maybe a lot better outcome here between US and China.

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Speaker 8: That's the thinking I think, especially in Hong Kong and

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Speaker 8: a lot of investors there, rather than maybe some of

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Speaker 8: the owners or draconian scenarios that you would have thought,

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Speaker 8: you know, going back to when Trump got elected.

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Speaker 5: How concerned you though that there are conversations already underway

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Speaker 5: between Trump administration officials when it comes to stricter export

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Speaker 5: controls similar to wish on the Biden administration, but actually

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Speaker 5: even maybe a little bit sharper.

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Speaker 8: Look, it's all going to be this fine line and

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Speaker 8: just even think about things like TikTok rightother chip on

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Speaker 8: the table, just like China's chips as well with Tesla

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Speaker 8: and FSD.

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Speaker 7: Look, this is all going to be a negotiation. But

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Speaker 7: I do believe that there's going to be this balancing act.

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Speaker 7: I don't think this is going to what I'll view is.

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Speaker 8: Like draconianly impact chips the supply chain, despite maybe some

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Speaker 8: of the fears out there.

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Speaker 7: And I think that's also why he talks to Jensen,

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Speaker 7: talks to Cook of course Musk, you.

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Speaker 8: Know, with a front row seat in terms of this

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Speaker 8: very tricky balancing act between acting tough but not ruining

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Speaker 8: this you know what continues to be I think the

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Speaker 8: biggest tech transformation the last forty years.

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Speaker 4: So, Dan, one reason why I love speaking with you

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Speaker 4: is because I never know where you're going to be today.

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Speaker 1: You're in Kuala Lumpur, you travel around the world.

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Speaker 4: I'm not sure if you're in a yacht, but I

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Speaker 4: am curious about what you're hearing from people around the

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Speaker 4: world when we see some of the uncertainty coming out

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Speaker 4: of the White House. How seriously are people taking that

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Speaker 4: internationally as they decide which tech giants to invest in

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Speaker 4: and how much they can really be confident in the

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Speaker 4: American tech power story.

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Speaker 8: Yeah, I mean that's I say, every meeting in the

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Speaker 8: last two weeks, regardless of what city we're in across

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Speaker 8: the Asia.

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Speaker 7: It starts off with that.

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Speaker 8: In terms of Trump, what does it mean, especially a

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Speaker 8: lot of these countries that's gotten crushed in terms of

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Speaker 8: worries about the ripple effect in terms of data centers,

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Speaker 8: you know, cap backs, regulatory and.

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Speaker 7: What that means.

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Speaker 8: Look, I think it's just another risk investors are trying

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Speaker 8: to handicap. But a lot of it really just does

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Speaker 8: come down to fundamentals.

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Speaker 7: I think fundamentals continue.

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Speaker 8: To kind of drive, and I believe we'll see it

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Speaker 8: from Nvidia tomorrow. I think some of this stuff does

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Speaker 8: go to the background, But no doubt it has been

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Speaker 8: white knuckles to start the year. You're just giving you

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Speaker 8: don't know what's going to come out from a regulatory perspective.

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Speaker 7: In terms of this, you as China call tech.

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Speaker 2: Warm Dennis in Malaysia this morning or the safe Nick

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Speaker 2: don't appreciate it. Dennis at Westbin. No doubta of Renmac

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Speaker 2: raising concerns on the labor market, writing, much of what

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Speaker 2: we see in the financial press tariffs and certainty is

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Speaker 2: a Red herrick An ex post rationalization for an economic

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Speaker 2: slowdown that was already in motion for the economy. Expect

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Speaker 2: conditions to deteriorate further in the jobs market. Neil joined

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Speaker 2: just now for more, Neil, Welcome to the program, sir.

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Speaker 2: As soon as you hit published yesterday, we talked about

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Speaker 2: that note. Fantastic read. They'll just share with us why

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Speaker 2: you think this is a train already in motion. It's

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Speaker 2: not about the last month.

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Speaker 9: Well, John, I'm beginning to have second thoughts already because

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Speaker 9: I see Anne, Marie Rock and Fendi on the program.

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Speaker 9: So it must be a bull market.

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Speaker 2: No, Vin, did someone spending Neil? She says, it's secondhand.

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Speaker 7: I don't know if it is sure. No.

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Speaker 9: All I'm doing, John is just applying the playbook from

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Speaker 9: late twenty twenty two when we made that no lined

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Speaker 9: in call. It will remember, if you recall, it was

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Speaker 9: basically four things, real income, housing, government spending, and this

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Speaker 9: the way the consensus was positioned. Right, so you fast

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Speaker 9: forward to today, Real incomes are slowing as the labor

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Speaker 9: market continues to cool. The housing market is getting worse.

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Speaker 9: Even though the FED had been cutting stay in, local

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Speaker 9: governments are pulling back. You know, the doge gets all

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Speaker 9: the attention, but really state in local government spending has

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Speaker 9: been a meaningful talement to growth, and that's likely to

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Speaker 9: go the other way. And if you look at the consensus,

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Speaker 9: I mean back in late twenty twenty two, everyone was

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Speaker 9: positioned for you know, essentially recession. I mean people held

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Speaker 9: onto that view, believe it or not, through the middle

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Speaker 9: of twenty twenty three. So one of the ways you

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Speaker 9: know it works is through an element of surprise, right,

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Speaker 9: I mean, if everyone expects recession and it doesn't happen,

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Speaker 9: you have to have this sort of period of ketchup.

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Speaker 9: By contrast, if you know, if everyone is expecting things

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Speaker 9: to be fine and then they're not, you know, I

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Speaker 9: could you know, prompt a clearing out of inventories, hiring, investment,

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Speaker 9: and so forth and kind of create a negative feedback

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Speaker 9: loop with the economy. So that's kind of what I'm

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Speaker 9: I'm concerned about. You know, the data hasn't been particularly

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Speaker 9: encouraging of late and i'd expect that to continue until

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Speaker 9: the FED gets on the right side of the eight point.

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Speaker 2: Well, now let's talk about the Fed. I said yesterday,

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Speaker 2: we all said yesterday, what's worse than a slowdown? And

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Speaker 2: it's a slow down the Fed's not willing to respond

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Speaker 2: to anytime soon.

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Speaker 4: Now.

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Speaker 2: The Federal Reserve was willing to get ahead of something.

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Speaker 2: Last year, they dropped rates by one hundred basis points

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Speaker 2: across three meetings. What changed coming into twenty five, Well, I.

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Speaker 9: Mean they're basically taking out an insurance policy against the

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Speaker 9: new administration. That's basically what happened. I mean, if you

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Speaker 9: look at the adjustments to their risk assessment around inflation,

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Speaker 9: the notion that they're simply innocently responding to the inflation data,

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Speaker 9: I think is a bit ridiculous. The upside surprise on

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Speaker 9: inflation that we saw in the back half of last

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Speaker 9: year paled in comparison to the upside surprises we saw

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Speaker 9: in the first half of last year, and you know,

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Speaker 9: the risk assessment didn't change all that much. So you know,

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Speaker 9: to me, this kind of feels eerily similar to the

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Speaker 9: period between June twenty twenty four and September twenty twenty four.

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Speaker 9: We went, you know, if you recall, I mean the

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Speaker 9: FED basically went peak hawkish in June and then three

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Speaker 9: months later they're cutting fifty bases points. So I think

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Speaker 9: where I'm at right now is the FED is waiting

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Speaker 9: for permission from the markets and the data in order

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Speaker 9: to respond if and that's essentially tempting fate. I mean,

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Speaker 9: if if you're waiting for something bad to happen before

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Speaker 9: you move, chances are something bad will happen. I mean,

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Speaker 9: what changes the trends that we're seeing at the moment

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Speaker 9: absence some kind of FED response.

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Speaker 4: Well, but Neil, I think that a lot of people

440
00:21:52,680 --> 00:21:54,080
Speaker 4: are picking up in the same thing that you are,

441
00:21:54,200 --> 00:21:56,640
Speaker 4: and suddenly the idea of terroris is no longer considered

442
00:21:56,640 --> 00:21:58,920
Speaker 4: so inflationary and it's considered more of a gross shock

443
00:21:58,960 --> 00:22:01,840
Speaker 4: in the absence of some other pro growth measures. Right now,

444
00:22:01,880 --> 00:22:03,679
Speaker 4: it seems like the bond market is turning around to

445
00:22:03,720 --> 00:22:06,080
Speaker 4: your side. Now we've got two rate cuts being priced

446
00:22:06,080 --> 00:22:07,520
Speaker 4: into the market through your end.

447
00:22:07,880 --> 00:22:10,240
Speaker 1: Is that enough to make you more positive.

448
00:22:09,880 --> 00:22:12,399
Speaker 4: If the FED does go through with a fifty basis

449
00:22:12,440 --> 00:22:14,560
Speaker 4: points of rate cuts by the end of this.

450
00:22:14,560 --> 00:22:17,000
Speaker 6: Year, No, not really.

451
00:22:17,080 --> 00:22:18,359
Speaker 9: I mean I think the FED will need to do

452
00:22:18,440 --> 00:22:20,919
Speaker 9: more than what's priced because the economy is weaker than

453
00:22:20,960 --> 00:22:23,840
Speaker 9: they think. It's really that simple, you know. I do

454
00:22:23,880 --> 00:22:26,639
Speaker 9: find it kind of amusing how everyone is basically using

455
00:22:26,720 --> 00:22:31,919
Speaker 9: tariffs and policy uncertainty as a rationale for their forecast adjustments. Now,

456
00:22:31,960 --> 00:22:34,040
Speaker 9: I mean, to me, it's a bit it's a bit rich,

457
00:22:34,359 --> 00:22:37,200
Speaker 9: you know, as if you know, if you thought that,

458
00:22:37,400 --> 00:22:38,960
Speaker 9: I mean, why don't you make your changes back in

459
00:22:39,000 --> 00:22:41,960
Speaker 9: November after the election. It's not I mean, the guy

460
00:22:42,119 --> 00:22:45,000
Speaker 9: ran on tariff being his favorite word in the dictionary,

461
00:22:45,040 --> 00:22:46,720
Speaker 9: and now you're surprised that he wants to go through

462
00:22:46,720 --> 00:22:47,800
Speaker 9: with it. I mean, it's crazy.

463
00:22:48,520 --> 00:22:51,000
Speaker 1: So well, you know, but let's just be clear.

464
00:22:51,160 --> 00:22:54,080
Speaker 4: It's not just that he's going through with tariffs. It's,

465
00:22:54,200 --> 00:22:56,960
Speaker 4: as Jonas measured many times, the sequencing of it, that

466
00:22:57,160 --> 00:22:59,600
Speaker 4: there isn't a clear path for some of the offsets,

467
00:22:59,600 --> 00:23:01,480
Speaker 4: which we're back to the tax cuts and the pro

468
00:23:01,520 --> 00:23:04,480
Speaker 4: growth measures, and you're not seeing the boom in deal activity.

469
00:23:04,800 --> 00:23:07,879
Speaker 4: That's the reason why people are focusing more on the

470
00:23:07,920 --> 00:23:10,200
Speaker 4: growth hit from tariffs than they are inflation.

471
00:23:10,359 --> 00:23:12,560
Speaker 1: No.

472
00:23:12,560 --> 00:23:14,280
Speaker 9: No, I mean, I think what I'm seeing more is

473
00:23:14,320 --> 00:23:17,920
Speaker 9: people talking about policy uncertainty related to the Trump administration,

474
00:23:18,040 --> 00:23:20,760
Speaker 9: and that's why they've gotten cautious all of a sudden,

475
00:23:20,800 --> 00:23:22,639
Speaker 9: and why there will be a freeze and sort of

476
00:23:22,680 --> 00:23:25,520
Speaker 9: investment and so forth. I mean, to me, it's ultimately

477
00:23:25,560 --> 00:23:28,760
Speaker 9: demand that's going to be driving the discussion, and household

478
00:23:28,840 --> 00:23:31,639
Speaker 9: demand is slowing because the labor markets continue to cool,

479
00:23:31,880 --> 00:23:33,720
Speaker 9: you know, the tariff stuff. I mean, again, this is

480
00:23:33,760 --> 00:23:36,640
Speaker 9: all just sort of X post thinking. I mean, it's

481
00:23:36,720 --> 00:23:39,399
Speaker 9: uncertainty would be high if if the shoe are on

482
00:23:39,440 --> 00:23:41,359
Speaker 9: the other foot, right, because we'd have one of the

483
00:23:41,480 --> 00:23:44,400
Speaker 9: largest tax increases ever potentially at the end of the year.

484
00:23:44,400 --> 00:23:46,800
Speaker 9: You don't think businesses would be worried about that. So

485
00:23:46,880 --> 00:23:48,640
Speaker 9: it's just sort of like this heads eye, wind tails

486
00:23:48,680 --> 00:23:50,440
Speaker 9: you lose type of analysis that I think is a

487
00:23:50,480 --> 00:23:53,440
Speaker 9: bit ridiculous. I think everyone should just focus on the

488
00:23:53,520 --> 00:23:56,480
Speaker 9: here and now, including the fit, you know, instead of

489
00:23:56,480 --> 00:23:58,840
Speaker 9: trying to take out an insurance policy about what may

490
00:23:58,880 --> 00:24:01,199
Speaker 9: happen or may not happen. I mean, Congress is very

491
00:24:01,320 --> 00:24:03,840
Speaker 9: evenly divided. I mean, the sort of physical expectations that

492
00:24:03,840 --> 00:24:06,720
Speaker 9: people had baked in after the election, you know, you

493
00:24:06,760 --> 00:24:10,960
Speaker 9: could pin that at the at the feet of Congress, right,

494
00:24:11,040 --> 00:24:13,440
Speaker 9: I mean, so it's not just the Trump administration from

495
00:24:13,440 --> 00:24:16,520
Speaker 9: where the uncertainty is coming from. But I think it's

496
00:24:16,560 --> 00:24:19,160
Speaker 9: wise to just focus on the here and now. And

497
00:24:20,320 --> 00:24:23,359
Speaker 9: what the hero now tells me is that demand is

498
00:24:23,400 --> 00:24:29,000
Speaker 9: slowing down, housing is still weak, and inflation is likely

499
00:24:29,040 --> 00:24:32,120
Speaker 9: to continue to moderate as rental inflation keeps cooling off.

500
00:24:32,560 --> 00:24:34,399
Speaker 2: He knows his fend and he now did it. At

501
00:24:34,440 --> 00:24:37,280
Speaker 2: the end, there Nodnsa of renmc neil got to catch up.

502
00:24:38,000 --> 00:24:41,560
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503
00:24:41,560 --> 00:24:44,880
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504
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505
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506
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507
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