1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,400 Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each 4 00:00:18,480 --> 00:00:21,360 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,400 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,760 --> 00:00:27,400 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,480 --> 00:00:31,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,479 --> 00:00:37,600 Speaker 2: Bloomberg Terminal and the Bloomberg Business app. Recession fears rising 10 00:00:37,600 --> 00:00:39,720 Speaker 2: on the hills have increased tarifs and federal job cuts. 11 00:00:39,760 --> 00:00:42,519 Speaker 2: Ronica Clark of City Rights the payrolls report was not 12 00:00:42,640 --> 00:00:46,040 Speaker 2: far off expectations, but details of the report suggest a 13 00:00:46,159 --> 00:00:48,879 Speaker 2: softening trend in labor demand for Anica joins us now 14 00:00:48,920 --> 00:00:50,120 Speaker 2: from what Bronica, good morning. 15 00:00:49,960 --> 00:00:51,400 Speaker 3: It's good to see you, Good morning, Thanks for having me. 16 00:00:51,520 --> 00:00:53,519 Speaker 2: Let's talk about those details. Where do you see the weakness? 17 00:00:53,560 --> 00:00:54,640 Speaker 2: What concerns you at the moment? 18 00:00:54,760 --> 00:00:56,880 Speaker 4: Yeah, on the surface, this looked like a jobs report 19 00:00:56,920 --> 00:00:58,600 Speaker 4: that looks like the last six or seven months, we 20 00:00:58,680 --> 00:01:00,880 Speaker 4: had the unemployment rate staying that range. It's been in 21 00:01:00,920 --> 00:01:03,880 Speaker 4: one hundred and fifty thousand jobs. That's fine, but it 22 00:01:03,920 --> 00:01:06,360 Speaker 4: was really the increase in the unemployment rate, so it's 23 00:01:06,400 --> 00:01:09,680 Speaker 4: still in the range, but that occurred alongside of decline 24 00:01:09,680 --> 00:01:13,560 Speaker 4: and participation, so people maybe leaving the labor force. Unemployment 25 00:01:13,640 --> 00:01:15,480 Speaker 4: rate would have been even higher, something like four point 26 00:01:15,560 --> 00:01:18,480 Speaker 4: four percent if that hadn't happened. And then even in 27 00:01:18,520 --> 00:01:20,880 Speaker 4: the details of perils, you know, hours work that are 28 00:01:20,920 --> 00:01:23,360 Speaker 4: coming down, it doesn't feel like there's a lot of 29 00:01:23,360 --> 00:01:25,040 Speaker 4: demand for workers right now. 30 00:01:25,040 --> 00:01:27,959 Speaker 5: Which raises this question of how resilient this labor market 31 00:01:28,040 --> 00:01:30,640 Speaker 5: is in the face potentially of a policy shock that 32 00:01:30,680 --> 00:01:31,560 Speaker 5: a lot of people. 33 00:01:31,280 --> 00:01:33,240 Speaker 6: Are talking about. What's your sense. 34 00:01:33,280 --> 00:01:35,400 Speaker 5: I know, you guys have been saying that the economy 35 00:01:35,520 --> 00:01:38,959 Speaker 5: was weakening. How off sides are people in their expectations 36 00:01:39,000 --> 00:01:40,839 Speaker 5: at the robustness of the US labor market. 37 00:01:40,920 --> 00:01:43,199 Speaker 4: Yeah, we have been seeing this weekening for a while. 38 00:01:43,280 --> 00:01:45,880 Speaker 4: Primarily this has looked like a very low churn labor 39 00:01:45,920 --> 00:01:48,880 Speaker 4: market that's low hiring, low quits, low layoffs. 40 00:01:49,840 --> 00:01:51,160 Speaker 3: But that low hiring. 41 00:01:50,880 --> 00:01:53,800 Speaker 4: Dynamic, I do think it's restrictive rates that got us here, 42 00:01:54,080 --> 00:01:56,840 Speaker 4: and that means the labor market's not very well positioned 43 00:01:56,880 --> 00:01:59,920 Speaker 4: to absorb a shock, even if it's coming from from government. 44 00:02:00,480 --> 00:02:03,080 Speaker 4: Obviously we're tracking the numbers of those layoffs and the 45 00:02:03,120 --> 00:02:06,400 Speaker 4: direct impact of those might be minimal enough, you know, 46 00:02:06,440 --> 00:02:08,960 Speaker 4: a couple tenths on the unemployment rate could could get bigger. 47 00:02:09,760 --> 00:02:12,000 Speaker 4: But I would really worry about the spillover to you know, 48 00:02:12,040 --> 00:02:15,799 Speaker 4: private private sector contractors and just hiring that is solo 49 00:02:15,919 --> 00:02:18,840 Speaker 4: and might be going even lower in face of uncertainty. 50 00:02:19,600 --> 00:02:21,880 Speaker 4: Why would you be hiring people right now? And that 51 00:02:21,880 --> 00:02:23,760 Speaker 4: could be the bigger impact on the labor market. 52 00:02:23,840 --> 00:02:25,839 Speaker 5: It seems like there is a grand plan, and there's 53 00:02:25,880 --> 00:02:27,760 Speaker 5: sort of this sense that you take your paint up 54 00:02:27,760 --> 00:02:30,359 Speaker 5: front and then some of the positive and you rejigger 55 00:02:30,400 --> 00:02:31,440 Speaker 5: the US economy. 56 00:02:31,720 --> 00:02:34,360 Speaker 6: And it's moving on a one or two year cycle. 57 00:02:34,760 --> 00:02:37,600 Speaker 5: President Trump saying he judges himself in quarters. Can you 58 00:02:37,639 --> 00:02:40,040 Speaker 5: talk about the timeframe of a labor market that is 59 00:02:40,120 --> 00:02:41,120 Speaker 5: much slower moving? 60 00:02:41,440 --> 00:02:41,720 Speaker 3: Yeah? 61 00:02:41,840 --> 00:02:44,119 Speaker 4: Yeah, I mean we've come a long way in terms 62 00:02:44,160 --> 00:02:46,480 Speaker 4: of the labor market loosening already. Of course, mean we 63 00:02:46,560 --> 00:02:49,079 Speaker 4: had the increase in the unemployment rate last year, had 64 00:02:49,080 --> 00:02:51,920 Speaker 4: looked like maybe there was some stability, But I think, 65 00:02:52,040 --> 00:02:55,440 Speaker 4: you know, we're at that point where in past cycles 66 00:02:55,440 --> 00:02:58,239 Speaker 4: you see this much sharper increase in the unemployment rate. 67 00:02:58,800 --> 00:02:59,960 Speaker 3: That's the layoff. 68 00:02:59,600 --> 00:03:02,040 Speaker 4: Stage of this weakening labor market. So it's been slow 69 00:03:02,080 --> 00:03:04,720 Speaker 4: moving for now. It's been maybe taking a bit longer 70 00:03:04,760 --> 00:03:07,560 Speaker 4: to get to that last stage than usual, But this 71 00:03:07,639 --> 00:03:09,560 Speaker 4: could be what pushes us there for sure. 72 00:03:09,639 --> 00:03:12,160 Speaker 7: What kind of impact is DOGE having on the labor market? 73 00:03:12,280 --> 00:03:14,280 Speaker 4: Yeah, I mean we do track, you know, the outright 74 00:03:14,360 --> 00:03:16,799 Speaker 4: numbers of layoffs that we've seen so far, Well, we'll 75 00:03:16,800 --> 00:03:18,600 Speaker 4: start to see that. I think in the March employment 76 00:03:18,639 --> 00:03:21,080 Speaker 4: report wasn't as you know, showing up in this February 77 00:03:21,160 --> 00:03:24,120 Speaker 4: data quite yet, but we're, you know, something around forty 78 00:03:24,200 --> 00:03:25,520 Speaker 4: to sixty k right now. 79 00:03:26,080 --> 00:03:27,799 Speaker 3: The bigger numbers would come over the summer. 80 00:03:27,840 --> 00:03:29,959 Speaker 4: You know, we have these plans for mass layoffs that 81 00:03:30,000 --> 00:03:32,880 Speaker 4: are supposed to happen over the summer. Maybe we're looking 82 00:03:32,919 --> 00:03:35,080 Speaker 4: at something like three hundred thousand maybe more. 83 00:03:35,640 --> 00:03:38,160 Speaker 7: Do you think the private sector could absorb these jobs? 84 00:03:38,200 --> 00:03:39,680 Speaker 3: I don't think so. Yeah. 85 00:03:39,920 --> 00:03:42,880 Speaker 4: I think this is a private sector also that has 86 00:03:42,920 --> 00:03:45,720 Speaker 4: been weakening for a while, hiring. 87 00:03:45,480 --> 00:03:46,240 Speaker 3: Rates very low. 88 00:03:46,880 --> 00:03:48,720 Speaker 4: Of course, the private sector is going to feel some 89 00:03:48,800 --> 00:03:52,600 Speaker 4: of this also. You know, government contractors, just general uncertainty. 90 00:03:52,640 --> 00:03:54,160 Speaker 3: Those are going to be people who. 91 00:03:54,120 --> 00:03:56,240 Speaker 4: Are not spending in the economy as much. You know, 92 00:03:56,240 --> 00:03:57,680 Speaker 4: they'll there will be ripple effects. 93 00:03:57,800 --> 00:04:00,080 Speaker 2: Isn't that They ultimate goal of the administration though, The 94 00:04:00,160 --> 00:04:02,480 Speaker 2: ultimate goal it is to rebalance the economy. And your 95 00:04:02,520 --> 00:04:04,440 Speaker 2: response to that is, I don't think so, you're not 96 00:04:04,440 --> 00:04:06,240 Speaker 2: finish as possible in. 97 00:04:06,240 --> 00:04:07,880 Speaker 3: A nice, orderly rebalancing. 98 00:04:07,960 --> 00:04:11,680 Speaker 4: I think no, because I think we had a weaker 99 00:04:11,800 --> 00:04:14,480 Speaker 4: view of the economy, you know, going into this year already, 100 00:04:14,480 --> 00:04:16,920 Speaker 4: and I think we've seen that in the data. So yeah, 101 00:04:16,920 --> 00:04:19,800 Speaker 4: this is a really precarious labor market that maybe can't 102 00:04:19,800 --> 00:04:21,080 Speaker 4: handle some of these these changes. 103 00:04:21,200 --> 00:04:23,400 Speaker 2: Is it a rebalancing the FED needs to support. 104 00:04:23,720 --> 00:04:25,640 Speaker 4: I think the FED will be there to support the 105 00:04:25,720 --> 00:04:29,960 Speaker 4: labor market. Obviously, we do have concerns of inflation, and 106 00:04:30,160 --> 00:04:31,360 Speaker 4: tariffs are related to that. 107 00:04:32,040 --> 00:04:34,000 Speaker 3: But if this is a true, you. 108 00:04:33,960 --> 00:04:36,800 Speaker 4: Know, weakening economy, maybe you can't pass on those price 109 00:04:36,839 --> 00:04:39,000 Speaker 4: increases as much. You can't demand a higher wage, and 110 00:04:39,000 --> 00:04:41,800 Speaker 4: so you're not actually as worried about the persistent inflation. 111 00:04:41,920 --> 00:04:43,200 Speaker 3: From this is what. 112 00:04:43,160 --> 00:04:44,720 Speaker 5: Does the FED have to see then in order to 113 00:04:44,760 --> 00:04:48,039 Speaker 5: actually start cutting rates. Does that sort of avoid a 114 00:04:48,080 --> 00:04:50,520 Speaker 5: recession or does that mean that we have to see 115 00:04:50,560 --> 00:04:53,320 Speaker 5: the whites of recession size before they start engaging. 116 00:04:53,400 --> 00:04:55,960 Speaker 4: I think they will probably be getting more concerned on 117 00:04:56,080 --> 00:04:57,880 Speaker 4: the labor market, on the growth side of things. And 118 00:04:57,920 --> 00:05:00,640 Speaker 4: so if you do see some inflation dat alone that 119 00:05:00,640 --> 00:05:03,760 Speaker 4: look a bit more favorable, maybe Wednesday's numbers, you'll add 120 00:05:03,760 --> 00:05:05,919 Speaker 4: to that confidence that inflation is slowing. 121 00:05:06,600 --> 00:05:08,320 Speaker 3: Then they can be cutting as soon as May. That's 122 00:05:08,360 --> 00:05:08,919 Speaker 3: our base. 123 00:05:08,800 --> 00:05:13,000 Speaker 2: Case Wednesday for CPI. The following week, FED Powell a 124 00:05:13,080 --> 00:05:16,240 Speaker 2: news conference and FED decision on March nineteenth. Two things 125 00:05:16,240 --> 00:05:18,240 Speaker 2: to look for. Veronica's good to see you as always. 126 00:05:18,240 --> 00:05:30,560 Speaker 2: Thank you, Ronica Clark. There a city. Let's turn back 127 00:05:30,600 --> 00:05:33,160 Speaker 2: to the tariff agenda. Twenty five percent tariffs on steel 128 00:05:33,360 --> 00:05:36,200 Speaker 2: and aluminum imports still on deck for Wednesday, the former 129 00:05:36,279 --> 00:05:39,400 Speaker 2: NEC deputy director Kelly and Shaw writing, the ambiguity of 130 00:05:39,440 --> 00:05:41,880 Speaker 2: Trump's tariff plans are a feature and not a bug. 131 00:05:42,120 --> 00:05:45,440 Speaker 2: As he sets to negotiate both USMCA and relationships with 132 00:05:45,480 --> 00:05:48,480 Speaker 2: a number of key trading partners, Kelly and Shaw joined 133 00:05:48,520 --> 00:05:50,560 Speaker 2: US Now for more Kelly and welcome to the program. 134 00:05:50,640 --> 00:05:53,040 Speaker 2: Those negotiations set to kick off a whole lot more 135 00:05:53,240 --> 00:05:55,000 Speaker 2: in the next month at a start of April when 136 00:05:55,000 --> 00:05:57,680 Speaker 2: we get the reciprocal tariffs. What are you expecting to 137 00:05:57,720 --> 00:05:59,720 Speaker 2: see in the next month or so. 138 00:06:00,680 --> 00:06:01,480 Speaker 8: Yeah, good morning. 139 00:06:01,720 --> 00:06:04,400 Speaker 9: I think what's been really interesting is despite the fact 140 00:06:04,440 --> 00:06:07,920 Speaker 9: that last week's terrifaction on Canada and Mexico was the 141 00:06:07,960 --> 00:06:11,719 Speaker 9: single largest terrifaction of any president in modern history, the 142 00:06:11,720 --> 00:06:15,840 Speaker 9: administration keeps saying, hold your breath and wait till April second. 143 00:06:16,160 --> 00:06:19,560 Speaker 9: So I'm expecting the announcement of large tariffs on a 144 00:06:19,680 --> 00:06:24,120 Speaker 9: number of US trading partners, particularly those with large trade deficits, 145 00:06:24,320 --> 00:06:27,320 Speaker 9: which will give them an opportunity to potentially negotiate their 146 00:06:27,320 --> 00:06:30,160 Speaker 9: way out of whatever the administration has planned in terms 147 00:06:30,160 --> 00:06:32,240 Speaker 9: of rebalancing those trading relationships. 148 00:06:32,400 --> 00:06:34,080 Speaker 7: Kelly, And when it comes to April second, is this 149 00:06:34,200 --> 00:06:36,119 Speaker 7: just the announcement and then we're going to have a 150 00:06:36,160 --> 00:06:39,039 Speaker 7: public comment period. How long until we see that tariffs 151 00:06:39,080 --> 00:06:39,960 Speaker 7: actually take place? 152 00:06:41,040 --> 00:06:42,880 Speaker 8: Yeah. The truth is we don't know yet. 153 00:06:42,920 --> 00:06:46,400 Speaker 9: We're not clear on how the administration intends to structure this, 154 00:06:46,480 --> 00:06:49,320 Speaker 9: whether they intend to actually move forward with tariffs under 155 00:06:49,360 --> 00:06:52,479 Speaker 9: something like AIPA or Section three three eight on April second, 156 00:06:52,880 --> 00:06:55,000 Speaker 9: as well as some of these sectoral tariffs that they've 157 00:06:55,000 --> 00:06:58,320 Speaker 9: been talking about or whether they'll announce their plan and 158 00:06:58,320 --> 00:07:01,120 Speaker 9: then kick those off into investigations, which would take several 159 00:07:01,200 --> 00:07:03,400 Speaker 9: more months before those tariffs went into effect. 160 00:07:03,560 --> 00:07:04,640 Speaker 8: They could pick either path. 161 00:07:05,040 --> 00:07:07,520 Speaker 7: If it's a path that they're going to have some 162 00:07:07,600 --> 00:07:10,520 Speaker 7: more time. Does that mean that Trump is a negotiating 163 00:07:10,520 --> 00:07:13,880 Speaker 7: mode and he's happy to maybe pull back the tariff 164 00:07:13,920 --> 00:07:16,120 Speaker 7: threat if he gets something from one of the trading partners. 165 00:07:17,360 --> 00:07:19,280 Speaker 9: Well, I think the President has been clear that he 166 00:07:19,440 --> 00:07:23,480 Speaker 9: is open to negotiations on these reciprocal tariffs. His idea 167 00:07:23,680 --> 00:07:26,280 Speaker 9: is that we'll charge you what you charge us, and 168 00:07:26,320 --> 00:07:28,520 Speaker 9: if other countries come to the table and lower their 169 00:07:28,560 --> 00:07:31,920 Speaker 9: own tariff barriers, then those teriff rates would go down 170 00:07:31,960 --> 00:07:33,840 Speaker 9: on the US side as well. And I think that 171 00:07:34,040 --> 00:07:37,520 Speaker 9: is the beauty of this concept of reciprocity. It really 172 00:07:37,560 --> 00:07:40,160 Speaker 9: is the epitome of fairness from the perspective of the president. 173 00:07:40,200 --> 00:07:42,400 Speaker 9: So I certainly think their scope for negotiation. 174 00:07:42,800 --> 00:07:45,280 Speaker 7: What about Wednesday when it comes to aluminum steel, Do 175 00:07:45,320 --> 00:07:46,680 Speaker 7: you expect those tariffs to go through? 176 00:07:46,720 --> 00:07:48,680 Speaker 6: As Howard Latnix said over the weekend. 177 00:07:49,280 --> 00:07:50,320 Speaker 8: Yeah, I do. 178 00:07:50,640 --> 00:07:52,360 Speaker 9: I think that this is a redo of what the 179 00:07:52,400 --> 00:07:56,040 Speaker 9: administration did back in twenty eighteen, and the view that 180 00:07:56,040 --> 00:07:58,040 Speaker 9: you're hearing coming out from the White House is that 181 00:07:58,080 --> 00:08:01,280 Speaker 9: there were so many exceptions, so many illusions, that it 182 00:08:01,320 --> 00:08:03,200 Speaker 9: became a loophole you could drive a truck through. 183 00:08:03,280 --> 00:08:05,000 Speaker 8: And so they're starting with the. 184 00:08:04,920 --> 00:08:08,560 Speaker 9: Maximalist tariff approach when it comes to steel and aluminum. 185 00:08:08,760 --> 00:08:11,360 Speaker 9: I do think that there's scope for countries like Australia 186 00:08:11,440 --> 00:08:13,880 Speaker 9: or maybe Canada and Mexico to get some sort of 187 00:08:13,920 --> 00:08:17,320 Speaker 9: country exception country exclusion, but for now, I think he's 188 00:08:17,360 --> 00:08:18,080 Speaker 9: moving forward with. 189 00:08:18,040 --> 00:08:18,640 Speaker 8: The full measure. 190 00:08:18,800 --> 00:08:20,840 Speaker 5: A number of studies callyan IF and pointing to the 191 00:08:20,880 --> 00:08:23,720 Speaker 5: fact that actually production might move more quickly out of 192 00:08:23,720 --> 00:08:28,560 Speaker 5: the United States if the twenty five percent tariffs do continue, particularly. 193 00:08:28,040 --> 00:08:28,960 Speaker 6: On Canada and Mexico. 194 00:08:29,000 --> 00:08:32,719 Speaker 5: I'm talking about autoparts makers in particular. How much do 195 00:08:32,760 --> 00:08:35,000 Speaker 5: you think that the president accounts for this type of 196 00:08:35,080 --> 00:08:37,080 Speaker 5: behavior at a time where a lot of companies are 197 00:08:37,120 --> 00:08:40,520 Speaker 5: trying to insulate themselves for themselves from headline risk. 198 00:08:41,880 --> 00:08:45,160 Speaker 9: Yeah, I think that the President's reaction to pair back 199 00:08:45,280 --> 00:08:47,800 Speaker 9: some of the Canada and Mexico tariffs and say that 200 00:08:48,120 --> 00:08:51,600 Speaker 9: for companies that are complying with USMCA rules of origin, 201 00:08:51,800 --> 00:08:53,960 Speaker 9: that you would be exempted from the measure shows that 202 00:08:54,000 --> 00:08:56,800 Speaker 9: the President is paying attention to this and that it's 203 00:08:56,840 --> 00:08:59,760 Speaker 9: not just about production in America but in North America. 204 00:09:00,120 --> 00:09:03,280 Speaker 9: But this is an administration that is really focused on production, 205 00:09:03,720 --> 00:09:06,160 Speaker 9: and so not only are they using tariffs to achieve that, 206 00:09:06,240 --> 00:09:09,559 Speaker 9: but they have forecasted that when it comes to tax cuts, deregulation, 207 00:09:09,679 --> 00:09:11,880 Speaker 9: in a number of other policies, they're going to do 208 00:09:11,920 --> 00:09:14,240 Speaker 9: what they can to incentivize producing in the US and 209 00:09:14,440 --> 00:09:15,600 Speaker 9: producing in North America. 210 00:09:15,840 --> 00:09:18,120 Speaker 5: Kelly, and what do you make of this theory that 211 00:09:18,200 --> 00:09:20,240 Speaker 5: this is all by design, that a little bit of 212 00:09:20,280 --> 00:09:23,080 Speaker 5: pain is kind of the goal here to get interest 213 00:09:23,120 --> 00:09:26,160 Speaker 5: rates lower to offset some of the tax cuts and 214 00:09:26,280 --> 00:09:30,240 Speaker 5: just the increasing deficit and increasing interest expense that the 215 00:09:30,320 --> 00:09:33,280 Speaker 5: US is paying. Do you believe that that could actually 216 00:09:33,280 --> 00:09:34,360 Speaker 5: be by design. 217 00:09:36,000 --> 00:09:38,960 Speaker 9: I'm not sure if that's the objective of the administration. 218 00:09:39,360 --> 00:09:41,360 Speaker 9: I think when they talk about the fact that there's 219 00:09:41,400 --> 00:09:43,840 Speaker 9: going to be pain, and when the President talks about 220 00:09:43,880 --> 00:09:47,240 Speaker 9: this transition period, what they're talking about is the fact 221 00:09:47,280 --> 00:09:49,959 Speaker 9: that they have their eye on the ball ten steps ahead, 222 00:09:50,240 --> 00:09:52,439 Speaker 9: and that at the end of the administration, they want 223 00:09:52,480 --> 00:09:55,240 Speaker 9: to be in a place where US trading relationships are 224 00:09:55,280 --> 00:09:59,000 Speaker 9: in a more balanced position where there are lower tax 225 00:09:59,120 --> 00:10:01,840 Speaker 9: rates and they're is a greater incentive to produce in 226 00:10:01,880 --> 00:10:04,280 Speaker 9: the United States and what they refer to as this 227 00:10:04,360 --> 00:10:07,800 Speaker 9: golden age of manufacturing, Golden age of production, but that 228 00:10:07,800 --> 00:10:09,480 Speaker 9: that is not going to be easy to get to. 229 00:10:09,520 --> 00:10:11,560 Speaker 9: It's not a straight line. You're gonna have to break 230 00:10:11,559 --> 00:10:14,080 Speaker 9: some plates in the meantime. And so if some of 231 00:10:14,080 --> 00:10:17,960 Speaker 9: these other economic consequences are happening, that is part of 232 00:10:18,240 --> 00:10:20,160 Speaker 9: the entire measure. But I'm not sure that all of 233 00:10:20,160 --> 00:10:22,720 Speaker 9: these are necessarily intended consequences, Killy. 234 00:10:22,760 --> 00:10:24,720 Speaker 7: And there's one place we know where the tariffs are 235 00:10:24,960 --> 00:10:27,240 Speaker 7: going to stick, and of course that's China. Twenty percent 236 00:10:27,440 --> 00:10:31,559 Speaker 7: and as of today, China's reciprocal tariffs on the United States, 237 00:10:31,600 --> 00:10:33,920 Speaker 7: those retaliatory measures have gone into place for a number 238 00:10:33,920 --> 00:10:35,160 Speaker 7: of agricultural products. 239 00:10:35,480 --> 00:10:36,200 Speaker 6: Given you were. 240 00:10:36,120 --> 00:10:39,240 Speaker 7: There for Phase one, do you think potentially there's a 241 00:10:39,280 --> 00:10:41,400 Speaker 7: bigger deal to be had at the end of this 242 00:10:41,440 --> 00:10:43,920 Speaker 7: when it comes to China, Because I remember twenty eighteen 243 00:10:44,280 --> 00:10:47,319 Speaker 7: there was billions of dollars of losses from the agricultural 244 00:10:47,360 --> 00:10:49,439 Speaker 7: sector in the United States and then Trump to actually 245 00:10:49,480 --> 00:10:50,920 Speaker 7: have a bailout for these farmers. 246 00:10:52,640 --> 00:10:55,480 Speaker 9: Yeah, agriculture really is at the tip of the sphere 247 00:10:55,480 --> 00:10:58,080 Speaker 9: when it comes to trade and tariff policy because they're 248 00:10:58,360 --> 00:11:01,480 Speaker 9: the first to get retaliated. They are one of the 249 00:11:01,480 --> 00:11:04,480 Speaker 9: most politically sensitive products in the United States, and every 250 00:11:04,480 --> 00:11:07,360 Speaker 9: member of Congress has some form of agriculture in their district, 251 00:11:07,600 --> 00:11:09,880 Speaker 9: which is why it's so attractive for our trading partners 252 00:11:09,920 --> 00:11:10,920 Speaker 9: to hit them first. 253 00:11:11,800 --> 00:11:12,960 Speaker 8: We'll have to see where this goes. 254 00:11:13,000 --> 00:11:15,520 Speaker 9: I mean, the President has tweeted and posted on true 255 00:11:15,600 --> 00:11:20,280 Speaker 9: social about taking care of the farmers, having them sell domestically. 256 00:11:20,440 --> 00:11:23,240 Speaker 9: I think he is keenly aware that they are getting 257 00:11:23,320 --> 00:11:25,600 Speaker 9: hit first. But when it comes to China and some 258 00:11:25,600 --> 00:11:28,400 Speaker 9: sort of trade deal the juries out. We'll have to 259 00:11:28,400 --> 00:11:30,600 Speaker 9: see what happens and whether China wants to come to 260 00:11:30,640 --> 00:11:33,920 Speaker 9: the table with the United States and vice versa. April second, 261 00:11:34,000 --> 00:11:36,760 Speaker 9: the President has a report on China's compliance with the 262 00:11:36,760 --> 00:11:40,000 Speaker 9: Phase one deal, a review of the eighteen billion dollars 263 00:11:40,000 --> 00:11:43,520 Speaker 9: in tariffa the Biden administration added, and then China's IP practices. 264 00:11:43,920 --> 00:11:46,080 Speaker 9: So I fully expect this relationship to get a bit 265 00:11:46,120 --> 00:11:48,880 Speaker 9: more tumultuous before it gets better. And then maybe this 266 00:11:48,880 --> 00:11:51,199 Speaker 9: spring or summer there may be some scope for negotiating 267 00:11:51,240 --> 00:11:51,559 Speaker 9: some of. 268 00:11:51,520 --> 00:11:53,920 Speaker 2: It back down, well, said Keleon, going to say, you 269 00:11:54,280 --> 00:11:57,400 Speaker 2: wise cleon show that they form any say Deputy Director 270 00:12:07,280 --> 00:12:10,800 Speaker 2: Barbara rein Hardefouyer Investment Management, writing, it's challenging to have 271 00:12:10,840 --> 00:12:13,720 Speaker 2: strong views in this turbulent market environment. If the pride 272 00:12:13,720 --> 00:12:18,000 Speaker 2: Trump administration is guidance ratified, trade policy should be better 273 00:12:18,400 --> 00:12:20,959 Speaker 2: than feared. Barbara joins, just now for more, Barbara got Mornick, 274 00:12:21,040 --> 00:12:23,880 Speaker 2: Good morning. Is that playbook even worth looking at anymore? 275 00:12:24,000 --> 00:12:26,360 Speaker 1: You know, I think it's the problem is the stopping 276 00:12:26,440 --> 00:12:29,720 Speaker 1: go nature of the administration's policy seem to really be 277 00:12:29,800 --> 00:12:32,000 Speaker 1: what's causing a lot of indigestion in the markets. 278 00:12:32,440 --> 00:12:34,000 Speaker 6: And that also. 279 00:12:33,800 --> 00:12:38,400 Speaker 1: Coupled with softer survey data, Earnings revisions have been marked 280 00:12:38,440 --> 00:12:40,000 Speaker 1: down a bit at least for the first half of 281 00:12:40,040 --> 00:12:42,679 Speaker 1: this year, and it's causing a lot of problems. I mean, 282 00:12:42,679 --> 00:12:44,839 Speaker 1: it was just on February twenty that we hit a 283 00:12:44,880 --> 00:12:46,880 Speaker 1: new all time high for the S and P five hundred. 284 00:12:47,160 --> 00:12:48,560 Speaker 1: It feels like it was about a year ago. 285 00:12:48,720 --> 00:12:51,120 Speaker 2: Things have changed quickly. The President's not stepping in, He's 286 00:12:51,120 --> 00:12:54,160 Speaker 2: not changing course certainly days why would he? The channel 287 00:12:54,160 --> 00:12:56,560 Speaker 2: of the Fed Reserve is not stepping in or changing course, 288 00:12:56,840 --> 00:12:58,840 Speaker 2: what do you need to see to generate a counter 289 00:12:58,880 --> 00:12:59,400 Speaker 2: trend rally? 290 00:12:59,400 --> 00:13:02,720 Speaker 1: Here happen, markets are very oversold at this point. So 291 00:13:02,760 --> 00:13:05,320 Speaker 1: we have long term indicators and short term indicators on 292 00:13:05,360 --> 00:13:09,239 Speaker 1: investor sentiment, and our short term indicators are as oversold 293 00:13:09,320 --> 00:13:11,840 Speaker 1: as they have been in over three years. 294 00:13:11,840 --> 00:13:12,360 Speaker 6: At this point. 295 00:13:13,000 --> 00:13:14,600 Speaker 1: You'd have to go back to the twenty twenty two 296 00:13:14,679 --> 00:13:17,719 Speaker 1: sell off to have this type of short term oversold indicators. 297 00:13:18,160 --> 00:13:21,199 Speaker 1: I think that you probably need some clarity on tariffs 298 00:13:21,400 --> 00:13:22,959 Speaker 1: in order to be able to get the market to 299 00:13:23,040 --> 00:13:26,800 Speaker 1: have put in a sustainable rally. Now, when a counter 300 00:13:26,800 --> 00:13:29,920 Speaker 1: trend rally comes, what's likely to do well The things 301 00:13:29,920 --> 00:13:31,760 Speaker 1: that have sold off the most. I mean US small 302 00:13:31,760 --> 00:13:34,319 Speaker 1: cap stocks, so one of my team pointed this out 303 00:13:34,360 --> 00:13:37,520 Speaker 1: to me, are down over twenty percent from September or 304 00:13:37,520 --> 00:13:39,679 Speaker 1: twenty twenty four. So likely you're going to see a 305 00:13:39,720 --> 00:13:42,400 Speaker 1: big counter trend rally in US small caps, US midcaps, 306 00:13:42,559 --> 00:13:45,480 Speaker 1: potentially US growth stocks as well, but it could be 307 00:13:45,520 --> 00:13:47,760 Speaker 1: a while before you get enough visibility to generate that 308 00:13:47,800 --> 00:13:48,680 Speaker 1: counter trend rally. 309 00:13:48,840 --> 00:13:51,560 Speaker 5: You said that the over sold indicators were the most 310 00:13:51,600 --> 00:13:54,080 Speaker 5: going back to twenty twenty two, and yet we're still 311 00:13:54,080 --> 00:13:56,520 Speaker 5: at some twenty one times earnings. We're still at a 312 00:13:56,559 --> 00:13:59,840 Speaker 5: pretty elevated valuation, which goes to the structural argument that 313 00:13:59,840 --> 00:14:03,120 Speaker 5: may maybe money has been flowing into the US disproportionately 314 00:14:03,200 --> 00:14:06,520 Speaker 5: for so long that now just a normalization, especially back 315 00:14:06,520 --> 00:14:09,160 Speaker 5: to Europe, makes a little bit of sense. How much 316 00:14:09,720 --> 00:14:11,240 Speaker 5: credence do you give that idea. 317 00:14:11,320 --> 00:14:13,400 Speaker 1: I don't discount it all that. I mean, I give 318 00:14:13,400 --> 00:14:15,600 Speaker 1: it a lot of credence. However, I would note the following. 319 00:14:15,800 --> 00:14:18,320 Speaker 1: The fiscal stimulus plans that Germany is planning to put 320 00:14:18,320 --> 00:14:20,400 Speaker 1: into place is really only for Germany. 321 00:14:20,440 --> 00:14:20,880 Speaker 6: At this point. 322 00:14:20,960 --> 00:14:23,600 Speaker 1: You still have long term structural issues that have to 323 00:14:23,600 --> 00:14:26,400 Speaker 1: be solved for Europe. According to the Droggy report, you 324 00:14:26,400 --> 00:14:27,320 Speaker 1: have demographics that. 325 00:14:27,280 --> 00:14:28,120 Speaker 6: Are working against you. 326 00:14:28,120 --> 00:14:31,120 Speaker 1: You've got regulation that is very heavy in Europe. Those 327 00:14:31,120 --> 00:14:35,360 Speaker 1: things have to be addressed and changed dramatically in order 328 00:14:35,400 --> 00:14:38,080 Speaker 1: for Europe to say, in order to say Europe's going 329 00:14:38,120 --> 00:14:38,680 Speaker 1: to outperform in. 330 00:14:38,680 --> 00:14:40,000 Speaker 6: The US for the next three years. 331 00:14:40,320 --> 00:14:43,840 Speaker 5: One difficulty right now is you don't invest in hours, 332 00:14:43,880 --> 00:14:46,160 Speaker 5: right I assume that you have a longer. 333 00:14:45,920 --> 00:14:48,120 Speaker 1: Term arized I mean, I'm investing free timing. 334 00:14:48,480 --> 00:14:49,800 Speaker 6: And it's technically forty years. 335 00:14:49,960 --> 00:14:52,640 Speaker 5: This is the difficult aspect, right this is a trader's 336 00:14:52,680 --> 00:14:55,680 Speaker 5: market right now, we're talking about shifts that are incremental 337 00:14:56,240 --> 00:14:58,720 Speaker 5: when you have to look over the big term and 338 00:14:58,840 --> 00:15:01,160 Speaker 5: understand what the long term goal is and whether it's 339 00:15:01,160 --> 00:15:02,400 Speaker 5: feasible for us to get there. 340 00:15:02,840 --> 00:15:03,560 Speaker 6: So how you doing that? 341 00:15:03,600 --> 00:15:03,760 Speaker 3: Well? 342 00:15:03,800 --> 00:15:05,920 Speaker 1: I think the big issue that we're considering now is 343 00:15:05,960 --> 00:15:09,560 Speaker 1: that the stagflationary scenario is getting a lot of traction 344 00:15:09,640 --> 00:15:12,160 Speaker 1: in the markets. And if that's the case, no asset 345 00:15:12,160 --> 00:15:16,240 Speaker 1: class works, not bonds, not stocks, no international nothing. Well 346 00:15:16,280 --> 00:15:19,520 Speaker 1: maybe cash works for you over the very short term. Now, 347 00:15:19,720 --> 00:15:21,880 Speaker 1: if you get a little bit less policy uncertainty, you 348 00:15:21,920 --> 00:15:24,880 Speaker 1: can look a little forward to the US data seems 349 00:15:24,920 --> 00:15:27,560 Speaker 1: to be softening a bit, at least on the survey side. 350 00:15:27,800 --> 00:15:31,440 Speaker 1: If it starts to reach the hard data such as employment, 351 00:15:32,080 --> 00:15:34,560 Speaker 1: you would see a FED policy response if they have 352 00:15:34,640 --> 00:15:37,520 Speaker 1: the air cover on inflation. But the problem is is 353 00:15:37,560 --> 00:15:40,840 Speaker 1: that even with the change in policy on Friday, you 354 00:15:40,880 --> 00:15:43,880 Speaker 1: did not see this big rally off of oh, we're 355 00:15:43,920 --> 00:15:44,880 Speaker 1: giving some relief on. 356 00:15:44,840 --> 00:15:46,280 Speaker 6: Tariffs that you had seen before. 357 00:15:46,800 --> 00:15:48,840 Speaker 1: So I think the market is in very much a 358 00:15:48,880 --> 00:15:51,200 Speaker 1: show me state, and the only way that you get 359 00:15:51,200 --> 00:15:54,560 Speaker 1: there is clarity on inflation, and clarity on terraffs. 360 00:15:54,680 --> 00:15:56,280 Speaker 6: Neither of those seem to be coming now. 361 00:15:57,200 --> 00:16:01,080 Speaker 1: Having said all that doom and gloom, potentially see a 362 00:16:01,160 --> 00:16:03,480 Speaker 1: very good case that the FED has the ability to 363 00:16:03,520 --> 00:16:06,320 Speaker 1: cut rates in the second half of this year, maybe 364 00:16:06,360 --> 00:16:09,160 Speaker 1: really kind of like the late third quarter, because if 365 00:16:09,240 --> 00:16:12,560 Speaker 1: all goes well, if tarists are indeed staved off, it's 366 00:16:12,600 --> 00:16:13,880 Speaker 1: a one time inflation hit. 367 00:16:13,920 --> 00:16:15,600 Speaker 6: To the upside, you. 368 00:16:15,560 --> 00:16:19,640 Speaker 1: Should get enough relief from weaker economic data that inflation's 369 00:16:19,680 --> 00:16:22,520 Speaker 1: coming down, that core PCE is dropping, that the Fed 370 00:16:22,520 --> 00:16:24,240 Speaker 1: may be able to say we can cut interest rates 371 00:16:24,240 --> 00:16:27,120 Speaker 1: maybe twice this year. That should give the market enough 372 00:16:27,160 --> 00:16:30,440 Speaker 1: relief as long as the underlying earnings picture stays pretty 373 00:16:30,480 --> 00:16:30,960 Speaker 1: much intact. 374 00:16:31,160 --> 00:16:33,520 Speaker 7: The narrative is focused on the political economy and all 375 00:16:33,560 --> 00:16:35,520 Speaker 7: these headlines from Trump, So you're saying that it can 376 00:16:35,560 --> 00:16:37,200 Speaker 7: shift back to the Fed, and that could be the 377 00:16:37,240 --> 00:16:39,440 Speaker 7: catalyst for an upswing in US eecrities. 378 00:16:39,160 --> 00:16:41,600 Speaker 1: It could be in upswinging equities globally. At that point, 379 00:16:41,680 --> 00:16:45,440 Speaker 1: I think that you need to see at least some 380 00:16:45,480 --> 00:16:49,320 Speaker 1: policy certainty from the administration, and don't forget as we 381 00:16:49,360 --> 00:16:51,640 Speaker 1: get towards the second half of this year, they have 382 00:16:51,720 --> 00:16:54,640 Speaker 1: to start worrying about the midterm elections in twenty twenty six, 383 00:16:54,960 --> 00:16:58,920 Speaker 1: So the clock on the very difficult, very uncertain Trump 384 00:16:59,000 --> 00:17:02,160 Speaker 1: policies that could be growth negative do have somewhat of 385 00:17:02,200 --> 00:17:04,080 Speaker 1: a time decay associated with them. 386 00:17:04,200 --> 00:17:06,440 Speaker 7: We do have some certainty though tariffs have gone into 387 00:17:06,440 --> 00:17:09,719 Speaker 7: place on China. Are you saying potentially uncertainty on everything 388 00:17:09,760 --> 00:17:12,720 Speaker 7: else is almost worse than tariffs going into place. 389 00:17:12,840 --> 00:17:15,440 Speaker 1: Well, tariffs in place on China is really an old 390 00:17:15,480 --> 00:17:17,320 Speaker 1: story that's been coming through for a long time. So 391 00:17:17,359 --> 00:17:19,639 Speaker 1: what happened after the first tariffs went in on China? 392 00:17:20,040 --> 00:17:22,720 Speaker 1: You had this opportunity set where the rest of the 393 00:17:22,760 --> 00:17:23,640 Speaker 1: world stepped in. 394 00:17:23,560 --> 00:17:24,640 Speaker 6: To be the manufacturer. 395 00:17:24,720 --> 00:17:29,600 Speaker 1: Right, so countries in Asia, Japan, excuse me, on Thailand, Malaysia, 396 00:17:29,640 --> 00:17:32,639 Speaker 1: the Philippines, and also even to Mexico when you're starting 397 00:17:32,680 --> 00:17:35,919 Speaker 1: to talk about tariffing our two biggest trading partners, that 398 00:17:36,080 --> 00:17:39,560 Speaker 1: is a whole different story. Those will certainly put Mexico 399 00:17:39,760 --> 00:17:44,600 Speaker 1: and Canada into a recession, and they account for forty 400 00:17:44,640 --> 00:17:47,440 Speaker 1: percent of globally traded goods. So it's a very different 401 00:17:47,520 --> 00:17:52,480 Speaker 1: story to tariff China. And then thinking differently about and 402 00:17:52,640 --> 00:17:54,960 Speaker 1: with the Mexico and China, and then also potentially Europe. 403 00:17:55,040 --> 00:17:57,119 Speaker 1: If you tariff Europe, that's going to have a big 404 00:17:57,200 --> 00:18:00,399 Speaker 1: knock on effect to China as well. However, the biggest 405 00:18:00,760 --> 00:18:03,400 Speaker 1: swing that you can get in stimulus is likely coming 406 00:18:03,400 --> 00:18:06,160 Speaker 1: from the Chinese, So that actually makes us a little 407 00:18:06,160 --> 00:18:08,240 Speaker 1: bit more bullish on the emerging markets. Then we would 408 00:18:08,320 --> 00:18:10,920 Speaker 1: say the very overbought European equities at this time. 409 00:18:11,040 --> 00:18:13,359 Speaker 5: So you put this all together, it sounds like on 410 00:18:13,440 --> 00:18:16,080 Speaker 5: the margins, over the past few weeks, you've been shifting 411 00:18:16,440 --> 00:18:18,720 Speaker 5: out of the US and waiting for the US to 412 00:18:18,760 --> 00:18:21,960 Speaker 5: sort of get some of those certainties before going into 413 00:18:22,080 --> 00:18:24,440 Speaker 5: whether it's small caps, mid caps or big tech. 414 00:18:24,480 --> 00:18:26,320 Speaker 6: Is at the idea well in our portfolio. 415 00:18:26,400 --> 00:18:29,000 Speaker 1: Is what we've done more recently, we bought a little 416 00:18:29,040 --> 00:18:31,160 Speaker 1: bit more into the emerging markets. We bought something into 417 00:18:31,240 --> 00:18:33,040 Speaker 1: US midcaps because we want to make sure and have 418 00:18:33,080 --> 00:18:35,680 Speaker 1: exposure to those parts of the market that are likely 419 00:18:35,680 --> 00:18:39,080 Speaker 1: going to benefit from the rotation. We've been reticent to 420 00:18:39,080 --> 00:18:41,360 Speaker 1: buy European equities because they have run. 421 00:18:41,400 --> 00:18:42,720 Speaker 6: So far at this point. 422 00:18:43,440 --> 00:18:46,600 Speaker 1: You know, every single type of technical indicator that you 423 00:18:46,640 --> 00:18:48,280 Speaker 1: look at RSIs that you could look at on your 424 00:18:48,320 --> 00:18:52,800 Speaker 1: Bloomberg terminal, and many of our sentiments surveys say that 425 00:18:52,960 --> 00:18:55,640 Speaker 1: European equities are indeed overbought, So if you're buying them 426 00:18:55,640 --> 00:18:59,199 Speaker 1: at this point, you know the potential tide is against you, 427 00:18:59,320 --> 00:19:01,480 Speaker 1: just because the new has been so positive for Europe. 428 00:19:01,560 --> 00:19:03,800 Speaker 1: So we would wait for someone to a reprieve before 429 00:19:03,800 --> 00:19:05,680 Speaker 1: we would think about going out to your p inequities. 430 00:19:05,720 --> 00:19:07,520 Speaker 2: The DATS is still up about twenty percent so far 431 00:19:07,600 --> 00:19:10,280 Speaker 2: here today, even with a one percent move this morning, Bumba, 432 00:19:10,280 --> 00:19:11,800 Speaker 2: it's good to see you. Thanks for breaking it down. 433 00:19:11,800 --> 00:19:14,119 Speaker 2: Thank you so much. Baba Royan, had there a voyeur 434 00:19:14,240 --> 00:19:16,680 Speaker 2: investment management if you are just joining US equities here 435 00:19:16,720 --> 00:19:29,640 Speaker 2: down by one point four percent. Let's turn to Washington 436 00:19:29,720 --> 00:19:32,160 Speaker 2: and President Donald Trump refusing to rule out a recession 437 00:19:32,160 --> 00:19:34,440 Speaker 2: for the United States and the economy, saying the US 438 00:19:34,480 --> 00:19:37,359 Speaker 2: should expect a period of transition as he rolls out 439 00:19:37,400 --> 00:19:39,560 Speaker 2: it's wide ranging tariff for gender joining US. Now for 440 00:19:39,640 --> 00:19:42,320 Speaker 2: more is Neil Dounta of run mac Neil, Good morning, Jis. 441 00:19:42,600 --> 00:19:44,160 Speaker 2: I want to take a step back with you because 442 00:19:44,160 --> 00:19:47,160 Speaker 2: I think you're talking about something much bigger than just tariffs. 443 00:19:47,160 --> 00:19:49,960 Speaker 2: In fact, you've pointed that out several times in your research. 444 00:19:50,040 --> 00:19:52,600 Speaker 2: You think maybe something bigger is happening here. I want 445 00:19:52,600 --> 00:19:54,679 Speaker 2: to give you the opportunity just to share your thoughts. 446 00:19:56,359 --> 00:19:59,560 Speaker 10: Well, I think what's important is, while there's a lot 447 00:19:59,560 --> 00:20:04,120 Speaker 10: of sort of enthusiasm, I guess to kind of lay 448 00:20:04,160 --> 00:20:06,640 Speaker 10: everything that we're seeing at the feet of the Trump administration, 449 00:20:06,760 --> 00:20:08,800 Speaker 10: I think the truth is is that things were slowing 450 00:20:09,560 --> 00:20:12,480 Speaker 10: before they walk through the door. I mean, even February 451 00:20:12,680 --> 00:20:14,400 Speaker 10: is you know, hard to say that this is all 452 00:20:14,440 --> 00:20:17,160 Speaker 10: a function of policy uncertainty in tariffs. 453 00:20:17,160 --> 00:20:18,280 Speaker 8: And in the three months. 454 00:20:18,040 --> 00:20:23,160 Speaker 10: Ending in February, total hours worked have actually contracted. That's 455 00:20:23,240 --> 00:20:25,720 Speaker 10: pretty rare on a three month basis. So it tells 456 00:20:25,760 --> 00:20:28,199 Speaker 10: you that, you know, the economy was already slowing and 457 00:20:28,240 --> 00:20:30,040 Speaker 10: there was a lot of weakness in train and you 458 00:20:30,040 --> 00:20:34,640 Speaker 10: couldn't make the argument that, you know, trade related policy 459 00:20:34,720 --> 00:20:37,960 Speaker 10: uncertainty is what's, you know, potentially dimming the outlook. 460 00:20:38,640 --> 00:20:40,120 Speaker 8: But the consensus was off. 461 00:20:39,960 --> 00:20:43,680 Speaker 10: Sides on the data as it has been coming in 462 00:20:44,560 --> 00:20:46,720 Speaker 10: for the last several months, and some of that data 463 00:20:46,760 --> 00:20:49,879 Speaker 10: reflects things that have already happened, right, So you know, 464 00:20:49,920 --> 00:20:52,199 Speaker 10: I think that's important. You know, incomes are slowing, the 465 00:20:52,240 --> 00:20:55,080 Speaker 10: housing markets frozen up increasingly. 466 00:20:55,119 --> 00:20:56,800 Speaker 8: It looks like the labor markets have been. 467 00:20:57,000 --> 00:21:01,160 Speaker 10: Sluggish, you know, and governments, I think, particularly for stay 468 00:21:01,160 --> 00:21:04,199 Speaker 10: in local governments had been has been getting sliced and 469 00:21:04,280 --> 00:21:07,840 Speaker 10: diced long before DOSEE came on the scene. So you know, 470 00:21:07,840 --> 00:21:10,080 Speaker 10: I think these are sort of very interesting. 471 00:21:09,680 --> 00:21:12,240 Speaker 8: Things to consider. And one of the things that we're 472 00:21:12,320 --> 00:21:13,120 Speaker 8: learning is. 473 00:21:14,720 --> 00:21:17,040 Speaker 10: Well, number one, I mean, the power put the stripe 474 00:21:17,040 --> 00:21:19,639 Speaker 10: price on that is lower than we thought, and we 475 00:21:19,800 --> 00:21:22,520 Speaker 10: learned more about that last week. But also I think 476 00:21:23,359 --> 00:21:25,400 Speaker 10: the strip price on the Trump put. 477 00:21:25,200 --> 00:21:26,160 Speaker 8: Is lower than we thought. 478 00:21:26,200 --> 00:21:30,399 Speaker 10: So you have both some BC kind of you know, 479 00:21:31,040 --> 00:21:34,720 Speaker 10: embracing the labor market even though it's getting worse. That's 480 00:21:34,720 --> 00:21:37,520 Speaker 10: not necessarily a good place to be for risk appetite. 481 00:21:37,680 --> 00:21:39,640 Speaker 6: So Neil, let's use it as a starting point. 482 00:21:39,680 --> 00:21:41,720 Speaker 5: And you've been pretty consistent about this for a number 483 00:21:41,720 --> 00:21:43,480 Speaker 5: of months that you think that the economy is a 484 00:21:43,480 --> 00:21:46,280 Speaker 5: lot weaker than a lot of people had been pricing 485 00:21:46,400 --> 00:21:48,440 Speaker 5: in and that you thought the FED would have to respond. 486 00:21:48,880 --> 00:21:52,720 Speaker 5: It raises a question of the fragility to headline risk, 487 00:21:52,840 --> 00:21:55,960 Speaker 5: the fragility to the uncertainty that we hear already coming 488 00:21:56,000 --> 00:21:59,919 Speaker 5: into some of the CEO commentary coming out after earning. 489 00:22:00,480 --> 00:22:03,159 Speaker 5: Do you think that it is even more susceptible to 490 00:22:03,240 --> 00:22:05,720 Speaker 5: some of what is happening on the policy front. 491 00:22:07,920 --> 00:22:10,639 Speaker 8: Well, I mean, you know, look, it depends. 492 00:22:11,840 --> 00:22:15,080 Speaker 10: So for example, last week, you know, we've been seeing 493 00:22:15,160 --> 00:22:18,879 Speaker 10: the markets kind of get dinged every time there's some 494 00:22:19,000 --> 00:22:22,359 Speaker 10: kind of a trade announcement, right, but you're not really 495 00:22:22,400 --> 00:22:25,880 Speaker 10: seeing that relief when the trade announcement is undone. Right, 496 00:22:25,960 --> 00:22:29,080 Speaker 10: So for example, with Mexico Canada tariffs, I mean, we 497 00:22:29,200 --> 00:22:32,200 Speaker 10: put twenty five percent tariffs on everything coming in from 498 00:22:32,200 --> 00:22:35,040 Speaker 10: Canada to Mexico, and then the next day we exclude 499 00:22:35,080 --> 00:22:38,280 Speaker 10: everything that's under the sort of umbrella of the USMCA. 500 00:22:38,400 --> 00:22:40,920 Speaker 10: So we're tariffing everything and exempting everything all at the 501 00:22:40,960 --> 00:22:44,520 Speaker 10: same time. And you know, you didn't really see much 502 00:22:44,560 --> 00:22:47,240 Speaker 10: relief in the markets from that. So to me, that suggests, 503 00:22:47,280 --> 00:22:49,600 Speaker 10: you know, number one, maybe the uncertainty is hurting to 504 00:22:49,640 --> 00:22:55,080 Speaker 10: some extent, but also there's something beyond just trade that's 505 00:22:55,160 --> 00:22:57,960 Speaker 10: driving markets, and I think it's you know, sort of 506 00:22:58,000 --> 00:23:01,399 Speaker 10: a deterioration in the data and what that means for 507 00:23:01,480 --> 00:23:03,600 Speaker 10: the outlook going forward, because it's not like the Fed's 508 00:23:03,600 --> 00:23:05,879 Speaker 10: about to step in. So the fact that the Fed's 509 00:23:05,960 --> 00:23:08,320 Speaker 10: not willing to step in even though the economy already 510 00:23:08,359 --> 00:23:11,160 Speaker 10: has slowed reinforces that downsup. 511 00:23:10,960 --> 00:23:12,880 Speaker 5: Almost I get through Neil, but a lot of companies 512 00:23:12,920 --> 00:23:16,440 Speaker 5: have come out Best Buy, Target talked about how they 513 00:23:16,440 --> 00:23:19,400 Speaker 5: are probably going to pass along price increases to consumers 514 00:23:19,440 --> 00:23:21,639 Speaker 5: and expect to sell less as a result of some 515 00:23:21,760 --> 00:23:25,080 Speaker 5: of these tariffs. We're already hearing about some companies shuttering 516 00:23:25,200 --> 00:23:28,240 Speaker 5: certain operations to try to deal with some of the 517 00:23:28,280 --> 00:23:30,800 Speaker 5: ebbs and flows of tariffs that come on and off. 518 00:23:30,840 --> 00:23:32,760 Speaker 5: For you saying that it has had no effect and 519 00:23:32,800 --> 00:23:35,480 Speaker 5: that essentially the vast majority of everything is just the 520 00:23:35,520 --> 00:23:38,080 Speaker 5: existing economy that was slowing in that essentially it is 521 00:23:38,119 --> 00:23:40,200 Speaker 5: Biden data and not Trump data. 522 00:23:40,359 --> 00:23:42,280 Speaker 8: Well, I think it's dramatically over sold. 523 00:23:42,280 --> 00:23:43,840 Speaker 10: I mean, it's one of these things where things are 524 00:23:43,840 --> 00:23:45,879 Speaker 10: going well, it's you know, my growth strategy, and now 525 00:23:45,920 --> 00:23:48,359 Speaker 10: when things are not going well, it's the uncertainty. 526 00:23:47,840 --> 00:23:49,560 Speaker 8: That came out about in the last week and a half. 527 00:23:49,640 --> 00:23:52,200 Speaker 10: I mean, it's sort of I think that's kind of 528 00:23:52,240 --> 00:23:56,240 Speaker 10: amusing to me, but I would just say that you 529 00:23:56,320 --> 00:23:58,480 Speaker 10: may be. I mean, I thought the comments from Kevin 530 00:23:58,520 --> 00:24:02,560 Speaker 10: Hassett were interesting where he's basically talking about reciprocity, and 531 00:24:02,880 --> 00:24:05,200 Speaker 10: you know, remember one of the ways there, they've they've 532 00:24:05,240 --> 00:24:07,560 Speaker 10: long said that they've they plan to use tariffs is 533 00:24:08,040 --> 00:24:08,920 Speaker 10: an escalate to. 534 00:24:08,880 --> 00:24:11,720 Speaker 8: De escalate situation, Right, So do you get the. 535 00:24:11,680 --> 00:24:14,520 Speaker 10: Heat dialed up to dial the heat back down and 536 00:24:14,560 --> 00:24:16,600 Speaker 10: you get other countries to reduce their tariffs? I mean, 537 00:24:16,600 --> 00:24:18,520 Speaker 10: how is the stock market going to respond to that? 538 00:24:18,720 --> 00:24:18,800 Speaker 6: So? 539 00:24:19,800 --> 00:24:23,680 Speaker 10: You know, I think what companies largely deal with is 540 00:24:23,960 --> 00:24:26,560 Speaker 10: what's right in front of them, and what they're seeing. 541 00:24:26,760 --> 00:24:30,680 Speaker 10: I think is that demand has been slowing and that's 542 00:24:30,760 --> 00:24:35,480 Speaker 10: probably prompting additional caution in their outlook. I don't think 543 00:24:35,520 --> 00:24:37,639 Speaker 10: that they're making whole set. I mean, maybe some of 544 00:24:37,680 --> 00:24:39,880 Speaker 10: them are, but I don't really think that's that's that's 545 00:24:39,680 --> 00:24:42,679 Speaker 10: the big story here. To me, The big story is 546 00:24:42,840 --> 00:24:46,440 Speaker 10: government spending was already getting worse, particularly stay in locals. 547 00:24:46,600 --> 00:24:49,440 Speaker 10: Housing has been locked up, labor markets have been locked up. 548 00:24:49,520 --> 00:24:54,160 Speaker 10: What Trump's doing isn't helping. But you know, those those 549 00:24:54,160 --> 00:24:57,560 Speaker 10: are those are much bigger considerations I think than policy uncertainty. 550 00:24:57,640 --> 00:24:59,280 Speaker 6: Yeah, what's the potential upside? 551 00:24:59,280 --> 00:25:00,520 Speaker 8: Though? Not right? 552 00:25:00,520 --> 00:25:02,159 Speaker 10: I mean, I guess the question I would have for 553 00:25:02,200 --> 00:25:05,160 Speaker 10: you is when does it matter, Lisa, when policy uncertainty 554 00:25:05,200 --> 00:25:05,520 Speaker 10: is high? 555 00:25:05,560 --> 00:25:05,720 Speaker 5: Right? 556 00:25:05,800 --> 00:25:08,399 Speaker 10: Is it when there's a financial market shock to go 557 00:25:08,440 --> 00:25:11,480 Speaker 10: along that, because if you look at credit spreads, they're 558 00:25:11,520 --> 00:25:16,600 Speaker 10: relatively team at the moment, right, So that to me, yeah, 559 00:25:16,720 --> 00:25:18,879 Speaker 10: they're rising from very very low levels. I mean you 560 00:25:18,880 --> 00:25:21,680 Speaker 10: need a magnifying glass to see the increase. 561 00:25:22,680 --> 00:25:25,120 Speaker 6: But can we talk about the market upside though? 562 00:25:25,160 --> 00:25:28,240 Speaker 7: You mentioned because Scott Bessant, you mentioned the Trump put 563 00:25:28,359 --> 00:25:29,000 Speaker 7: or the FED put. 564 00:25:29,040 --> 00:25:31,800 Speaker 6: Scott Bessant last week said there's no put. 565 00:25:32,000 --> 00:25:33,879 Speaker 7: He said the Trump call on the upside is if 566 00:25:33,880 --> 00:25:35,919 Speaker 7: we have good policies and the markets will go up. 567 00:25:36,160 --> 00:25:37,800 Speaker 6: When can we see that? And what kind of strike 568 00:25:37,840 --> 00:25:38,840 Speaker 6: price are you looking at? 569 00:25:39,400 --> 00:25:42,440 Speaker 8: Well, I mean, I don't know. It's it's like anything else. 570 00:25:42,480 --> 00:25:44,199 Speaker 10: I mean you have to kind of peel back the 571 00:25:44,240 --> 00:25:47,560 Speaker 10: onion and kind of think about what they're really trying 572 00:25:47,600 --> 00:25:50,159 Speaker 10: to say here. And what that means is, you know, 573 00:25:50,200 --> 00:25:51,840 Speaker 10: there may they may be. I mean, the look they're 574 00:25:51,840 --> 00:25:54,160 Speaker 10: they're playing a game of chicken, both ends of DC 575 00:25:54,320 --> 00:25:56,800 Speaker 10: with each other. It's exhausting, but it is what it is, 576 00:25:57,000 --> 00:26:01,359 Speaker 10: right and and I think at some level what they're 577 00:26:01,359 --> 00:26:04,640 Speaker 10: trying to do is kind of, you know, maybe get 578 00:26:04,640 --> 00:26:07,879 Speaker 10: the FED to You can see a scenario where the 579 00:26:07,880 --> 00:26:10,320 Speaker 10: Fed's cutting interest rates in the back half of the year, 580 00:26:10,720 --> 00:26:15,160 Speaker 10: probably somewhat aggressively, you know, maybe one hundred basis points 581 00:26:15,200 --> 00:26:18,879 Speaker 10: in the back half. At the same time, we're past 582 00:26:18,960 --> 00:26:23,320 Speaker 10: the kind of uncertainty regarding trade, and then you get 583 00:26:23,520 --> 00:26:28,520 Speaker 10: the Fed cuts, and then you get the call option, 584 00:26:28,680 --> 00:26:34,159 Speaker 10: which is the tax law getting extended, and you know, 585 00:26:34,200 --> 00:26:36,040 Speaker 10: sort of the markets focusing more. 586 00:26:35,880 --> 00:26:39,320 Speaker 8: On lower taxes and deregulation. 587 00:26:39,480 --> 00:26:42,800 Speaker 2: Again, no distactly what's the threshold for those cuts from 588 00:26:42,840 --> 00:26:44,760 Speaker 2: the Federals, what they want to see, what they need 589 00:26:44,800 --> 00:26:45,080 Speaker 2: to say. 590 00:26:45,280 --> 00:26:46,960 Speaker 10: It is going to get worse, and inflation is not 591 00:26:47,000 --> 00:26:48,719 Speaker 10: going to be as strong as they think. I mean, 592 00:26:48,760 --> 00:26:50,200 Speaker 10: that's really what it is. I mean, you talk about 593 00:26:50,240 --> 00:26:53,359 Speaker 10: inflation expectations. Mike McKee was talking about how there's going 594 00:26:53,440 --> 00:26:56,639 Speaker 10: to be inflation expectations coming out this week, you know 595 00:26:56,760 --> 00:26:57,960 Speaker 10: today and at the end of the week with the 596 00:26:58,000 --> 00:27:00,719 Speaker 10: humish data. You know, why do we care about inflation 597 00:27:00,800 --> 00:27:04,159 Speaker 10: expectations because people take those expectations and then try to 598 00:27:04,160 --> 00:27:06,800 Speaker 10: bid up their wages. Good luck, good luck with that, 599 00:27:07,160 --> 00:27:09,120 Speaker 10: see how it works out. I don't think that people 600 00:27:09,160 --> 00:27:11,960 Speaker 10: are going to be able to actually bid their employers 601 00:27:12,040 --> 00:27:14,480 Speaker 10: up for higher wages no matter what their inflation expectations 602 00:27:14,520 --> 00:27:17,000 Speaker 10: are because no one's quitting their jobs, so firms have 603 00:27:17,040 --> 00:27:19,040 Speaker 10: no incentive to pay people up. So I think people 604 00:27:19,080 --> 00:27:23,639 Speaker 10: are in to the extent they have those expectations. I 605 00:27:23,640 --> 00:27:25,200 Speaker 10: think companies are going to be in for a root 606 00:27:25,240 --> 00:27:27,720 Speaker 10: awakening if they try to meet those expectations. 607 00:27:27,760 --> 00:27:29,600 Speaker 8: I think people are going to be much. 608 00:27:29,400 --> 00:27:33,800 Speaker 10: More resistant to higher prices than companies believe. It doesn't Again, 609 00:27:33,920 --> 00:27:37,120 Speaker 10: so tariffs are the inflationary Yeah, maybe, but I think 610 00:27:37,160 --> 00:27:39,640 Speaker 10: the bigger issue is the increased costs. So we don't 611 00:27:39,640 --> 00:27:43,399 Speaker 10: know exactly how much of the in cost increase is 612 00:27:43,440 --> 00:27:46,160 Speaker 10: going to be passed passed through to consumers. 613 00:27:46,200 --> 00:27:48,440 Speaker 2: PSA. On my side, Neil, I just want to say 614 00:27:48,440 --> 00:27:50,880 Speaker 2: to everyone out there, push, keep asking, No You're worth 615 00:27:50,960 --> 00:27:54,119 Speaker 2: Neil owns his own company, He's talking his book. No 616 00:27:54,240 --> 00:27:56,480 Speaker 2: do'ts to appreciate your time. No dotsor of Renmak there 617 00:27:56,600 --> 00:27:59,280 Speaker 2: one of the best. Thank you said. 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