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Speaker 2: The University of Michigan sentiment data came out today weaker
Speaker 2: than expected. Sixty four point seven was a headline number.
Speaker 2: The consensus was sixty seven point eight last month sixty
Speaker 2: seven point It's a little bit weaker there. Let's break
Speaker 2: it down. Johanne Schue joins US Surveys of Consumers Director
Speaker 2: at the University of Michigan. Joanne, what did the number
Speaker 2: numbers tell you today?
Speaker 3: Essentially, consumers are feeling less optimistic about the future inflation. Sorry,
Speaker 3: consumer sentiment declined over the course of the month of February,
Speaker 3: and consumers do see that things the outlook is looking
Speaker 3: a bit weaker than it was about a month ago.
Speaker 3: The main reason for this is that they're becoming much
Speaker 3: more concerned that inflation is going to come surging back
Speaker 3: in the future. Inflation expectations really got quite a bit worse,
Speaker 3: both in the short term as long as the long
Speaker 3: as well as the long term.
Speaker 4: So all five components of the index deteriorated, including a
Speaker 4: decline in buying conditions for big ticket items. How do
Speaker 4: you interpret, You know, what kind of macro signal you
Speaker 4: get out of something like that.
Speaker 3: Consumers are seeing signs of weakening throughout the economy. We
Speaker 3: see it again in terms of buying conditions for durables.
Speaker 3: So that's mainly because people are really worried that it
Speaker 3: might be too late to avoid tariff related price hikes
Speaker 3: in the very near future. But consumers are also expecting
Speaker 3: unemployment rates to get worse over the next year, so
Speaker 3: they're seeing weaknesses, potential weaknesses and business conditions in their
Speaker 3: personal finances as well as in inflation and big buying
Speaker 3: conditions for big ticket items.
Speaker 2: Our moves of this magnitude again sixty four point seven
Speaker 2: and was the actual sixty seven point eight was kind
Speaker 2: of last month. It was also the consensus for this month.
Speaker 2: Our misses of this magnitude are they common in your
Speaker 2: survey work.
Speaker 3: What's a little bit unusual is that we're seeing declines
Speaker 3: across the board usually the five index components. Some are
Speaker 3: moving up, some might go sideways, and some might move down,
Speaker 3: but this time we're seeing all five index components all
Speaker 3: moving down at the same time, both inflation expectations figures
Speaker 3: moving getting worse at the same time, as well as
Speaker 3: unemployment expectations. This not necessarily saying people think things are
Speaker 3: getting a lot worse, but they're seeing concerning signs across
Speaker 3: the economy.
Speaker 2: Interesting and again, the Universe emission five to ten year
Speaker 2: inflation a look. The consensus was three point three percent
Speaker 2: was the outlook. It came into three point five percent,
Speaker 2: So Joan was mentioning a little bit higher there.
Speaker 5: A little bit.
Speaker 2: Concerning joeyan Shoe Surveys of Consumers, Director at the University
Speaker 2: of Michigan. They don't just make good football players and
Speaker 2: make some pretty good economists out there in Michigan.
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Speaker 2: Looking for some trends in the marketplace today, you know,
Speaker 2: just kind of a risk off kind of day. The
Speaker 2: United Healthcare News weighing on the DAL certainly, but people
Speaker 2: trying to get a sense of economic data and earnings
Speaker 2: growth and all that good stuff. Looks like the Fed's
Speaker 2: going to be more less on the sidelines for most
Speaker 2: of this year. Katiekiminski joins us. She's a chief research
Speaker 2: strategist Alpha Simplex Group up there in Boston, Mass Area.
Speaker 2: Lots of MIT stuff going on in her resume. I
Speaker 2: don't know what's going on there. It's a lot of math,
Speaker 2: I think, Katie, thanks so much for joining us here.
Speaker 2: How are you guys thinking about these markets today? Where
Speaker 2: are you guys seeing interest, opportunity value?
Speaker 6: Well, to be honest, it's been a little bit of
Speaker 6: a reversal the last two days. We've generally been following
Speaker 6: that US exceptionalism theme across multiple asset classes, and you know,
Speaker 6: it seems to be stumbling a little bit, and you know,
Speaker 6: the market is definitely a little concerned.
Speaker 7: Today really doesn't seem to be any different from that.
Speaker 6: So we'll have to see what that means, I guess
Speaker 6: in the next few weeks.
Speaker 4: How are you thinking about correlations between stocks and bonds
Speaker 4: right now? I know we said it was a risk
Speaker 4: off day, but I mean today we're seeing I guess
Speaker 4: people piling into treasuries exiting stocks. I guess that could
Speaker 4: make sense with the risk theme, but we haven't seen
Speaker 4: that correlation kind of play out every single day over
Speaker 4: the last few months.
Speaker 6: That's that's a really good point because we actually have
Speaker 6: seen on aggregate positive stock bond correlation often more recently.
Speaker 6: And what that means is that the market is trying
Speaker 6: to figure out how much is inflation important, because that's
Speaker 6: what we've anytime the market's concerned about inflation, the correlation
Speaker 6: being stocks and bonds changes quite a bit. But today
Speaker 6: just seems to be a classic risk off type of
Speaker 6: day where you know, people are nervous, consumer confidences down,
Speaker 6: long term inflation expectations are up.
Speaker 7: So I think people are just a little nervous about
Speaker 7: what all this.
Speaker 5: Means, Katie.
Speaker 2: One of the trades that's been pretty solid for a
Speaker 2: lot of people for a long time has been just
Speaker 2: buy the dollar. It was certainly part of, you know,
Speaker 2: quote unquote the Trump trade. We've had a little bit
Speaker 2: of a pullback in the dollar here. How do you
Speaker 2: think about that long dollar trade here?
Speaker 6: Well, the long dollar trade, you know, just had everything
Speaker 6: going for it earlier this year, you know, you really
Speaker 6: saw given the FED being on the sidelines, that means
Speaker 6: that there's less pressure on the dollar. Uh, the idea
Speaker 6: that the US was looking strong and that was making
Speaker 6: the dollars strong as well. But as some of those
Speaker 6: narratives have petered out a little bit or perhaps extended
Speaker 6: quite a bit.
Speaker 7: We've started to see some reversion in that theme.
Speaker 6: This month, and so I think a lot of people
Speaker 6: are starting to wonder, you know, could this theme come
Speaker 6: back or is there just a lot of noise around
Speaker 6: a lot of the geopolitical and also the changes in
Speaker 6: the US administration that could sort of shift dynamics.
Speaker 4: Actually have a colleague on the FX team you asked
Speaker 4: me today, have you seen anyone turning bearish on the dollar?
Speaker 4: So maybe I'll throw the question to Katie. Is it
Speaker 4: time to turn bearish on the US dollar?
Speaker 7: That is actually a good question.
Speaker 6: I think people are asking that question, especially versus things
Speaker 6: like the yen where there's a more clear narrative, you know,
Speaker 6: where you know boj is doing something different. But I
Speaker 6: think the question is just is this just a reversion
Speaker 6: from the consistent theme or you know, have we kind
Speaker 6: of shifted course?
Speaker 7: And so far it doesn't look like it yet, but there.
Speaker 6: Has been some indication that the dollar is backed up,
Speaker 6: particularly this month.
Speaker 2: Another trend that's been pretty pervasive has been gold here
Speaker 2: and I you know, the Bloomberg Intelligence commodity strategist Michael
Speaker 2: mcglohan is said, for years and years and years in
Speaker 2: terms of commodities by gold and short everything else.
Speaker 5: What's that.
Speaker 2: I guess the fundamentals for gold look really solid.
Speaker 6: Yeah, I mean, gold has been one of the tried
Speaker 6: and true trades for trend in the last few months.
Speaker 6: I mean, of course it reverted a little bit this week,
Speaker 6: but there just seems to be a lot of structural
Speaker 6: reasons why people want to hold gold. There's a lack
Speaker 6: of supply of gold, people don't want to loan out gold,
Speaker 6: so it just seems to be sort of that safe
Speaker 6: haven that it, you know, especially in.
Speaker 7: A world where there's you know, more of supply chain
Speaker 7: and other you.
Speaker 6: Know it issues globally across central banks. So I think,
Speaker 6: you know, gold seems to be your sort of safe
Speaker 6: haven asset and that doesn't seem to be stopping yet.
Speaker 4: I have to ask a question about managed futures because
Speaker 4: Katie wrote a book about managed futures And without getting
Speaker 4: too technical here, I do write about ETFs and we
Speaker 4: have seen this year Blackrock Invesco, and I also believe
Speaker 4: Fidelity file for Managed Futures ETF.
Speaker 7: What do you make of this?
Speaker 4: Is this like a really a vehicle that should be
Speaker 4: in the ETF wrapper and you know, something that retail
Speaker 4: should be looking into.
Speaker 6: I would say absolutely yes, it's a very exciting and
Speaker 6: you know, we wrote this really exciting paper recently about
Speaker 6: this new fields or the managed futures ETF, the rise
Speaker 6: of it. And what's exciting is since there were changes
Speaker 6: in US transparency in the regulations for active ETFs, now
Speaker 6: there's a lot more uh, you know, ability to incorporate
Speaker 6: dynamic and active strategies in an ETF rapper, which allows
Speaker 6: people to you know, invest in such strategies on an
Speaker 6: inter day basis as opposed to sort of a typical
Speaker 6: mutual fund structure. So I think you're going to see
Speaker 6: a lot of opportunities for beta like products that give
Speaker 6: investors access to a dynamic range of asset classes over time.
Speaker 6: So it's an exciting field and something I'm super excited about.
Speaker 7: So thanks for asking.
Speaker 2: That's awesome. Who needs I mean ETFs for everything. Katie
Speaker 2: Comminski ch you Research Strategists, Alpha Simplex group up there
Speaker 2: in Cambridge.
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Speaker 2: Stock story of today, United Healthcare off about nine percent.
Speaker 8: Here.
Speaker 2: We've got some oversight potentially some people probing, some regulators
Speaker 2: probing United Health. We want to get some of the
Speaker 2: details there. We go to Glen Mooseef, Bloomberg Intelligence senior
Speaker 2: Ecroyannel's covering some of these healthcare names here. Uh, Glenn
Speaker 2: talks about you and h What's what is the news today?
Speaker 2: Moving the stock?
Speaker 5: So the news good morning. First of all, good afternoon.
Speaker 5: The news basically that the Wolsetet Journal broke the story
Speaker 5: that there is a Department of Justice investigation into Medicare
Speaker 5: advantage up quoting from United Health group. Upcoting means that
Speaker 5: doctors usually upcode the diagnosis, make diagnosis more acute, so
Speaker 5: companies likedic like United for example, or any other Medicare
Speaker 5: advantage plan get much higher payments from the government, and
Speaker 5: that's the issue.
Speaker 4: How do you anticipate United is going to respond to this?
Speaker 5: So United issued a very short statement saying that Wolf
Speaker 5: Street Journal has been sort of pursuing, you know, putting
Speaker 5: in that gative spin on what United Health Group is
Speaker 5: doing and completely unite the accusations. That being said, Department
Speaker 5: of Justice is investigating and you'll see what common is
Speaker 5: it for?
Speaker 2: I mean, this goes to the heart of what an
Speaker 2: insurance company does. Diagnosis, you know, submit, get payment. I
Speaker 2: mean that's what they do. How common or uncommon is
Speaker 2: it for the government to look into.
Speaker 5: These type of investigations are very common? Common or relatively okay,
Speaker 5: this is nothing new usually, so investigations key. The other
Speaker 5: thing is investigations can take up to a few years.
Speaker 5: Usually they have resolved in the settlement. Government is looking
Speaker 5: to make some money and company just wants to put
Speaker 5: it behind them.
Speaker 2: And they said, what is the reputation of United Health
Speaker 2: that they's such a monster company? What's the reputation industry
Speaker 2: for this kind of stuff?
Speaker 5: Well, it's very difficult to say. Especially over the last
Speaker 5: six plus month, you know, the company has been heavily
Speaker 5: scrutinized after the murder of one of the executives. That
Speaker 5: being said, you know, every company, as I always said,
Speaker 5: is there to make Every business is there to make money.
Speaker 5: So you know, unless they're doing something illegal, which I
Speaker 5: you know, very difficult to prove. You know, I don't
Speaker 5: think there is anything.
Speaker 8: What do you make at the share price reaction?
Speaker 4: Is is it an overreaction to this news Because the
Speaker 4: company's medicare advantage division it is kind of small compared
Speaker 4: to the overall business, right.
Speaker 5: Right, so, so relative to overall business, it's pretty small,
Speaker 5: but United is the largest Medicare advantage plan in the
Speaker 5: United States. That's one thing. Another thing is a lot
Speaker 5: of revenue comes from Medicare advantage for United It and
Speaker 5: the other thing that I think the reaction of the
Speaker 5: stock where it is, even though I do think that
Speaker 5: it's probably an overreaction, which sort of you know, today's
Speaker 5: use adds to what happened over the last six months
Speaker 5: with the company, you know, all the negative sentiment. But
Speaker 5: I also think that investors are thinking that today's announcement
Speaker 5: is sort of the Pambindi introducing herself and also partly
Speaker 5: you know, the Trump administrations showing that federal agency are
Speaker 5: not the only target of you know, waste for the
Speaker 5: abuse those agenda.
Speaker 2: So you think there is a political aspect to this pot.
Speaker 5: I mean, I can't say for sure, but you know,
Speaker 5: what's what's.
Speaker 2: The feeling about the managed care business in general? See
Speaker 2: the stocks haven't been great performers. Has the market feel
Speaker 2: about the managing care business?
Speaker 5: So, you know, first of all, United sets the tone
Speaker 5: for the whole industry, right, It's the biggest company and
Speaker 5: sort of manage care companies usually trade in tandem with
Speaker 5: United sort of setting the tone and everyone else follows
Speaker 5: as United sort of has these issues that they sort
Speaker 5: of try to navigate. You know, the whole industry is
Speaker 5: sort of under pressure right because of it. So I
Speaker 5: think over the last couple of years medical costs were
Speaker 5: going up. Everyone is expecting medical costs to continue to
Speaker 5: go up. My thesis that it's gonna they're gonna start
Speaker 5: to ease because three years after the post pandemic recovery began,
Speaker 5: I think there are less people that will sort of
Speaker 5: seek here at the levels that they did after differing
Speaker 5: seeing a doctor during the pandemic. So that could sort
Speaker 5: of provide a tailviinon for United. Earnings from Hunt as
Speaker 5: well as the only Indus ship. But we'll see how
Speaker 5: it plays out, all.
Speaker 2: Right, Glenn, thanks so much for journey. US really appreciate it.
Speaker 2: Glenn Losev. He's a senior equianols Bloomberg Intelligence, following US
Speaker 2: managed care companies, United Healthcare the big mover in the market.
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Speaker 1: weekdays at ten am Eastern on Applecarcklay and Android Auto
Speaker 1: with the Bloomberg Business App. Listen on demand wherever you
Speaker 1: get your podcasts, or watch US live on YouTube.
Speaker 2: Speaking of tariffs, let's get the latest here, because it
Speaker 2: is a fluid situation. We know that tariffs are an
Speaker 2: economic policy that President Trump likes to employ in various ways.
Speaker 2: And the current joins us Bloomberg Global Economy Reporter and
Speaker 2: to kind of where are we here on the tariffs?
Speaker 2: I mean, I think people are trying to get a
Speaker 2: sense of what tariff discussion is real, what tariff discussion
Speaker 2: is maybe just a negotiating point with other countries. How's
Speaker 2: the thinking around tariff's.
Speaker 8: Evolving well and moving fast. If you consider the action
Speaker 8: so far, there has been a ten percent tariff put
Speaker 8: on all goods from China. That's actually happening. It's real,
Speaker 8: and it's it's new because it's covering all of the
Speaker 8: goods from China, not just targeted. Then, of course, we
Speaker 8: have various executive orders that have been signed asking the
Speaker 8: Trade Represents, the Office and Cumberence Apartment, excuse me to
Speaker 8: go out and analyze how the US to doing business
Speaker 8: with the rest of the world. They're going to come
Speaker 8: back with a lot of reports by April one, and
Speaker 8: this in the meantime, we will see new tariffs going
Speaker 8: steel around the middle of March. I think it is so. Yes,
Speaker 8: there is obviously some rehetoric and a lot of headlines,
Speaker 8: but at the same time, there is also concrete action
Speaker 8: that's happening, and we're seeing companies respond, we're seeing consumers respond.
Speaker 8: You just had joined talking there about the impact and
Speaker 8: consumer sentiment, and we're speaking to companies who make similar
Speaker 8: points as well, and.
Speaker 4: That you have a wonderful piece of reporting out on
Speaker 4: the terminal today all about small businesses and how they're
Speaker 4: reacting to the prospect of tariffs and the tariffs that
Speaker 4: are already in place.
Speaker 7: Tell us about what you're reporting.
Speaker 8: Showed, sure, well, So the thinking when it comes to
Speaker 8: tariff is that big multinational companies are better resourced, they
Speaker 8: can shift supply chains, they can adapt, they can maybe
Speaker 8: absorb somebody hit into their margins. But the real pain
Speaker 8: comes to those small business operators, those small manufacturing in
Speaker 8: US who rely on saying import the components from China
Speaker 8: and the rest of the world. And we found out
Speaker 8: we spoke to a lot of these people. They make
Speaker 8: all kinds of products, whether from lighting to fasteners, two
Speaker 8: tonke toys, and all of them made the same point
Speaker 8: that if tariffs on the goods they're bringing in at
Speaker 8: port go up, then their margins are at a point
Speaker 8: or squeeze, the point where they can't absorb that and
Speaker 8: they're going to have to pass those costs on their consumers.
Speaker 8: So it's a small business people warning about the hit
Speaker 8: to their companies, hit their investment plans, and the fact
Speaker 8: that they have the pac these costs along.
Speaker 2: What's the feeling and about reciprocal tariffs if if in
Speaker 2: fact the US does move forward on tariffs against certain countries,
Speaker 2: is he just the expectation that almost a knee jerk
Speaker 2: reaction to those countries will react and put tariffs on
Speaker 2: our goods as well.
Speaker 8: I think that's the reaction function for training partners. We've
Speaker 8: already had China respond. China's put tariffs on US agricultural
Speaker 8: equipment going to China, for example, and have put some
Speaker 8: many trust investigations on US companies. The EU Trade Commissioner
Speaker 8: was in DC this week and I went along to
Speaker 8: his events, and he was making the point that he
Speaker 8: came here to talk deals. They're happy to buy alng
Speaker 8: buyside beans, ready to bring down tariffs on US cars.
Speaker 8: But he also made it clear of that isn't enough,
Speaker 8: and tariffs go ahead on European goods, well, you're will
Speaker 8: respond to. They have their list, he said, and their
Speaker 8: lists agrievances, and they're ready to go. So this is
Speaker 8: a big danger that people make the point about. Yes,
Speaker 8: headlines are on tariffs. Maybe its leverage, maybe reaches some
Speaker 8: kind of a deal, but if tariff's go in and
Speaker 8: you get this tit for that spiral of a trade war,
Speaker 8: then ultimately it will weigh on business confidence and sentiment.
Speaker 4: What are you seeing so far about just the extent
Speaker 4: of all of the talk of tariffs actually affecting inflation
Speaker 4: Because you see headlines every day that you know, analysts
Speaker 4: are saying that the tariffs are going to increase inflation,
Speaker 4: And what is your reporting showing about just how business
Speaker 4: is preparing for the prospect of tariffs. How does that
Speaker 4: actually affect inflation.
Speaker 8: Well, we're still early, right, the inflation story is still
Speaker 8: very much kind of about stubborn services inflation, I think,
Speaker 8: more so than goods prices. But we're rather delicate point
Speaker 8: in the inflation story when hang on a second, wasn't
Speaker 8: it meant to be all about this inflation and it
Speaker 8: looks like that might be a little bit rocky. Now
Speaker 8: throw on top of that the point that maybe there
Speaker 8: will be these tariffs going on, typical consumer goods coming
Speaker 8: to the country. Well, then the thinking among economists and businesses.
Speaker 8: As I saying, business are warning you'll have to pass on.
Speaker 8: Economists say price.
Speaker 2: So we'll go up.
Speaker 8: We'll have to go up near term. That's where it
Speaker 8: becomes more pointy. I mean, okay, near term prices go up.
Speaker 8: But what's the second round effect. Is is it one
Speaker 8: off inflation impact that kind of policemakers owners look through,
Speaker 8: or does it set and chain longer term higher inflation expectations?
Speaker 8: Maybe that's the hint coming out of the Michigan survey today,
Speaker 8: for example, that's where the big economic crunch does come.
Speaker 8: But right here, right now, of course, companies and consumers warning.
Speaker 8: What it means for prices, what it means for inflation
Speaker 8: a longer term, what it means for confidence.
Speaker 2: Very good, Endercurrent, Thank you so much for joining us
Speaker 2: at an acurrent global economy reporter Bloomberg News. Joining us
Speaker 2: from Washington, DC via.
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