WEBVTT - Traders React to the Jobs Report as Tariffs Sink In 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.200 us live on YouTube. 0:00:27.440 --> 0:00:31.800 Claudia Sam, yesterday in front of sixteen hundred people at 0:00:31.800 --> 0:00:36.279 the Marriott Marquis, we had a fantastic panel and they 0:00:36.360 --> 0:00:42.199 mentioned Claudia Sam. She is definitive on rational analysis of 0:00:42.240 --> 0:00:45.520 the American labor market out of Michigan Chief Economists, News 0:00:45.520 --> 0:00:47.479 Centery Advisors joining us. 0:00:47.520 --> 0:00:50.000 Now, Claudia, you write that the. 0:00:49.880 --> 0:00:53.240 Some rule triggers at four and a half percent. How 0:00:53.280 --> 0:00:55.680 distant are we from a four and a half percent 0:00:56.200 --> 0:00:57.120 unemployment rate? 0:00:59.000 --> 0:01:02.040 So I think we're unths away from seeing that unemployment rate. 0:01:02.080 --> 0:01:05.200 It tends to take time for it to build. Unfortunately. 0:01:05.240 --> 0:01:07.600 I think that is where we're headed here, so we 0:01:07.680 --> 0:01:09.679 could see something like that in the second half of 0:01:09.680 --> 0:01:10.000 the year. 0:01:12.600 --> 0:01:14.759 Claudia, the question I think for a lot of folks 0:01:14.800 --> 0:01:16.600 here when we look at this data here today on 0:01:16.640 --> 0:01:18.120 the jobs, and it's not going to give as much 0:01:18.120 --> 0:01:20.640 of a hint to the way employers are thinking about 0:01:20.680 --> 0:01:25.160 the job market today post tariff discussion, But what will 0:01:25.240 --> 0:01:25.880 you be looking at it? 0:01:25.920 --> 0:01:31.600 Today's data, right, So you know today's data matters. This 0:01:31.760 --> 0:01:35.160 employment report matters not because it tells us what's going 0:01:35.240 --> 0:01:37.840 to be the effect of all the administration's policies, particularly 0:01:37.840 --> 0:01:40.000 with the teriff policies that we learned about this week, 0:01:40.440 --> 0:01:44.640 But it is a policy happens in a macroeconomic context. 0:01:44.760 --> 0:01:48.240 We need this labor market to be as resilient and 0:01:48.360 --> 0:01:52.960 strong as possible to help workers and households whether this 0:01:53.160 --> 0:01:56.800 storm is coming. That was absolutely crucial. We in twenty 0:01:56.840 --> 0:01:59.480 twenty two or twenty twenty three, we're economous. Many were 0:01:59.560 --> 0:02:01.680 saying session is coming, recession is coming. We had some 0:02:01.760 --> 0:02:04.680 big policy changes fed raising interest rates, Inflation was high. 0:02:04.960 --> 0:02:07.000 We did not have a recession, and a key to 0:02:07.040 --> 0:02:09.680 that was we had a very strong labor market that 0:02:09.800 --> 0:02:13.919 buffered it. So it's really important this context going in 0:02:14.040 --> 0:02:16.079 even if the policy effects aren't there today. 0:02:16.240 --> 0:02:19.120 Clauda Danny blanche Flower up at Dartmouth's just mentioned your 0:02:19.200 --> 0:02:24.160 name in awe over the Michigan approach to listening to 0:02:24.320 --> 0:02:27.200 non experts to the Michigan conference numbers. 0:02:27.560 --> 0:02:28.760 In all that his. 0:02:28.880 --> 0:02:34.480 President Trump broken the labor and investment confidence of America. 0:02:36.400 --> 0:02:39.160 Well, and I will say Danny's done excellent work using 0:02:39.200 --> 0:02:43.000 those expectations surveys, but Michigan survey the conference board to 0:02:43.680 --> 0:02:46.360 really get a sense of is a recession coming? So 0:02:46.440 --> 0:02:47.959 the song rule was a lot about is one here? 0:02:47.960 --> 0:02:49.640 But he's done a lot of work on what is 0:02:49.680 --> 0:02:53.000 one coming? And take those the sentiment surveys very seriously, 0:02:53.080 --> 0:02:56.120 and it's ugly right now. We had an ugly period 0:02:56.120 --> 0:02:58.320 a few years ago too where people were very downbeats. 0:02:58.760 --> 0:03:01.680 But again we're back in place where people are telling 0:03:01.760 --> 0:03:04.680 us and business is too. The outlook is pretty grim. 0:03:04.720 --> 0:03:07.800 And that's even before I mean that's last month surveys, right, 0:03:07.919 --> 0:03:12.440 that's not even this week's survey. So it's you. It 0:03:12.440 --> 0:03:15.400 can be hard to interpret those data. Sometimes they can 0:03:15.520 --> 0:03:18.320 lead us astray, and yet like there are real policy 0:03:18.400 --> 0:03:20.919 tatas happening. And one thing with this little book Salt Data, 0:03:21.000 --> 0:03:22.600 is you can look into the future and give us 0:03:22.600 --> 0:03:22.919 that cuit. 0:03:23.000 --> 0:03:23.240 You can. 0:03:23.680 --> 0:03:25.840 Claudia, stay with us, please, We're going to go to 0:03:25.919 --> 0:03:28.959 doctor Sam here after the data. Neil Dutta waiting on deck, 0:03:29.000 --> 0:03:33.520 who's been brilliant again. Duta talking with Krugman. Professor Krugman 0:03:33.520 --> 0:03:37.119 will join us next week at some point, Claudia, completely 0:03:37.200 --> 0:03:40.000 unfair for you to go granually here on the jobs report. 0:03:40.040 --> 0:03:43.520 We'll let Neil Dutta do that. But do you take 0:03:43.600 --> 0:03:43.920 us three? 0:03:43.960 --> 0:03:47.880 I mean, Jason Furman's go an ecumenical, honest with seven 0:03:47.960 --> 0:03:48.960 moving averages. 0:03:49.440 --> 0:03:50.720 What does Claudia Sam do? 0:03:50.840 --> 0:03:53.320 Do you look at the two months, the three months 0:03:53.320 --> 0:03:57.200 with revisions, the six month moving average, which matters to 0:03:57.240 --> 0:03:58.640 you on non farm payrolls. 0:04:00.680 --> 0:04:02.680 Right, well, you definitely don't want to focus on just 0:04:02.720 --> 0:04:05.480 one month of data. Three month moving average is a 0:04:05.480 --> 0:04:07.080 good place to start. I will say, though, I'm the 0:04:07.080 --> 0:04:09.200 employment report in general, you just want to breathe it 0:04:09.200 --> 0:04:11.480 all in, right, like, you need to look at this. 0:04:11.600 --> 0:04:14.440 You know, the payrolls, this is good. That was a solid, 0:04:14.600 --> 0:04:17.480 solid red even with the revision unemployment rate. We don't 0:04:17.480 --> 0:04:19.840 like to see it taking up on utilization. So I'd 0:04:19.839 --> 0:04:22.039 say this is kind of a mixed bag. That the 0:04:22.080 --> 0:04:24.440 wage pressures aren't there, so at least we're not, you know, 0:04:25.000 --> 0:04:28.599 pulling in another inflationary impulse here. So I think, you know, 0:04:28.760 --> 0:04:31.400 generally this this looks a lot like what we've been 0:04:31.440 --> 0:04:34.479 seeing from this labor market, which is it's in a 0:04:34.520 --> 0:04:39.000 good place, but it's not it's not the like firing 0:04:39.040 --> 0:04:41.839 on all cylinders that we would need to, you know, 0:04:41.880 --> 0:04:43.280 go up against some of these shoes. 0:04:43.040 --> 0:04:45.200 And Paul, you're going back and forth with jer own Powell. 0:04:45.200 --> 0:04:47.599 I mean, this doesn't move the needle for the fat doesn't. 0:04:48.120 --> 0:04:50.920 I'm not sure we'll see soon though. But Claudia here, 0:04:50.960 --> 0:04:53.280 how do you think, maybe let's just say, how do 0:04:53.320 --> 0:04:55.719 you think the labor market's going to evolve for the 0:04:55.720 --> 0:04:58.760 remainder of the year, giving some of this uncertainty that 0:04:58.760 --> 0:05:01.640 that's number brought into the accon outlook with all these tariffs. 0:05:03.760 --> 0:05:06.120 Well, so I think the labor market is going to 0:05:06.160 --> 0:05:08.840 get on a slowing trajectory. The thing is, it's one 0:05:08.839 --> 0:05:10.480 of the it's one of the last places where this 0:05:10.560 --> 0:05:12.600 shows up. We're going to see prices start to move 0:05:12.720 --> 0:05:15.920 up pretty rapidly, and then you see consumers pull back, 0:05:16.000 --> 0:05:18.919 and then you see you know, employers go from not 0:05:19.000 --> 0:05:20.880 hiring as much to not as many hours, and then 0:05:20.920 --> 0:05:23.440 they start laying off and then you know, it takes 0:05:23.600 --> 0:05:25.960 time for this to move for a shock like this 0:05:26.080 --> 0:05:29.320 like these tariffs, to move their way through the economy, 0:05:29.640 --> 0:05:32.880 and if if you wait until it shows up in 0:05:32.960 --> 0:05:35.839 the higher unemployment rate to do something, they like to said, 0:05:36.360 --> 0:05:40.520 you waited until we're passed. So I think that's you 0:05:40.560 --> 0:05:43.039 don't want to look here first the labor market, but 0:05:43.120 --> 0:05:45.960 the trajectory is not encouraging the policy. 0:05:45.640 --> 0:05:48.760 Changes, Claudia, to the silliness of the sum rule. And 0:05:48.800 --> 0:05:52.359 you've been very good about you know, the people speaking 0:05:52.440 --> 0:05:57.360 with sorted to trying to crystal ball or recession. Nobody knows, Claudia, 0:05:57.400 --> 0:06:00.960 where we are may second the April report June sixth, 0:06:01.120 --> 0:06:05.480 the main report, where would you guess the labor economy? 0:06:05.800 --> 0:06:07.279 Is the fourth of July? 0:06:10.480 --> 0:06:14.080 Oh goodness, you know the answer to that question is 0:06:14.120 --> 0:06:16.360 going to change so much on what the administration says 0:06:16.520 --> 0:06:20.120 the next few weeks. Right, it really can't be underscore 0:06:20.160 --> 0:06:23.600 how like the duration of the tariffs, the bread like 0:06:23.640 --> 0:06:26.360 do we have retaliation. I mean, again, the outlook is 0:06:26.360 --> 0:06:29.760 not good, but it's like that that is going to 0:06:29.800 --> 0:06:32.360 be so important, and that is that's such a wild card. 0:06:32.400 --> 0:06:35.720 So I'll put a direction of imp unemployment rate will 0:06:35.760 --> 0:06:36.240 be higher. 0:06:36.880 --> 0:06:41.360 I don't know that we're four and a half at 0:06:41.360 --> 0:06:43.800 that point, but I think that's that's the direction we're 0:06:43.800 --> 0:06:46.680 headed unless there is a real pivot on the policy 0:06:46.720 --> 0:06:47.880 coming out of the administration. 0:06:48.160 --> 0:06:50.120 Doctor Sam, thank you so much. Claudia Sam. 0:06:50.160 --> 0:06:53.040 We are honored to have you on each and every 0:06:53.360 --> 0:06:56.600 labor David New Century Advisors, of course, definitive at Michigan 0:06:57.000 --> 0:07:00.480 and the Federal Reserve. Neil Dunda with us number of 0:07:00.640 --> 0:07:03.200 days ago. Generous of him to come back on this 0:07:03.320 --> 0:07:07.359 job's day. He's with Renaissance Macro. Neil, let's start with 0:07:07.440 --> 0:07:10.200 how you dovetail your work with Jeff de Graf on 0:07:10.240 --> 0:07:14.880 the markets over at Renaissance Macro. Is the Neil Dutta 0:07:14.960 --> 0:07:19.360 world such a mess that the graph freezes, goes to cash, 0:07:19.680 --> 0:07:21.560 takes a hyper defensive position. 0:07:24.760 --> 0:07:27.440 I mean, I think, you know, Jeff is always looking 0:07:27.480 --> 0:07:30.320 for opportunities and you know, trying to look under the 0:07:30.840 --> 0:07:33.480 hood to see what other people aren't seeing. And I 0:07:33.480 --> 0:07:36.560 think he continues to do that, so you know, I 0:07:36.560 --> 0:07:39.760 think it's times like this he's looking for, you know, 0:07:39.880 --> 0:07:43.560 tentative evidence of a bottom the. 0:07:43.600 --> 0:07:47.120 Job's day four point two percent. I guess a vector's 0:07:47.160 --> 0:07:51.000 in place. Claudia Sam speaks of an important four point 0:07:51.040 --> 0:07:54.040 five percent. I asked us yesterday at the game for him, 0:07:54.080 --> 0:07:56.160 Neil Dott I would have asked it of you, do 0:07:56.240 --> 0:07:59.400 you frame out a five percent unemployment rate given the 0:07:59.440 --> 0:08:01.040 festivity in the rose garden. 0:08:03.200 --> 0:08:06.240 I don't know about five percent. But we're going up, 0:08:07.160 --> 0:08:09.760 I think, you know, I think we've been going up 0:08:09.760 --> 0:08:14.000 for a while. Obviously, given the shock to financial conditions 0:08:14.000 --> 0:08:18.720 that we've seen in recent days, that view is just amplified. 0:08:19.480 --> 0:08:21.760 But consumers have been telling us that things are getting 0:08:21.760 --> 0:08:27.120 worse for a while. So I had been largely expecting 0:08:27.120 --> 0:08:29.800 a fairly linear increase in the unemployment rate. I mean 0:08:29.840 --> 0:08:34.320 you basically have you know, ongoing layoffs. I mean they've 0:08:34.320 --> 0:08:38.040 been coming up modestly. The hiring rate has been very 0:08:38.120 --> 0:08:41.960 very sluggish, and rates of job finding are low, and 0:08:42.040 --> 0:08:44.880 so when you that combination, it you know has gotten 0:08:44.960 --> 0:08:48.400 us a fairly linear increase in the unemployment rate. The 0:08:48.480 --> 0:08:51.439 risk now, I think is a more nonlinear increase in 0:08:51.480 --> 0:08:54.240 the unemployment rate because of what's going on. That to 0:08:54.280 --> 0:08:58.040 me is the risk that we need to be concerned about. 0:08:58.480 --> 0:09:01.400 You know, hiring rates are probably be going to weaken, 0:09:02.760 --> 0:09:05.160 and you know, at the margin, I would say layoffs 0:09:05.360 --> 0:09:09.240 are getting worse because you know, I mean just tariffs, 0:09:09.280 --> 0:09:11.640 I mean it's like it's like anything else with trade. 0:09:11.679 --> 0:09:16.800 I mean, the you know, the benefits are widespread with trade, 0:09:16.920 --> 0:09:21.880 the costs are very localized, and tariffs it's the opposite. 0:09:21.920 --> 0:09:24.680 So the costs are spread out, the benefits are localized. 0:09:25.280 --> 0:09:28.600 So you know, my sense is that it's hard to 0:09:28.679 --> 0:09:32.960 argue that the shock to financial conditions won't you know, 0:09:33.040 --> 0:09:35.920 have some spill over into the into the real economy. 0:09:35.960 --> 0:09:38.120 And so you know, I think it makes sense to 0:09:38.160 --> 0:09:40.720 a pencil in a higher unemployment rate forecast. 0:09:41.920 --> 0:09:42.760 Right going forward. 0:09:43.040 --> 0:09:47.040 So Neil, I know the administration labeled their tariff day 0:09:47.080 --> 0:09:50.840 Liberation Day, but I see in your note happy obliteration 0:09:51.160 --> 0:09:54.160 a day here. So walk us through the math here. 0:09:54.200 --> 0:09:56.440 Given the numbers that we do, know, what do you 0:09:56.600 --> 0:09:59.959 kind of run through your model that could be a hit? 0:10:00.160 --> 0:10:02.760 Do GDP as we give a wope? 0:10:02.760 --> 0:10:05.200 You know, well a lot of these models, I mean 0:10:05.240 --> 0:10:08.080 if you game out like I mean, wherever the effective 0:10:08.120 --> 0:10:11.600 tariff rate was before and what these new tariffs imply. 0:10:11.760 --> 0:10:14.400 I mean you're talking about an effective tech tariff rate. 0:10:15.280 --> 0:10:20.320 Basically that's like customs duties revenues as a share of 0:10:20.600 --> 0:10:22.480 our custom you know, as a share of imports. I 0:10:22.480 --> 0:10:25.840 mean you're basically talking about, you know, something close to 0:10:25.920 --> 0:10:30.480 twenty five percent based I mean by our calculations, you know, 0:10:30.520 --> 0:10:33.120 that represents you know, a little over I think a 0:10:33.200 --> 0:10:37.280 one percentage point shock to GDP. So I think that's 0:10:37.520 --> 0:10:41.160 kind of where, you know, how most of these calculations 0:10:41.160 --> 0:10:44.719 are coming about. I would argue, though, that these calculations 0:10:44.840 --> 0:10:49.520 understate conditions, you know, the hit to some extent, because 0:10:49.520 --> 0:10:52.199 you're just looking at a direct cost. You're not You're 0:10:52.200 --> 0:10:54.559 not sort of including like what is their ramification to 0:10:55.000 --> 0:10:59.040 corporate confidence, household up confidence, you know, and sort of 0:10:59.040 --> 0:11:01.000 the l over and not on effects. And I think, 0:11:01.120 --> 0:11:02.760 you know, that's why I think it could be even worse. 0:11:02.800 --> 0:11:05.600 But you know, I mean if these stay on, I mean, 0:11:05.600 --> 0:11:08.680 this is basically a recession like outcome for the US economy. 0:11:08.800 --> 0:11:10.559 Neil dan Ives was in earlier. 0:11:11.000 --> 0:11:14.920 He suggests Big Tech will pull all guidance forward in 0:11:15.000 --> 0:11:18.079 their conference calls. How in God's name do you take 0:11:18.120 --> 0:11:21.680 an Excel spreadsheet and get the Dutta crystal ball out 0:11:22.040 --> 0:11:25.520 past the vicinity of April fifteenth? 0:11:26.320 --> 0:11:28.960 I don't, I mean, you know, to me, we're all 0:11:29.000 --> 0:11:32.520 just guessing at this point. Maybe you should have a 0:11:32.559 --> 0:11:34.800 game theorist, come on with you, Tom, that would probably 0:11:34.880 --> 0:11:39.880 be the best, the best person to interview. I mean, 0:11:40.320 --> 0:11:43.080 we sort of see these things on our international trade courses, 0:11:43.120 --> 0:11:45.000 looking at, you know, the the. 0:11:45.040 --> 0:11:46.559 Dynamics of a trade war. Right. 0:11:46.760 --> 0:11:49.800 This is sort of like the classic prisoner's dilemma, and 0:11:49.840 --> 0:11:51.439 we're kind of going through it, right. I mean, we're 0:11:51.440 --> 0:11:54.360 seeing the part where you know, you see both sides 0:11:54.400 --> 0:11:58.040 retaliate and you're at the worst outcome, and that seems 0:11:58.040 --> 0:12:00.480 to be what we're getting. And you know, I do 0:12:00.520 --> 0:12:02.640 think it's interesting. I mean, this is sort of going 0:12:02.679 --> 0:12:06.200 a little bit beyond my wheelhouse, admittedly, but I found 0:12:06.200 --> 0:12:08.760 it interesting that the administration said it was wise for 0:12:08.840 --> 0:12:12.200 other countries not to retaliate because this would be some 0:12:12.240 --> 0:12:14.880 sort of cap And yet what do we see this morning. 0:12:15.720 --> 0:12:20.960 China retaliating and I think Europe is probably next. And 0:12:21.080 --> 0:12:23.440 if that's the case, you know, I think you have 0:12:23.520 --> 0:12:28.760 to really cross your fingers and hope that the White 0:12:28.840 --> 0:12:31.360 the White House won't also retaliate. But you know, I'm 0:12:31.400 --> 0:12:32.600 not really holding my breath best. 0:12:32.679 --> 0:12:36.360 This is great in man Q, macroeconomics is one one 0:12:36.360 --> 0:12:41.479 of your pages. Alan Blinder, fifteenth edition, fifteenth edition, Chapter fourteenth, 0:12:41.520 --> 0:12:43.320 Paul is cross your fingers. 0:12:43.320 --> 0:12:48.400 So, Neil, one of the things that's I guess concerning 0:12:48.400 --> 0:12:49.920 me in addition to you know, kind of the math 0:12:50.000 --> 0:12:52.200 you ran through about a what a terrafrate of twenty 0:12:52.240 --> 0:12:54.880 five percent? What that would mean for GDP. It's just 0:12:54.960 --> 0:12:59.000 the it seems like noticeable, noticeable decline in confidence, both 0:12:59.080 --> 0:13:04.160 consumer confident and corporate confidence. How do you factor that 0:13:04.280 --> 0:13:08.120 into kind of economic growth and maybe inflation expectations. 0:13:08.800 --> 0:13:12.920 Well, I mean it's it's it's the it's for consumer confidence. 0:13:12.920 --> 0:13:15.400 It's the speed of the decline, right that, That to 0:13:15.480 --> 0:13:17.840 me is the big concern. I mean, consumer confidence has 0:13:17.840 --> 0:13:21.120 been quite sluggish for a while. You know. 0:13:21.160 --> 0:13:22.000 Look, I mean. 0:13:23.320 --> 0:13:25.400 This is a this is a shock to the economy, 0:13:25.600 --> 0:13:28.520 right like, So it's basically growth will slow down and 0:13:28.559 --> 0:13:32.080 reset at a much lower level. I think, what this 0:13:32.360 --> 0:13:36.520 what what you're going to see is basically, uh, the 0:13:36.920 --> 0:13:39.680 high end consumer, which has been the core source of 0:13:39.720 --> 0:13:43.160 support for consumer spending over the last year, they are 0:13:43.200 --> 0:13:45.160 going to jack up their savings rate. 0:13:45.120 --> 0:13:46.000 As a result of this. 0:13:46.120 --> 0:13:48.480 I mean, you're you're in a situation now where stock 0:13:48.520 --> 0:13:51.720 prices are going down, right. The elevated level of stock 0:13:51.760 --> 0:13:55.559 prices is one reason why net worth was rising relative 0:13:55.559 --> 0:13:58.080 to income last year, which is why consumer spending was 0:13:58.080 --> 0:14:00.520 so strong because people drew down their savings as a result. 0:14:00.800 --> 0:14:02.880 You have the opposite situation now, So what do you 0:14:02.880 --> 0:14:04.320 think is gonna happen with the savings rate? 0:14:04.360 --> 0:14:06.600 It's gonna go up As. 0:14:06.480 --> 0:14:10.400 A baseline, consumer spending wasn't gonna be really much stronger 0:14:10.440 --> 0:14:12.559 than one and a half percent right now, because that's 0:14:12.600 --> 0:14:15.760 where real income growth has kind of been tracking net 0:14:15.760 --> 0:14:18.319 of transfer. So we've already seen quite sluggish income. 0:14:19.760 --> 0:14:20.320 So even a. 0:14:20.280 --> 0:14:23.520 Stable savings rate gets you that if the savings rates 0:14:23.560 --> 0:14:25.440 going up, you're gonna have something weaker than that. So 0:14:25.520 --> 0:14:28.360 you can see already how it's very challenging to get 0:14:28.400 --> 0:14:33.400 to a anything better than really the best I can 0:14:33.400 --> 0:14:35.680 come up with is like a below potential growth environment. 0:14:35.760 --> 0:14:39.560 Still, so maybe this job's day wasn't what's to come 0:14:39.600 --> 0:14:41.600 in May and June and on forward. In some of 0:14:41.600 --> 0:14:44.680 the gloom again, a four point two percent unemployment rate, 0:14:44.840 --> 0:14:47.840 But Neil dudda on April ten, when the red sacks 0:14:47.840 --> 0:14:51.760 are in first place on April ten, I'm looking at 0:14:51.760 --> 0:14:54.160 as CPI report, is. 0:14:54.120 --> 0:14:55.920 That move is lagged? 0:14:56.280 --> 0:14:59.960 Is the unemployment rate. Are we going to see stagflation 0:15:00.400 --> 0:15:02.600 CPI here in six days? 0:15:04.480 --> 0:15:06.120 I mean, I think there's I mean, there may be 0:15:06.200 --> 0:15:10.000 some possibility that the inflation number surprises to the downside, 0:15:10.040 --> 0:15:13.760 in my opinion. I mean, you do have some you know, 0:15:13.840 --> 0:15:16.680 some improvement in some of these areas like eggs and 0:15:17.040 --> 0:15:20.280 so forth. I mean, you probably haven't yet seen the 0:15:20.400 --> 0:15:23.400 upward movement in car prices just yet. Write what we 0:15:23.480 --> 0:15:26.240 know about auction prices suggest that maybe car prices come 0:15:26.240 --> 0:15:29.160 in a little bit, so, you know, March might be 0:15:29.160 --> 0:15:33.640 an okay month for inflation, and normally I think that 0:15:33.680 --> 0:15:38.120 would probably give the Fed, you know, some rope to 0:15:38.160 --> 0:15:41.760 cut or think about it. But it's all about the 0:15:41.760 --> 0:15:44.800 outlook now, and you know so so the data doesn't 0:15:44.800 --> 0:15:46.520 really take on that much. 0:15:47.480 --> 0:15:48.920 What are you going to write about this weekend? 0:15:48.960 --> 0:15:51.440 Paul Krugman just email being says, ask Donna what he's 0:15:51.480 --> 0:15:52.080 going to write about. 0:15:52.080 --> 0:15:53.400 What are you going to write about this weekend? 0:15:53.400 --> 0:15:56.960 Neil, I'm going to write about how I think the 0:15:57.000 --> 0:16:00.480 economy was slowing, you know, going into all this trade 0:16:00.680 --> 0:16:05.000 war stuff, and that means that the administration doesn't have 0:16:05.040 --> 0:16:08.760 as much buffer as they thought they might have earlier. 0:16:08.800 --> 0:16:10.880 I mean, you know, we talk about two twenty eight 0:16:10.960 --> 0:16:13.480 on non farm perils today. I mean the revisions, I 0:16:13.480 --> 0:16:17.400 think are what's important, right, That's where you have the 0:16:17.400 --> 0:16:19.600 most confidence. Right. So the fact that the revisions were 0:16:19.600 --> 0:16:23.080 down fifty thousand tells me that they didn't get as 0:16:23.120 --> 0:16:24.880 strong of a hand as they thought they were dealt. 0:16:24.960 --> 0:16:28.400 And you know, arguably, you know, this March number was 0:16:28.480 --> 0:16:31.360 just a payback from weather right in January and February. 0:16:31.400 --> 0:16:33.480 So the underlying trend is actually somewhat weaker. 0:16:33.520 --> 0:16:37.200 So if they if they are, even Paul's been brilliant, 0:16:37.200 --> 0:16:39.840 and as Jerry Morian Senator Mariana Kansas was just out 0:16:39.880 --> 0:16:43.040 on CNN, people are basically saying, where are the Republicans? 0:16:43.080 --> 0:16:46.080 Paul? You mentioned this this morning, Neil Dadda. 0:16:46.520 --> 0:16:51.360 If this goes away, do you sense that our trust, 0:16:51.600 --> 0:16:56.400 our confidence in our American exceptionalism is damaged? 0:16:58.560 --> 0:16:59.560 If what goes away? 0:17:00.240 --> 0:17:03.480 I mean yeah, if the tariffs go away. 0:17:06.640 --> 0:17:13.680 If Trump tariffs go away, that means that I mean 0:17:13.680 --> 0:17:18.159 that basically means that the president isn't as politically, I 0:17:18.160 --> 0:17:21.720 mean that basically it's a it's a political nightmare for him, right. 0:17:21.760 --> 0:17:24.119 I mean, if you're if you're betting on on that. 0:17:24.240 --> 0:17:26.880 I mean, I don't know, Tom. I mean, I think 0:17:26.920 --> 0:17:32.080 to me, I wrote about this quickly this morning. I 0:17:32.080 --> 0:17:34.720 think he believes he was spared an assassin's bullet to 0:17:34.760 --> 0:17:36.720 do what he's doing. So why does anybody think he's 0:17:36.760 --> 0:17:38.440 going to be backing off anytime soon? 0:17:38.560 --> 0:17:39.560 This is what he believes. 0:17:39.560 --> 0:17:40.399 It's a part. 0:17:40.280 --> 0:17:43.200 Of his political identity if he if he backs off now, 0:17:43.280 --> 0:17:48.120 that's an uncontal surrender, which makes him basically impotent politically 0:17:48.160 --> 0:17:49.720 going forward. I mean, it's too soon for that to 0:17:49.760 --> 0:17:50.680 happen in my opinion. 0:17:50.960 --> 0:17:53.720 Neil, thank you so much, and as thank you President 0:17:53.760 --> 0:17:55.720 Trump for listening to surveillance this morning. 0:17:55.880 --> 0:17:57.600 Paul and I got to take a break. Paul's going 0:17:57.680 --> 0:17:58.159 to bring her in. 0:17:58.240 --> 0:18:03.680 Jamie Patton is out of TCW and Los Angeles. Every 0:18:03.720 --> 0:18:06.359 time she speaks, I learned something, of course, maybe in 0:18:06.400 --> 0:18:07.919 this crisis will learn something. 0:18:08.000 --> 0:18:09.200 I want to learn what her when. 0:18:09.119 --> 0:18:11.119 Do the Dodgers lose exactly? 0:18:11.520 --> 0:18:13.280 I want to learn what her favorite sandwich was at 0:18:13.320 --> 0:18:15.679 Hogie Haven in for instance, she spent some time there. 0:18:15.760 --> 0:18:19.720 Jamie Patten, co head of Global Rates at TCW, joins us, Jamie, 0:18:19.720 --> 0:18:21.320 what do you make of kind of what we're seeing 0:18:21.320 --> 0:18:24.480 out there in your market, the treasury. 0:18:24.119 --> 0:18:31.159 Bond market, it's been busy. I think obviously risk markets 0:18:31.200 --> 0:18:35.439 are very disappointed by all the tariffs, but treasuries are 0:18:35.440 --> 0:18:36.359 great again, so. 0:18:36.840 --> 0:18:40.440 We love this move. We were much. 0:18:40.200 --> 0:18:45.240 More confused by the initial reaction to a Trump presidency 0:18:45.320 --> 0:18:47.920 and tariffs and anti immigration and all of that. That's 0:18:48.359 --> 0:18:51.080 there's nothing surprising about this. Tariffs are bad for growth, 0:18:51.119 --> 0:18:54.359 they're bad for the consumer, they're bad for the economy. 0:18:54.600 --> 0:18:55.240 They're bad. 0:18:55.440 --> 0:18:58.240 So this is the right market reaction. I'm a little 0:18:58.280 --> 0:18:59.920 confused why it took so long. It's like the market 0:19:00.040 --> 0:19:03.320 didn't believe what Trump was saying until not even Tuesday. 0:19:03.320 --> 0:19:05.040 Even when he said it Tuesday, it was really like 0:19:05.160 --> 0:19:09.480 Wednesday that market participants for like, oh this is serious, 0:19:09.600 --> 0:19:12.919 this is bad. But his whole campaign and all up 0:19:13.000 --> 0:19:15.040 until now, he's been telling us what he's going to do. 0:19:15.119 --> 0:19:18.080 So I think, unfortunately we need to believe him, which 0:19:18.080 --> 0:19:20.119 is great for bonds and great for TCW. You know, 0:19:20.160 --> 0:19:22.200 we've been long duration in the front end. 0:19:22.720 --> 0:19:25.600 What should mom and pop do here? Would their fixed 0:19:25.640 --> 0:19:30.000 income take us away from geniosity? Jamie Patten and Princeton 0:19:30.000 --> 0:19:31.959 and derivatives and mathewness. 0:19:31.840 --> 0:19:32.400 And all that. 0:19:32.600 --> 0:19:36.320 What do mom and pop do in fixed income over 0:19:36.320 --> 0:19:36.800 the weekend? 0:19:38.560 --> 0:19:40.320 I'll tell you what I tell my parents to do, 0:19:40.400 --> 0:19:45.320 because please get Allocating into fixed income is a great 0:19:45.359 --> 0:19:48.000 idea right now, but you have to be really careful. 0:19:48.359 --> 0:19:51.560 So how we're positioned at TCW, we're long duration. We 0:19:51.600 --> 0:19:53.800 love that we're lightening up just because we don't call 0:19:53.840 --> 0:19:55.879 tops and bottoms and we dollar cost average in and 0:19:55.880 --> 0:19:58.480 out just to be prudent risk managers. But we're also 0:19:58.640 --> 0:20:02.119 still very underweak credit. So you can be long fixed 0:20:02.119 --> 0:20:05.960 income but also in an extra defensive position, but you 0:20:06.000 --> 0:20:08.000 don't want to bleed out on carry. So at the 0:20:08.040 --> 0:20:12.359 same time, you can be underweight credit, long duration and treasuries, 0:20:12.600 --> 0:20:15.520 and then we're also long. We like agency mortgages. They're 0:20:15.880 --> 0:20:19.880 basically government guaranteed. They should do well regardless of risk 0:20:19.960 --> 0:20:21.600 on risk off. Maybe you have a little bit of 0:20:21.600 --> 0:20:23.560 pain in the beginning of a risk off, but overall 0:20:23.640 --> 0:20:28.040 their money good. So we like allocations to fixed income, 0:20:28.040 --> 0:20:29.920 but you have to be careful. Don't just go all 0:20:29.920 --> 0:20:32.119 into credit to pick up a few extra basis points. 0:20:32.160 --> 0:20:35.440 This is not the environment to just pick up carry. 0:20:35.560 --> 0:20:38.720 So in terms of just kind of the market here, 0:20:39.240 --> 0:20:40.960 talk to us about where you think. I'm looking at 0:20:41.000 --> 0:20:44.440 the tenure here three point nine to two percent. Where 0:20:44.440 --> 0:20:45.160