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Speaker 3: All right, so there's a pretty interesting story on the
Speaker 3: Bloomberg terminal and at Bloomberg dot Com. Basically, Bloomberg News
Speaker 3: used a large language model to scan more than three
Speaker 3: hundred of President Trump's public comments between August of twenty
Speaker 3: twenty four mid March, as well as more than three
Speaker 3: thousand social media posts from the president members of his
Speaker 3: administration since the start of twenty twenty five. Basically, this
Speaker 3: technique allows for comparing meaning across large volumes of text,
Speaker 3: even if the specific wording differs. Now the results they
Speaker 3: were reviewed by our reporters, and what they showed was
Speaker 3: a correlation between Trump administration contacts with Vladimir Putin and
Speaker 3: subsequent comments that echoed the Russian leader's own positions on
Speaker 3: subjects including the occupation Kiev's goal of joining NATO and
Speaker 3: Ukrainian President Voldemir Zelenski's political legitimacy now the netnet. President
Speaker 3: Trump's views on the war in Ukraine teim increasingly aligned
Speaker 3: with the Kremlin, and.
Speaker 4: That despite most recently President Trump seeming to be more
Speaker 4: critical of Russia and Putin. For some thoughts on this
Speaker 4: and where the war goes next, back with us is
Speaker 4: doctor Angelos stan She's senior fellow at the Brookings Institution,
Speaker 4: also a former National Intelligence officer for Russia and Your
Speaker 4: Age at the National Intelligence Council. She also served in
Speaker 4: the Office of Policy Planning at the US Department of State.
Speaker 4: She's the author of the book came out in twenty nineteen,
Speaker 4: Putin's World, Russia Against the West and with the Rest.
Speaker 4: She joins us from Washington, DC. Doctor send, good to
Speaker 4: have you along with us. It's been a little bit
Speaker 4: since we talked to you. How would you characterize the
Speaker 4: way that the President has been speaking and acting with
Speaker 4: regard to Russia's invasion of Ukraine? Would you agree with
Speaker 4: the LM analysis that has found that there is a
Speaker 4: correlation between Trump administration contacts with Putin and subsequent comments
Speaker 4: that echoed Putin's own positions on subject related to the war.
Speaker 5: Yeah, I would definitely agree with that. I think that
Speaker 5: was true even before he was elected president a second time. Certainly,
Speaker 5: Steve Witkoff, every time that he the chief negotiator, every
Speaker 5: time he's met with Putin, has come out and essentially
Speaker 5: repeated the Russian version of all events, and President Trump
Speaker 5: has most of the time too. You occasionally get instances
Speaker 5: like on Saturday after he met with President Zelenski when
Speaker 5: he was critical of Russia for its continued bombing and
Speaker 5: killing of Ukrainian civilians, particularly since these negotiations have begun.
Speaker 5: But I think his view of the world, his view
Speaker 5: of the conflict echoes Putin well. Blaming NATO, he of
Speaker 5: course also blames Presidents Obama and Biden, and then essentially
Speaker 5: saying that Crimea has always been Russian, which of course
Speaker 5: is not true. And then you know, repeating that the
Speaker 5: Ukrainians will have to recognize the areas that Russia has
Speaker 5: now occupied since the twenty two war began as belonging
Speaker 5: to Russia.
Speaker 3: All right, so we've heard from the Secretary of State too.
Speaker 3: I think about the President having to make or expected
Speaker 3: maybe to kind of come to some conclusion this week
Speaker 3: when it comes to I guess US involvement in the
Speaker 3: Russia Ukraine War. I don't know what are you expecting
Speaker 3: to come next here, Angela.
Speaker 5: Yeah, it's interesting. The Financial Times just have a story
Speaker 5: saying that Europeans are now increasingly worried that in fact,
Speaker 5: President Trump will say, you know, this is too difficult,
Speaker 5: I've tried, it's over, and he'll turn his attention to
Speaker 5: something else. I think it's possible. The messages that we've heard,
Speaker 5: both from President Trump himself and from Secretary Rubio do
Speaker 5: indicate that some kind of decision is going to be
Speaker 5: made this week. I don't know whether it's tied to
Speaker 5: the first hundred days, but I think we just have
Speaker 5: to keep remembering that there are two sets of negotiations
Speaker 5: going on, and that even if President Trump says he's
Speaker 5: not interested anymore in trying to end the war and
Speaker 5: negotiate it's too hard, the restoration and improvement of US
Speaker 5: Russian relations will probably go ahead, And of course that's
Speaker 5: what Putin really wants.
Speaker 4: Well, explain that how is he leveraging Russia's invasion of
Speaker 4: Ukraine to improve relations between the US and Russia.
Speaker 5: Well, I think that from the beginning, as soon as
Speaker 5: President Trump was inaugurated the second time, he indicated that
Speaker 5: he wanted to restore relations with Russia, that he wanted
Speaker 5: to end the sanctions, that he wanted to work on
Speaker 5: maybe another strategic nuclear arms agreement with President Putin. So
Speaker 5: I think those things have always been separate in President
Speaker 5: Trump's mind, and they've certainly been separate in President Putin's
Speaker 5: mind and the people around him. Because even though Putin
Speaker 5: has now announced, you know, a three day cease fire
Speaker 5: from March eighth to March eleventh, I believe it is
Speaker 5: we have no idea whether that will happen. But the
Speaker 5: very next day, his foreign minister, in an interview with CBS,
Speaker 5: repeated all the maximalist Russian demands, including international recognition of
Speaker 5: the annexation of these four territories that Russia doesn't fully control.
Speaker 5: So I think in both president's minds, these negotiations have
Speaker 5: been separated, and it's quite possible that the US and
Speaker 5: Russia can continue to improve ties, you know, restore the
Speaker 5: personality embassy and things like that, maybe lift sanctions, go
Speaker 5: into big business deals with Russia. Maybe, but that the
Speaker 5: walk still go on and the message to the Europeans
Speaker 5: from the US will be you have to take care
Speaker 5: of this.
Speaker 3: Any outcome where President Putin gets to hold on to
Speaker 3: the territory that he has taken over and is more
Speaker 3: favorable to him, does that only embolden him going forward?
Speaker 5: Well, of course it does, because right now, as we
Speaker 5: believe the negotiations stand, the Trump administration is willing to
Speaker 5: say that Russia should only one should only recognize that
Speaker 5: part of those four territories that Russia actually occupies, and
Speaker 5: that the unoccupied parts of these four territories would still
Speaker 5: be Ukrainian. And so you know that would certainly be
Speaker 5: a mild gain for Ukraine.
Speaker 3: And what does embolded mean? Does it mean we've talked
Speaker 3: with you about this before? Like, does it just mean
Speaker 3: I don't know, in a year, two years, five years,
Speaker 3: six months, he goes after some thing else. Potentially.
Speaker 6: Yeah.
Speaker 5: So let's say there's a ceasefire and it's more than
Speaker 5: thirty days. I mean, the initial ceasefire that Zelensky has
Speaker 5: agreed to would be for thirty days. Russia hasn't agreed
Speaker 5: to that yet. But if there were a ceasefire for
Speaker 5: thirty days, then we would have to see would Russia
Speaker 5: then immediately start bombing again, or would the thirty day
Speaker 5: cease fire lead to a more permanent cease fire, in
Speaker 5: which case Russia might wait some time to attack again.
Speaker 5: But the way that the Russians are talking at the
Speaker 5: moment is that they still want to achieve their maximum goals,
Speaker 5: which they can do right now. I mean when President
Speaker 5: Trump said, well, it's already a concession that Russia hasn't
Speaker 5: taken over all of Ukraine, That's exactly what they tried
Speaker 5: to do in February of twenty twenty two when they couldn't.
Speaker 5: So they might try that again later.
Speaker 4: On, doctor Sten before we let you go just thirty seconds.
Speaker 4: You know, I ask you this every time and past
Speaker 4: you repeatedly over the last three years as you've joined us.
Speaker 4: Given what we know now, how do you see this
Speaker 4: war ending?
Speaker 7: So?
Speaker 5: I think at the moment it still looks as if
Speaker 5: it would end with some kind of territorial I mean
Speaker 5: recognition by Ukraine that at least temporarily the territory that
Speaker 5: Russia now occupies in Ukraine will remain with Russia. I
Speaker 5: think you could have a cease fire again. Going back
Speaker 5: to the North Korean South Korean example, but you would
Speaker 5: have to have that very heavily policed with some forces,
Speaker 5: and then you know it would be over for a while.
Speaker 5: But I don't see at the moment this ending in
Speaker 5: any way that one could be really sure that Russia
Speaker 5: wouldn't attack again unless Ukraine joins NATO.
Speaker 3: Doctor Angelas stant Thinks Always Always, Senior fellow at the
Speaker 3: Brookings Institution, former National Intelligence Officer for Russia and Eurasia
Speaker 3: at the National Intelligence Council, author of the book Putins World.
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Speaker 3: All Right, you know this already. We've been talking about it.
Speaker 3: This week, marking the first one hundred days of President
Speaker 3: trump second term, we covered it. Question is we want
Speaker 3: to dig a little bit more into tim what comes next?
Speaker 4: The US Treasury Secretary Scott Besson and congressional Republicans will
Speaker 4: meet to sketch out the plan for passing a multi
Speaker 4: trillion dollar tax cut in the coming weeks. As polling
Speaker 4: shows that voters largely disapprove of the White House's handling
Speaker 4: of the economy. President Trump leighing in on taxes yesterday
Speaker 4: as he was traveling back to Washington, DC.
Speaker 8: We're going to be taking in a tremendous amount of money.
Speaker 4: And we're going to make a lot of money, and we're.
Speaker 7: Going to cut.
Speaker 4: Taxes for the people of this cutting this possible.
Speaker 9: We'll do a complete tax cut, because I think the
Speaker 9: daris will be enough to cut all of the income.
Speaker 4: Tax, enough to cut all of the income tax.
Speaker 3: I don't have to pay income tax anymore.
Speaker 4: I think Congress will have something to do with that.
Speaker 4: Let's ask Nathan Dane.
Speaker 3: All right, let's bring him in. He's Bloomberg Intelligence senior
Speaker 3: policy analyst, typically based in DC. Likely for us to
Speaker 3: be here at Bloomberg headquarters in New York City all
Speaker 3: income tax.
Speaker 9: No, I don't think it's going to happen, but you
Speaker 9: are going to get There are going to be some
Speaker 9: tax cuts in this bill.
Speaker 8: I mean, so what they're.
Speaker 9: Talking about is a five point three trillion dollar reconciliation bill.
Speaker 9: There's about one point five trillion earmarked in therefore tax cuts. Primarily,
Speaker 9: what we're thinking is no taxes on tips, no taxes
Speaker 9: on overtime, and for you know, no taxes on Social Security.
Speaker 9: Those are like the three main priorities. But there has
Speaker 9: been this push by President Trump to try and lower
Speaker 9: you know, other taxes for individuals that make less than
Speaker 9: two hundred thousand dollars.
Speaker 8: That's what they're thinking. The idea here is that tariffs
Speaker 8: are going to pay for it.
Speaker 9: And you know, all the analysis that we've done, all
Speaker 9: the analysis that we've seen for other people do is
Speaker 9: it's not exactly sure that money is ever going to
Speaker 9: be there.
Speaker 8: So, you know, we.
Speaker 5: From Paris for the Tax correct and.
Speaker 9: So what we're telling our clients is that we've i
Speaker 9: think as of right now, with specifics likely to come
Speaker 9: out over the next couple of weeks, the more likely
Speaker 9: scenario is you are going to see Congress pretty much
Speaker 9: kick the can on a lot of these cuts. We
Speaker 9: don't think there's going to be material cuts to snap Medicaid,
Speaker 9: the Inflation Reduction Act, but what you are going to
Speaker 9: see is most likely a very large deficit inducing bill
Speaker 9: at the end of this which could be multiple trillion dollars.
Speaker 9: Because it's much easier from the policy perspective to kick
Speaker 9: the can of the issue down the road than it
Speaker 9: is to take a bill or a vote that's going
Speaker 9: to actually pull back benefits within the near time.
Speaker 3: Can I just say we've kicked the cans how far
Speaker 3: the Cans and mars right at this point? I mean,
Speaker 3: we just keep doing this and doing this well.
Speaker 9: And again that's the problem is is that you know,
Speaker 9: for a lot of in both sides of the aisle,
Speaker 9: it's both Democrats and Republicans. For them to actually take
Speaker 9: a vote that actually claused back some provisions or entitlements
Speaker 9: and so forth, it's extremely difficult. In fact, it was
Speaker 9: reporting over the weekend that from some of the tax provisions,
Speaker 9: let's talk about Medicaid and snap benefits. Rather than implementing
Speaker 9: those cuts immediately, the thought now is that you would
Speaker 9: implement it after the election, whether it's the midterm election
Speaker 9: or even four years, and now implement.
Speaker 8: It after the Trump administration.
Speaker 9: So they understand, they being the Republicans, understand that this
Speaker 9: is not a popular vote. We've seen Senator Josh Holly
Speaker 9: from Missouri come out and say don't touch Medicaid. We've
Speaker 9: seen the Chairman of the House Ad Committee, Glenn Thompson,
Speaker 9: come out and say, look, we can't really touch snap
Speaker 9: benefits outside of maybe just trying to combat waste and fraud.
Speaker 9: So there's a lot of ideas out there, but at
Speaker 9: the end of the day, it's much easier to kick
Speaker 9: the can on the deficit than to do anything else.
Speaker 4: So do you think that indeed we will see tax
Speaker 4: on tips taken away? So no tax in this next bill,
Speaker 4: no taxes on tips, no taxes on social security, and
Speaker 4: no taxes on overtime. Do you think that'll pass?
Speaker 9: I think that's like the idea. So what we're waiting
Speaker 9: for is markups. So this week we have a couple
Speaker 9: of markups from the Bloomberg client perspective, not the most.
Speaker 9: If you're in the defense industry, you'll care, but for
Speaker 9: the macro investor, not all that important. The big one
Speaker 9: you're looking for is the House Ways and Means Committee,
Speaker 9: probably going to be around in mid March, I'm sorry,
Speaker 9: mid May, and that is the one that's going to
Speaker 9: have a lot of these ideas in there.
Speaker 4: And what's the total there that would add up to?
Speaker 4: What are some rough estimates on how much revenue the
Speaker 4: government would lose out on as a result of not
Speaker 4: taxing those things.
Speaker 8: So here's the interesting thing.
Speaker 9: So the Senate resolution and the House resolution had two
Speaker 9: different They were the same at the top number, five
Speaker 9: point three trillion dollar bill, but where it differs is
Speaker 9: how are you going to cut in order to pay
Speaker 9: for this one point five trillion.
Speaker 8: What the Senate did is they said, well.
Speaker 9: We're going to just as a floor cut four billions,
Speaker 9: so with a B the House that we're going to
Speaker 9: cut one point five trillion, so we'll have like for like.
Speaker 9: But it's much easier to say that you're just going
Speaker 9: to kick the can than it is to cut. So
Speaker 9: that one point five trillion will most likely include some
Speaker 9: form of no taxes on tips, no form on overtime.
Speaker 9: We'll have to see what the estimates actually come out
Speaker 9: to be. And for the New Yorkers in Connecticut and
Speaker 9: New Jersey folks, the salt deduction most likely, we think
Speaker 9: we'll go from around ten thousand dollars to the general
Speaker 9: dealing in Washington right now is around twenty five to
Speaker 9: thirty thousand.
Speaker 3: What do you think, Carol Better? Okay Better? Is this governing?
Speaker 3: Is this governing for the people or is this just
Speaker 3: governing to make sure I keep my job? So by
Speaker 3: members of Congress.
Speaker 9: This is governing to avoid the filibuster and to do
Speaker 9: something without the opposition party. And so this is how
Speaker 9: President Obama got Obamacare through. This is how President Biden
Speaker 9: got the Inflation Net Reduction Act through, and this is
Speaker 9: how President Trump got Trump one point zero tax cuts through.
Speaker 9: But using reconciliation, you have a majority vote in the House,
Speaker 9: a majority vote in the Senate, you bypass the filibuster.
Speaker 9: But the Cavia idea is that you should only be
Speaker 9: able to do things that impact the budget. What the
Speaker 9: Senate did is they said, you know what, the current
Speaker 9: cost of these Trump era tax cuts of extending it
Speaker 9: is effectively zero because it's current policy, that's something that
Speaker 9: hasn't really worked in the past. They just said we're
Speaker 9: going to do at this time and as a result,
Speaker 9: the deficit now may go up significantly as a result
Speaker 9: of this.
Speaker 8: But you know, we're also to.
Speaker 9: Our clients that there are a lot of deficit hawks
Speaker 9: out there that wouldn't be going for this. But we
Speaker 9: think President Trump ultimately would use his political capital to
Speaker 9: get those Republicans on.
Speaker 4: Board, meaning sign this, go with me, or you're getting primary.
Speaker 9: Exactly and you march down to Capitol Hill, look them
Speaker 9: in the eye and say, are you're going to do
Speaker 9: real my plan?
Speaker 1: Yeah?
Speaker 4: And look, Jordan Favian was talking about this earlier, Carol.
Speaker 4: He only has so much political capital at this point,
Speaker 4: especially with some of the poll numbers coming in that
Speaker 4: we've seen.
Speaker 3: Is that exactly Is that good enough, Nathan to keep
Speaker 3: the Republicans come the mid terms?
Speaker 9: Well, I would just say here, what's the ultimate goal
Speaker 9: for the Republicans in this package, and that is to
Speaker 9: ensure that individual taxes don't go up.
Speaker 8: At the end of the year. Right now, they're trying
Speaker 8: for a permanent.
Speaker 9: Text cut, but nothing says that. If they can't come
Speaker 9: up with a deal that maybe they say, you know,
Speaker 9: instead of ten years or permanent, let's just do this
Speaker 9: four years so that taxes would go up and under
Speaker 9: the next administration, that brings the price tag lower and
Speaker 9: then would make it much easier to pass a bill.
Speaker 3: Is it ever permanent?
Speaker 8: Well, it is for the corporate tax right, That's what
Speaker 8: they did in the first one.
Speaker 5: Permanent.
Speaker 3: No other administration can come in or no other Congress
Speaker 3: can come in and change it.
Speaker 9: Well, you can obviously change it if it's but it's
Speaker 9: permanent and from the standpoint that there's no sunset provision.
Speaker 3: Okay, got it, got it, got it, got it. I
Speaker 3: mean it's going to take legislative action to change it.
Speaker 4: When you have the pencil sharpened, when you have Excel open,
Speaker 4: and you're going through these calculations, how do you think
Speaker 4: about potentially the burden being eased on lower income Americans
Speaker 4: with some of these provisions, but then potentially the inflationary
Speaker 4: aspects of tariffs if those indeed remain in place. Because
Speaker 4: the President says, hey, this is a revenue raiser for us.
Speaker 4: We saw a lot of reports over the weekend about
Speaker 4: companies starting to add a specific line item as a
Speaker 4: result of an import tax and import duty. Does that
Speaker 4: then hit those Americans who this would likely benefit?
Speaker 9: Yeah, you know, I just saw our restaurant analyst, Michael
Speaker 9: Halen's downstairs, and you know, I was talking with a
Speaker 9: bunch of our consumer.
Speaker 8: Analysts a few minutes ago.
Speaker 9: And the questions that we have from this package is
Speaker 9: Commerce Secretary Howard likes to say that it's stimulating, but
Speaker 9: if you're spending the bulk of this extending current policy,
Speaker 9: where's the stimulus. So when it comes to retail in particular.
Speaker 9: You know, there's a lot of our analysts are looking
Speaker 9: at this and they're just saying, look, you know, you
Speaker 9: know spending is still somewhat strong from now, but what
Speaker 9: happens if we get supply chains and a few supply
Speaker 9: chain shortages in a few weeks. There's a lot of
Speaker 9: different questions here, but ultimately the question is can the
Speaker 9: consumer to continue to spend as they're spending today And
Speaker 9: a lot of our analysts aren't exactly sure that can happen.
Speaker 3: What do you hear from the investor base and you know,
Speaker 3: various corporate base. You are a policy expert analyst in
Speaker 3: terms of trying to figure out what the next I
Speaker 3: don't know one hundred days or next six months are
Speaker 3: for a Trump White House.
Speaker 9: So the first question is obviously on the tariffs. The
Speaker 9: number one question we get is when are these exceptions
Speaker 9: or when is President Trump going to quote unquote back
Speaker 9: down on tariffs? And what we tell our clients is
Speaker 9: is that, like, look, within the next three to four
Speaker 9: weeks president Trump. Bloomberg News reported this over the weekend
Speaker 9: that President Trump is going to announce deals within quote
Speaker 9: three to four weeks, but Treasury Secretary Scott Bessont.
Speaker 8: Isn't going to wait that long.
Speaker 9: He's feeling the pressure, and so you are going to
Speaker 9: see I think later this week or beginning of next
Speaker 9: week quote unquote understandings or memor amums. I think essentially,
Speaker 9: I think it's like three to four page bullet points
Speaker 9: rather than an actual deal.
Speaker 8: So obviously that's goin too well.
Speaker 9: I don't know if I China, but you know, they're
Speaker 9: negotiating with seventy countries, and the idea from the Treasury
Speaker 9: Department that we've learned is that this isn't so much
Speaker 9: of a US China negotiation, but rather you know, they've
Speaker 9: been saying India potentially could be a first one in
Speaker 9: South Korea Japan. So you have this tariff argument that's
Speaker 9: going or this tariff debate that's taking place with I
Speaker 9: don't want to say the ultimate answer, but at least
Speaker 9: some more clarity. But then the Republicans on the House
Speaker 9: are trying to get this tax extension bill. They want
Speaker 9: to get it done by Memorial Day. We don't think
Speaker 9: that can happen. I think it's going to happen during
Speaker 9: my vacation in late July, but more likely than not
Speaker 9: because the debt ceiling is included. I think they will
Speaker 9: get it done before the mid July.
Speaker 4: I hope for your sake it doesn't happen on your vacation, Nick,
Speaker 4: and I want to go back to something that you
Speaker 4: said about stimulative effects or potential stimulative effects of this bill.
Speaker 4: There's this narrative that has emerged in recent weeks, given
Speaker 4: the challenges that the that analysts are saying the economy
Speaker 4: faces as a result of this tariff policy, that there
Speaker 4: needs to be some sort of stimulus to the economy,
Speaker 4: and they're saying it's all about the tax bill. They're
Speaker 4: using this as a way to say, Okay, we got
Speaker 4: to get this tax bill through because that is what's
Speaker 4: going to push the economy. You just spoke to the
Speaker 4: folks on the retail side. Is that indeed the case?
Speaker 4: Can it be stimulative in its current iteration?
Speaker 9: Well, I mean when you're essentially extending current policy, you know,
Speaker 9: I think the stimulation from yesterday's taxes to tomorrow's taxes sorry,
Speaker 9: tariffs and taxes. You know you're not going to see
Speaker 9: much change in the current way of current taxes. Then
Speaker 9: you're going to see this no taxes on tip, no
Speaker 9: taxes and overtime. Potentially this like tax cut the President
Speaker 9: Trump's talking about.
Speaker 8: Is that enough that really gets the market going?
Speaker 9: We're not exactly sure that's the case, but I will
Speaker 9: say is is that, you know, Republicans, there's no other
Speaker 9: option here if they don't pass this, they you know,
Speaker 9: there's really no other bills out there that people are
Speaker 9: talking about between now and the midterm elections that are
Speaker 9: going to try and address this, even bills to try
Speaker 9: and claw back authority from President Trump on tariffs. Just
Speaker 9: the White House just this morning put out a veto
Speaker 9: threat on a resolution that's going to come in the
Speaker 9: Senate later this week.
Speaker 8: So this is it, Democrats. The Democrats are messaging for
Speaker 8: twenty twenty six.
Speaker 9: Mean, they don't have the power at the moment, and
Speaker 9: when you're the party in minority, you know you essentially
Speaker 9: have to prepare for tomorrow.
Speaker 3: Unbelievable interesting times, no doubt about it. Nathan, so much,
Speaker 3: so great to have you here in studio. Thank you,
Speaker 3: thank you, do you appreciate it. Bloomberg Intelligence Senior policy
Speaker 3: analyst Nathan Dean joining us.
Speaker 2: This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 4: President Trump promised Americans a quote boom like no other
Speaker 4: if they elected in president, But based on the stock
Speaker 4: market's performance during his first one hundred days in office,
Speaker 4: it depends on what you mean by boom. Esha Day
Speaker 4: writes about Trump's first one hundred days and the worst
Speaker 4: stock slump in the first one hundred days in more
Speaker 4: than fifty years. Asha's US Equities deputy team leader senior
Speaker 4: reporter for Bloombergner. She joins us from New York. Give
Speaker 4: us the numbers here, Kasha, what did you What does
Speaker 4: boom mean in this case?
Speaker 7: And thanks for having me? So? Yeah, I mean the
Speaker 7: boom was also a lot of volatility, which I guess
Speaker 7: none of us who are watching markets day to day
Speaker 7: can't really forget about. We're still kind of in the
Speaker 7: midst of it. But let's look at the numbers, of course.
Speaker 7: So SMP five hundred as of today's close, which was
Speaker 7: ten minutes back, is down about eight percent, just shy
Speaker 7: of eight percent since Jan. Twenty eighth, which was an
Speaker 7: inauguration day for Donald Trump. Now, Trump's one hundred day
Speaker 7: would be April twenty ninth, So by April thirtieth, which
Speaker 7: is like the end of this month, he would have
Speaker 7: completed like one hundred days of his administration. So we
Speaker 7: have like one or two more sessions to go to
Speaker 7: kind of see where this record lands. But right now,
Speaker 7: this is the worst decline for the SIMP five hundred
Speaker 7: in a precedent's first hundred day since Gerald Ford was
Speaker 7: president in nineteen seventy four. So yeah, I mean, we
Speaker 7: all remember what a tumultuous time that was for American
Speaker 7: politics at that point.
Speaker 5: This is ti.
Speaker 7: Multious too, so you know, it's a long time and
Speaker 7: also not a very good comparison to look at.
Speaker 5: So there's that when.
Speaker 3: You look at and you drill down into sectors and
Speaker 3: so on, Right, what else do you see and how
Speaker 3: broad based all the selling was.
Speaker 7: Selling was very broad based, But the biggest declines that
Speaker 7: came since Jan. Twenty eight came from the two most
Speaker 7: expensively valued sectors as well, and also the two sectors
Speaker 7: that house most of the megacap like the top seven names,
Speaker 7: the ones we call the magnificent seven, right, So that's
Speaker 7: the technology sector within the sent five hundred and the
Speaker 7: consumer discretionary sectors. These had the biggest declines as sectors
Speaker 7: over these almost one hundred days. And then when we
Speaker 7: look into stocks, we really kind of see a lot
Speaker 7: of these stocks that took like the biggest beatings are
Speaker 7: the ones that will be in the forefront of this
Speaker 7: kind of higher tariff regimes. And if the tariffs that
Speaker 7: have been proposed by these administration they stick around, we
Speaker 7: would be seeing the highest tariffs on these trading partners
Speaker 7: since over the past hundred years. So that that's a
Speaker 7: big hit, and that kind of explains why these names
Speaker 7: are taking such a head. So for example, you know
Speaker 7: Deckers Outdoors, this is a footwear maker, is one of
Speaker 7: the biggest stickliners Bugs.
Speaker 4: Those are the companies that they have.
Speaker 7: That's correct, That's correct. I mean it's almost a household name, right,
Speaker 7: like we all know these brands. Then there are chip makers.
Speaker 7: Chip makers you know, show up very widely. These of
Speaker 7: course are not household names. So these are again and
Speaker 7: almost like the front line of this stariff war. Chip making,
Speaker 7: the semi conductor sector really is a globally spread supply chain,
Speaker 7: just as autos, and these are going to be hit
Speaker 7: very badly, and we have seen the shares kind of
Speaker 7: starting to tell that story. Another group that did pretty
Speaker 7: badly is the travel group. And that makes sense, right, like,
Speaker 7: if there's concern about the economy, if there's concerns about
Speaker 7: economy growth, people are unsure about spending. That's kind of
Speaker 7: the discretionary spending that gets hit travel and leisure. So
Speaker 7: all the big airline names, the legacy airline names, the
Speaker 7: United Deltas, and the American airlines of the world. They
Speaker 7: have come out, they're reported results already for the first quarter,
Speaker 7: and the outlooks have been very money to say the least.
Speaker 7: Or the other big group within the travel sector that
Speaker 7: took a big hits are the cruise liners. Again a
Speaker 7: really classic example of that kind of discretionary spending that
Speaker 7: can be really impacted when consumers are feeling unsure.
Speaker 4: And unsteady interested in sort of how you're thinking about
Speaker 4: what companies have said thus far, at least about the outlook.
Speaker 4: Carol mentioned this note from Gina mar n Adam's a
Speaker 4: little earlier today, Esha, you know there are those out
Speaker 4: there who say this is short term pain for a
Speaker 4: stronger America longer term. That's what the administration would say
Speaker 4: if a member of the administration we're sitting here right now,
Speaker 4: is is that what you're hearing from companies that this
Speaker 4: could be a minor speed bump or is this something
Speaker 4: they're worried about something bigger.
Speaker 7: It's a great question, I think right now. The lack
Speaker 7: of clarity is such that what we're hearing over and
Speaker 7: over again from these companies is that we just have
Speaker 7: no clue about what's coming next. And that was kind
Speaker 7: of I would say. There is the outlook from United Airlines,
Speaker 7: which reported early on in the first quarter reporting season,
Speaker 7: where it came out with essentially two sets of outlook
Speaker 7: for two different scenarios. So in case there's a recession,
Speaker 7: this is what we expect to happen, and in case
Speaker 7: there's no recession, this is how much we expect to earn.
Speaker 7: That is something everybody's kind of pointing out too. And
Speaker 7: seeing that that tells you that, oh, like they're completely
Speaker 7: flying in the dark at this point.
Speaker 3: Hey, one thing I want to ask you, and this
Speaker 3: is something like we were trying to get to with
Speaker 3: Eric Wiener, who also follows the markets for us here
Speaker 3: at Bloomberg. But I am just curious about positioning within
Speaker 3: the market that whether it's equity positioning or fixing positioning,
Speaker 3: like what it tells us about the psyche of investors
Speaker 3: at this point, which might determine whether or not, you know,
Speaker 3: they're ready to kind of change if the sentiment or
Speaker 3: the narrative changes quickly.
Speaker 7: Yeah. No, that's a great question. So when we look
Speaker 7: at positioning data, especially from the big banks who are
Speaker 7: kind of sharing those numbers, what we are seeing, and
Speaker 7: a doatcha bank every week puts out really good set
Speaker 7: of stats on this, and they're still seeing that equity
Speaker 7: positioning is really near the bottom of its range, which
Speaker 7: is kind of typical for times of great uncertainties. At
Speaker 7: the same time, you know, when we talk about positioning,
Speaker 7: we really have to talk about all these kind of
Speaker 7: sentiment surveys that are coming out and showing us over
Speaker 7: and over again how investor sentiment has really turned extremely
Speaker 7: bullish at this point and given this really low positioning
Speaker 7: once some kind of certainty, and this is something when
Speaker 7: I talk to my sources comes up over and over again.
Speaker 7: Once there's some kind of certainty the bounce back in
Speaker 7: the markets. There's enough clue from positioning to tell us
Speaker 7: that the bounce back from the markets could be strong enough,
Speaker 7: especially since both these things. Positioning is towards the bottom
Speaker 7: and sentiment is just really kind of near rock bottom almost.
Speaker 7: But then, what people really need, it's something solid, something
Speaker 7: concrete to latch onto. This more kind of vague promises,
Speaker 7: our ideas of agreements deals that is not going to
Speaker 7: cut it at this point because money managers, institutional investors,
Speaker 7: they've just seen it a lot, and they're absolutely not
Speaker 7: willing to kind of buite the bullet at this point.
Speaker 3: Interesting, interesting, right, gets to kind of the center to
Speaker 3: me and psyche out there. Esha, thanks so much, Esha Day.
Speaker 3: She's US Equity's deputy team leader, senior reporter at Bloomberg News,
Speaker 3: joining us right here in New York City. Now about
Speaker 3: you let me drive?
Speaker 9: Oh no, no, no, no, this is not a toy.
Speaker 5: Please gravel ecuse I want to drive. It's a good question.
Speaker 1: This is the drive to the clothes punks a thing
Speaker 1: well on Bloomberg Radio.
Speaker 4: What a trade today?
Speaker 3: I know?
Speaker 5: Are you feeling bored?
Speaker 4: I would never say I'm bored, Carol. What I will
Speaker 4: say with the whiplash of the last three weeks. Yeah,
Speaker 4: it's like this feels a little weird to me.
Speaker 3: It feels a little it feels like a calm before
Speaker 3: the storm.
Speaker 5: Perhaps.
Speaker 3: Yeah, I don't know that that's going to be the case.
Speaker 3: You doing a lot coming right now? Yeah, I mean,
Speaker 3: super super interesting. Let's see what our drive to the
Speaker 3: closed guest has to say. Great to have back with us,
Speaker 3: Carol Schleife. She's investment strategist at BMO Family Office, joining
Speaker 3: us from minneappleist Carol, Good to have you here. It
Speaker 3: does feel a little quiet and subdued today, considering what
Speaker 3: we've seen over the last month. What's you read here?
Speaker 6: It does feel no one really wants to take too
Speaker 6: strong a stance coming into We've got big earnings, we've
Speaker 6: got big data. It's sort of like peak week for
Speaker 6: a lot of a lot of information, and it's nerve wracking,
Speaker 6: I think for anyone to want to get a too
Speaker 6: bold in front of that.
Speaker 4: I mean, I'm having a hard time understanding the next
Speaker 4: catalyst here because we thought we'd get it with alphabet
Speaker 4: last week. We got the jobs report coming up on Friday,
Speaker 4: We've got earnings of slew of earnings. We got Microsoft,
Speaker 4: we got Amazon, we got Apple coming in the next
Speaker 4: couple of days. What do you see as the biggest catalyst, hopefully.
Speaker 6: Of a narrative change if we can get Congress really
Speaker 6: focusing on and some of the more pro growth business
Speaker 6: aspects of things and get movement there. It's going to
Speaker 6: be difficult because investors are hanging on a lot of
Speaker 6: these earnings reports hoping to get guidance from companies on
Speaker 6: what they're doing relative to tariffs. But it's honestly, we're
Speaker 6: not going to get that kind of clarity probably until
Speaker 6: the next quarter of the following quarter, when we figure
Speaker 6: out what they're doing. Because if you're a retailer right now,
Speaker 6: you're trying to decide do I take the goods do
Speaker 6: I take the chance that there might be big tariffs
Speaker 6: on those goods coming in for the fall and Christmas,
Speaker 6: because we're moving into those months where they have to
Speaker 6: make those decisions, and so as investors, we're not necessarily
Speaker 6: going to get clarity on that. Although I do think
Speaker 6: it's positive that you're seeing a lot of companies either
Speaker 6: suspend guns bring it down. It smells a lot like
Speaker 6: it did in March of twenty twenty, when companies set
Speaker 6: the bar very low. Then things stabilized and we were
Speaker 6: able to move.
Speaker 5: Off of that.
Speaker 6: So I think the only sort of catalysts we're going
Speaker 6: to get for markets in the very short term is
Speaker 6: a narrative catalyst change. If Congress can can be back
Speaker 6: in talking about you know, accelerated depreciation being reinstated, and
Speaker 6: perhaps some credits for manufacturing construction, that if we can
Speaker 6: get the narrative focused on that, that will help.
Speaker 3: But Carol's safe to say that it's hard to make
Speaker 3: that investment bet on stable markets right until we get
Speaker 3: more clarity. And so does that mean for investors are
Speaker 3: putting not committing new money, taking existing money and putting
Speaker 3: in in safer plays like what's going on? And I
Speaker 3: understand investors invest for the long term, but it's got
Speaker 3: to be a little startling to see what's happened over
Speaker 3: the last month.
Speaker 6: I think the piece of it is is we've been
Speaker 6: trying for years to get people to invest in globally
Speaker 6: diversified portfolios, and so I think part of it is
Speaker 6: refocusing on that. Let's look outside the United States and
Speaker 6: poke around at some of the other areas, and fixed
Speaker 6: income actually is held in Okay. There's been a lot
Speaker 6: of nervousness about the tenure and extending extending out, but
Speaker 6: it's actually most of the capital markets have behaved very
Speaker 6: reasonably in here despite the volatility we've seen, and so
Speaker 6: looking at those portfolios, rounding up where we might be underweight,
Speaker 6: because you know, for years the only trade was to
Speaker 6: invest in the US, and now while you're waiting for
Speaker 6: some clarity there, maybe picking away at other things on
Speaker 6: the fringes makes some sense.
Speaker 4: Like when you say fringes, what do.
Speaker 6: You mean, I just mean broader in terms of looking
Speaker 6: at some of the you know, we've actually had play
Speaker 6: participation in China, Japan for some China, I know is
Speaker 6: very controversial, but you look at them as an investment opportunity.
Speaker 6: You look at some of the non US markets where
Speaker 6: a little we're more underweight than we would want to
Speaker 6: be in Europe right now, but there's some places to
Speaker 6: look there too, and so global funds as well, because
Speaker 6: you know, the one thing you've seen is that if
Speaker 6: you look at the All Country World Index, the US
Speaker 6: used to be fifty five percent of it. For decades,
Speaker 6: and then over the last number of years it's grown
Speaker 6: to percent. You're back to rebalancing the world. So looking
Speaker 6: at your portfolio and seeing if it's more aligned with
Speaker 6: what global GDP is would be one way to take it.
Speaker 3: Do you think about longer term two in terms of
Speaker 3: the US being more disconnected from the global economy, or
Speaker 3: do you just think this is a moment of chaos
Speaker 3: and that things will settle down and be more normal
Speaker 3: quote unquote in terms of the US relationship to the world.
Speaker 6: I think this is where my long term optimist keeps
Speaker 6: raising its head up. Having watched this for a very
Speaker 6: long period of time, I have to, in my heart
Speaker 6: of hearts, believe that in the long run, maybe that
Speaker 6: the shine is off the US exceptionalism crown. I'm not
Speaker 6: giving up on the US. It's a place to invest
Speaker 6: because I do believe we've got the innovation. We'll figure
Speaker 6: out a way to do things. And the interesting thing is,
Speaker 6: is this near term cast for companies. It doesn't mean
Speaker 6: they're standing still behind the scenes. They're monking a bunch
Speaker 6: of different things, and once it gets some sort of clarity,
Speaker 6: they're going to be quick off those starting blocks to
Speaker 6: figure out how to participate in this because companies have
Speaker 6: to grow. It's part and parcel of what we are.
Speaker 6: They either have to grow for their shareholders, they have
Speaker 6: to grow for their owners, or they have to grow
Speaker 6: for their bankers. So, you know, one way, shape or form,
Speaker 6: they have to figure this out. And we still have
Speaker 6: a lot of innovation going on here. And if we
Speaker 6: can get this figured out, where we pick key industries
Speaker 6: we want to invest in and we start investing in them,
Speaker 6: that's a pretty great long cicture too.
Speaker 4: You know, we've been taught, Carolyn. I've been talking a
Speaker 4: lot about the US's place in the world, and just
Speaker 4: in the last forty five seconds that we have with you,
Speaker 4: when it comes to innovation, is there do you see
Speaker 4: a risk, given what's happening in trade, that the US
Speaker 4: sort of loses the mantle as this most innovative place.
Speaker 6: I do see a risk in that, and I see
Speaker 6: a risk in what we're doing to hire ed and
Speaker 6: interest in some of that. If we want to own
Speaker 6: those industries, we need a whole infrastructure and ecosystem that
Speaker 6: goes with those industries. So we have to be very
Speaker 6: careful to make sure that we're not discouraging great young
Speaker 6: people from coming here to innovate, and the government needs
Speaker 6: to fund some of that, like they have all along,
Speaker 6: or we wouldn't have iPhones, who wouldn't have GPS, We
Speaker 6: wouldn't have all of what we had if it hadn't
Speaker 6: been for the public private partnership. And there is a
Speaker 6: risk there if we're not very careful.
Speaker 3: Interesting, Carol, Thank you so much. Carrol's Life, chief investment
Speaker 3: strategist at BMO Family Office, joining us from Minneapolis, Minnesota.
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