WEBVTT - Wall Street Gains on Optimism US Will Soon Reopen 0:00:00.080 --> 0:00:10.520 Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business 0:00:10.520 --> 0:00:14.400 Week Daily reporting from the magazine that helps global leaders 0:00:14.440 --> 0:00:18.360 stay ahead with insight on the people, companies, and trends 0:00:18.400 --> 0:00:23.400 shaping today's complex economy. Plus global business finance and tech 0:00:23.480 --> 0:00:27.320 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.680 --> 0:00:31.760 with Carol Masser and Tim Stenebeck on Bloomberg Radio. 0:00:32.680 --> 0:00:33.559 I've been driving on. 0:00:33.680 --> 0:00:37.600 That man's went on, take a drive, put drive, Yeah, 0:00:37.640 --> 0:00:38.160 I drive. 0:00:40.560 --> 0:00:43.360 Can you just focus on driving, focus on the roads. 0:00:43.440 --> 0:00:47.440 Driving, because I'm asking you to. 0:00:47.600 --> 0:00:48.440 Just taking. 0:00:50.440 --> 0:00:53.360 Just drive baby, Let's see. 0:00:53.040 --> 0:00:56.400 This is the drive to the clothes. No, we don't 0:00:56.480 --> 0:00:59.040 need road on Bloomberg Radio. 0:01:00.000 --> 0:01:02.320 All right, everybody, just by eighteen nineteen minutes to go 0:01:02.400 --> 0:01:05.200 until we wrap up the trade on this Tuesday, November eleventh, 0:01:05.200 --> 0:01:09.080 Carol master Timstanovic live here in our Bloomberg Interactive Broker Studio. 0:01:09.200 --> 0:01:11.320 I mean, you look at the charts and we're definitely 0:01:11.400 --> 0:01:13.520 well off our worst levels of this session. But just 0:01:13.720 --> 0:01:15.800 up a hair, Tim, on the S and P five hundred. 0:01:15.840 --> 0:01:16.600 We just heard from. 0:01:16.480 --> 0:01:19.360 Bill and Alexis, and you still have the Nasdaq one 0:01:19.440 --> 0:01:22.640 hundred slightly lower, but again it's. 0:01:22.520 --> 0:01:25.120 Much more upbeat than where it was earlier in the session. 0:01:25.160 --> 0:01:26.560 I want to see what Eddie Gebora has to say 0:01:26.560 --> 0:01:28.240 about this. He's the co founder and CEO of Key 0:01:28.240 --> 0:01:30.679 Advisor's Wealth Management. The firm is more than nine hundred 0:01:30.680 --> 0:01:34.200 million dollars in assets under management. Eddie joins us here 0:01:34.200 --> 0:01:36.000 in the Bloomberg Interactive Broker's studio. 0:01:36.040 --> 0:01:37.600 It's good to see you. Thank you for having me. 0:01:37.720 --> 0:01:38.360 Welcome back. 0:01:38.800 --> 0:01:42.160 So the macro outlook here, Carol and I've been talking 0:01:42.160 --> 0:01:46.280 a lot about whether or not the government shutdown actually 0:01:46.280 --> 0:01:50.000 matters to equity investors. Jan van k right before the 0:01:50.040 --> 0:01:52.520 government shutdown, was on our program and he said, it 0:01:52.560 --> 0:01:56.240 doesn't matter. It doesn't affect the federal reserve and doesn't 0:01:56.240 --> 0:01:57.000 affect earnings. 0:01:57.400 --> 0:01:58.080 Do you agree? 0:01:58.360 --> 0:02:00.160 I do. As a matter of fact, I think this 0:02:00.280 --> 0:02:03.360 shutdown is a real bullish catalyst because I think the 0:02:03.400 --> 0:02:06.600 probability of a rate cut in December has gone up 0:02:06.640 --> 0:02:09.720 tremendously now because to be prior to the government shutdown, 0:02:10.160 --> 0:02:12.880 there was taught that the bond market wasn't really pricing 0:02:12.919 --> 0:02:15.120 in a December rate cut, and now the rate cut 0:02:15.160 --> 0:02:18.079 is about sixty percent because it is going to be 0:02:18.120 --> 0:02:20.360 a drag on economic data when it comes out, and 0:02:20.400 --> 0:02:22.480 so I think the FED is going to kind of 0:02:22.880 --> 0:02:25.320 err on the side of caution and go ahead and 0:02:25.360 --> 0:02:28.400 cut rates just because of the fears of a slowdown 0:02:28.480 --> 0:02:30.760 getting worse going into twenty twenty six. They don't want 0:02:30.760 --> 0:02:33.200 that on their watch. So I don't think it a 0:02:33.200 --> 0:02:35.240 big impact in regards to stocks. But what it does 0:02:35.240 --> 0:02:39.079 indirectly is increase that probability of the Santa Claus rally 0:02:39.120 --> 0:02:40.760 because the one thing I think that could end that 0:02:40.880 --> 0:02:43.400 would be if the FED does not cut in December. 0:02:43.480 --> 0:02:47.960 Having said that, you know, Churchery Secretary Scott Bessett has 0:02:48.000 --> 0:02:49.760 been out and about and he has said that he's 0:02:49.800 --> 0:02:52.639 going to be out and about over the next few 0:02:52.639 --> 0:02:55.640 weeks as he talks about the big, beautiful tax bill 0:02:56.080 --> 0:02:57.919 that was passed by Congress. 0:02:58.280 --> 0:03:00.720 What I'm curious about, Eddie is he kind of reed. 0:03:00.400 --> 0:03:02.320 When it comes to inflation concerns, and he talked about 0:03:02.360 --> 0:03:04.600 better times in twenty twenty six, So why would we need. 0:03:04.480 --> 0:03:05.000 A rate cut? 0:03:05.320 --> 0:03:07.040 So I think the rate cut is because we have 0:03:07.120 --> 0:03:08.080 this dynamical. 0:03:07.760 --> 0:03:10.880 Especially there's inflationary concerns and still pressures because they're going 0:03:10.960 --> 0:03:13.600 to pick the labor market and the economics slow down 0:03:13.880 --> 0:03:16.920 over where we are right now for an inflationary procedure 0:03:17.320 --> 0:03:17.600 the FED. 0:03:17.720 --> 0:03:20.040 That's correct the Fed, because inflation. I think the new 0:03:20.040 --> 0:03:22.360 normal has to be three percent. If the FED tries 0:03:22.400 --> 0:03:24.160 to get us down to two percent, it's going to 0:03:24.200 --> 0:03:25.600 be too late. We're not going to get there. 0:03:25.720 --> 0:03:27.600 But the isn't conceeded on that yet. 0:03:27.639 --> 0:03:30.640 They have not. However, I think last time when FED 0:03:30.800 --> 0:03:34.240 Chairman spoke, he talked about it being transitory, the tariff 0:03:34.280 --> 0:03:37.480 concerns in regards to inflation, and I think the new normal, 0:03:37.520 --> 0:03:39.600 they're going to be forced to pivot. I believe next 0:03:39.680 --> 0:03:41.720 year they will pivot and go away from that two 0:03:41.720 --> 0:03:44.480 percent number because at the end of the day, as 0:03:44.480 --> 0:03:47.680 long as we continue to grow economically, you focus more 0:03:47.720 --> 0:03:49.400 on growth, the inflation is not going to have a 0:03:49.400 --> 0:03:51.720 big of an impact. But if you just focus on 0:03:51.840 --> 0:03:55.520 inflation and cause growth to go down, you're going to 0:03:55.600 --> 0:03:57.840 have a double whamie where inflation is going to stay 0:03:57.840 --> 0:04:00.320 sticky and then potentially take us into a session. 0:04:00.480 --> 0:04:02.640 So you think under Fed shir J. Powell, the FED 0:04:02.680 --> 0:04:05.200 will abandoned the two percent goal. 0:04:05.520 --> 0:04:09.680 I do. I think that'll happen next year. Wow, Okay, 0:04:09.880 --> 0:04:12.280 they're going to be forced to because we're not going 0:04:12.320 --> 0:04:15.000 to get the two percent inflation. And if they stay 0:04:15.040 --> 0:04:17.800 tight with monetary policy, right this case shape the economy 0:04:17.839 --> 0:04:21.880 we have. They're killing small businesses and the bottom of 0:04:21.920 --> 0:04:24.400 the k the lower earners in this country are the 0:04:24.440 --> 0:04:26.760 ones that are getting hurt by this tighter monetarition. 0:04:27.080 --> 0:04:29.400 Well, is the FED killing the lower wrong? 0:04:29.640 --> 0:04:33.080 Or you know, as we had a great conversation with 0:04:33.120 --> 0:04:37.480 Henrietta Tre's Veda Partners yesterday and getting to this point 0:04:37.520 --> 0:04:40.000 that you have records on Wall Street, yet you have 0:04:40.800 --> 0:04:43.599 you know, one in eight Americans on food stamps. That 0:04:43.680 --> 0:04:47.080 is not a Republican or Democratic policy that is cumulative 0:04:47.560 --> 0:04:50.760 over the years. So her point was that there are 0:04:50.800 --> 0:04:52.800 a lot of companies out there, and she named names 0:04:53.320 --> 0:04:56.599 that aren't really paying workers a living wage. So, you know, 0:04:56.720 --> 0:04:58.600 to put the blame on the FED doesn't seem to 0:04:58.640 --> 0:04:59.279 make sense to me. 0:04:59.760 --> 0:05:01.440 Well in regards to the FED, when I look at 0:05:01.440 --> 0:05:04.520 it from an entrepreneurial perspective, these small businesses, they don't 0:05:04.520 --> 0:05:06.680 go out and issue bonds to raise capital like the 0:05:06.760 --> 0:05:08.960 large companies have the luxury of doing. They have to 0:05:08.960 --> 0:05:11.920 go to their local bank to raise capital to get 0:05:12.040 --> 0:05:14.599 monetary to get money from those for loans, and when 0:05:14.600 --> 0:05:17.280 you talk to them, the increase in interest rates have 0:05:17.440 --> 0:05:20.400 really hurt them. So they don't have the capital that 0:05:20.480 --> 0:05:22.800 the other companies do. So when we talk about the 0:05:22.839 --> 0:05:27.320 FED keeping monetary policy tight and hurting the smaller businesses, 0:05:27.400 --> 0:05:29.520 that's what we're talking about. Are they solely the blame, 0:05:29.560 --> 0:05:31.279 of course not. I'm not putting all the blame on 0:05:31.320 --> 0:05:33.520 the FED, but that's a big component is being able 0:05:33.560 --> 0:05:34.200 to get capital. 0:05:34.320 --> 0:05:36.680 But the FED still will have a duel mandates stable 0:05:36.680 --> 0:05:40.600 prices and maximum employment. So from the stable price's perspective, 0:05:40.800 --> 0:05:42.000 what is the new two percent? 0:05:42.440 --> 0:05:44.880 So I think where we are right now two and 0:05:44.880 --> 0:05:47.320 a half to three percent on core, I think they 0:05:47.400 --> 0:05:50.080 can live with that at the because they've already been 0:05:50.120 --> 0:05:53.039 cutting rates when we are not down the two percent. 0:05:53.080 --> 0:05:56.000 They did a fifty basis point rate cut last year. 0:05:56.000 --> 0:05:58.720 They're doing rate cuts again now. So you can make 0:05:58.720 --> 0:06:01.080 the argument that they've already a ban in that, because 0:06:01.320 --> 0:06:03.520 why would they be cutting rates if they're not abandoning 0:06:03.600 --> 0:06:04.679 the two percent mandate? 0:06:05.200 --> 0:06:05.640 I don't know. 0:06:05.760 --> 0:06:07.960 To be preemptive, I think what there is. 0:06:08.080 --> 0:06:09.680 I mean some might say maybe they're concerned about the 0:06:09.720 --> 0:06:10.320 labor market. 0:06:10.600 --> 0:06:12.000 That's it. And this is why I say they're in 0:06:12.000 --> 0:06:14.120 a really tough spot because now they have to pick. 0:06:14.120 --> 0:06:15.320 Are they going to pick inflation? 0:06:15.360 --> 0:06:18.000 They flowing growth that they were concerned about, so doing 0:06:18.040 --> 0:06:19.520 something to kind of juice it a little bit. 0:06:19.640 --> 0:06:22.280 So that's why I think there they don't want to 0:06:22.320 --> 0:06:24.520 be abandoned the two percent, but they're going to be 0:06:24.640 --> 0:06:26.280 forced to because I think they're going to pick the 0:06:26.360 --> 0:06:28.520 labor market, and I think that's wise. I'd rather than 0:06:28.600 --> 0:06:31.560 pick the labor market and try to help it from 0:06:31.600 --> 0:06:33.599 slowing to a point where we go into a recession, 0:06:33.880 --> 0:06:37.360 so that way we can grow economically and hopefully continue 0:06:37.360 --> 0:06:38.280 to prosper here. 0:06:38.360 --> 0:06:40.000 But how do you grow when you have you know, 0:06:40.040 --> 0:06:41.880 I'm kind of obsessed with this story, and we're going 0:06:41.920 --> 0:06:43.400 to talk about it a little bit later on. But 0:06:43.560 --> 0:06:46.279 Walgreen's no longer giving many of its retail workers paid 0:06:46.360 --> 0:06:50.320 vacation time for Thanksgiving, Christmas, another major holidays company looking 0:06:50.320 --> 0:06:52.760 to cut costs under their new owners. Like it does 0:06:52.800 --> 0:06:55.279 seem like there is still a squeeze. 0:06:56.160 --> 0:06:57.560 On workers and wages. 0:06:58.200 --> 0:07:00.560 The unfortunate reality is, and this is a problem in 0:07:00.560 --> 0:07:02.600 this country. We recognize as we talk about it all 0:07:02.600 --> 0:07:04.479 the time, when it goes back to the K shaped 0:07:04.520 --> 0:07:07.080 economy that the wealthy, the top fifty percent in this 0:07:07.160 --> 0:07:10.720 country are continuing to do really well, and they're going 0:07:10.760 --> 0:07:13.320 to do well whether the Fed cuts or doesn't cut. 0:07:13.600 --> 0:07:16.760 So I think the focus on the FED and companies 0:07:16.800 --> 0:07:19.400 and businesses is the bottom part of the K. We're 0:07:19.400 --> 0:07:21.920 going to be prosper more if the entire economy is 0:07:21.960 --> 0:07:22.520 doing well. 0:07:22.640 --> 0:07:26.640 But doesn't policy have a responsibility too in terms of 0:07:26.680 --> 0:07:29.680 helping out the economy. We talk about the Treasury Secretary 0:07:30.080 --> 0:07:31.720 kind of on a tour to talk about the big 0:07:31.760 --> 0:07:35.320 beautiful bill. I mean, what is there for you know, 0:07:35.680 --> 0:07:39.520 Americans at large. I think this stem business or you know, 0:07:39.520 --> 0:07:41.840 there's lots of tax breaks, but it seems like for 0:07:41.920 --> 0:07:42.960 bigger corporations. 0:07:43.320 --> 0:07:46.440 So I think this stems from years in the making 0:07:46.480 --> 0:07:49.240 of the mouse and massive debt that our country has 0:07:49.280 --> 0:07:52.760 put ourselves into. That's ultimately what causes inflation, is you. 0:07:52.760 --> 0:07:56.560 Overstepending bill creates more debt too, right, it does. 0:07:56.920 --> 0:07:59.440 I mean every administration one ups the other. I mean 0:07:59.800 --> 0:08:02.360 the amount we have thirty plus trillion dollars of debt 0:08:02.440 --> 0:08:05.360 that did not happen overnight and so we have had 0:08:05.440 --> 0:08:08.080 a real fiscal problem and that's ultimately what's going to 0:08:08.160 --> 0:08:10.840 break the back of this market is the bond market 0:08:10.880 --> 0:08:13.600 at some point in time is going to say, you 0:08:13.680 --> 0:08:15.800 know what, I don't care what you do monetarily wise, 0:08:15.840 --> 0:08:17.600 the ten year is going to go through five percent. 0:08:17.760 --> 0:08:19.400 So what does that break in the market look like? 0:08:19.520 --> 0:08:20.920 So what does it mean for equities? And just got 0:08:20.920 --> 0:08:22.520 about thirty thirty five seconds here. 0:08:22.880 --> 0:08:25.680 This is an amazing bull run far, it's far from over. 0:08:25.760 --> 0:08:28.360 But when it does pop, this is a bubble. It's 0:08:28.400 --> 0:08:30.800 going to be ugly, and you need to be able 0:08:30.880 --> 0:08:32.880 to sell and pivot. We are not in a buy 0:08:32.920 --> 0:08:35.640 and hold strategy, and I don't think individual investors should. 0:08:35.960 --> 0:08:40.080 Large institutions are tactical. Every family, hard work and American 0:08:40.120 --> 0:08:42.199 family should have a tactical strategy as a way to 0:08:42.240 --> 0:08:44.079 protect against when this bubble does pop. 0:08:44.480 --> 0:08:47.040 And the bubble is going to pop because of debt, 0:08:47.360 --> 0:08:50.040 or because of the AI spend or all of it. 0:08:50.040 --> 0:08:52.120 It's going to be all of it, all of It's 0:08:52.120 --> 0:08:53.400 going to be a combination of it all and then 0:08:53.400 --> 0:08:55.880 the bond market will speak very loudly. 0:08:56.080 --> 0:08:59.880 So then administrative stration policies are our supportive or no, I. 0:09:00.080 --> 0:09:03.000 Think they're supportive of economic growth going into twenty twenty six. 0:09:03.200 --> 0:09:06.160 You know they are. That is our opinion. And look 0:09:06.200 --> 0:09:09.760 as a business owner myself, we pay our teams very well. 0:09:09.840 --> 0:09:11.000 Okay, well, that's good to know. 0:09:11.120 --> 0:09:15.160 Eddie Gebor, co founder and cefkey Advisor's Wealth Management. 0:09:16.280 --> 0:09:19.080 Stay with us. More from Bloomberg Business Week Daily coming 0:09:19.160 --> 0:09:20.120 up after this. 0:09:24.160 --> 0:09:28.000 You're listening to the Bloomberg Business Week Daily podcast. Catch 0:09:28.080 --> 0:09:30.760 us live weekday afternoons from two to five e's during 0:09:30.760 --> 0:09:34.199 the Listen on Applecarplay and Android Auto with the Bloomberg 0:09:34.240 --> 0:09:38.200 Business app, or watch us live on YouTube Now. 0:09:38.240 --> 0:09:42.280 As the US Treasury Secretary looks to highlight the administration policy, 0:09:42.280 --> 0:09:46.720 whether it's inflation or other aspects of their policies, we 0:09:46.800 --> 0:09:48.920 continue to live in a world that really lacks US 0:09:48.960 --> 0:09:51.439 government data. We did get one piece of private data today. 0:09:51.480 --> 0:09:54.719 ADP research suggested that the labor market slowed in the 0:09:54.760 --> 0:09:57.400 second half of last month. Traders, now we know, have 0:09:57.440 --> 0:10:00.480 relied on private data as the government closure tip has 0:10:00.520 --> 0:10:02.719 delayed the release of official statistics. 0:10:02.880 --> 0:10:05.760 Meantime, the government now and it's well known to the 0:10:05.760 --> 0:10:08.400 Bloomberg audience, who is with us right now Neil data 0:10:08.480 --> 0:10:11.120 partner and head of economics at Renaissance Macro Research. He 0:10:11.200 --> 0:10:13.400 joins us from New Jersey. Neil, good to have you 0:10:13.480 --> 0:10:16.800 back on the program. I want to start exactly there, 0:10:16.920 --> 0:10:19.600 and with regard to the shutdown, where we are longest 0:10:19.640 --> 0:10:23.000 shutdown on record, but also the lack of data, the 0:10:23.040 --> 0:10:26.679 picture that we're kind of piecing together from various disparate 0:10:26.760 --> 0:10:29.959 parts show that a labor market is weakening. In your view, 0:10:30.160 --> 0:10:30.880 how weak is it? 0:10:32.880 --> 0:10:33.080 You know? 0:10:33.160 --> 0:10:35.440 I tend to concern myself more with the direction as 0:10:35.480 --> 0:10:38.240 opposed to the magnitude, to be honest, but I think 0:10:38.800 --> 0:10:42.599 I think we're probably at the Fed's estimate for the 0:10:42.679 --> 0:10:47.840 unemployment rate for year end already, so a couple of 0:10:47.880 --> 0:10:51.440 months ahead of schedule. So that's not necessarily a good thing. 0:10:51.520 --> 0:10:53.719 So my sense is that the speed of the weakness has, 0:10:54.240 --> 0:10:56.640 you know, maybe picked up a little bit. But I 0:10:56.679 --> 0:10:59.840 think we're probably at four and a half percent already 0:10:59.880 --> 0:11:01.000 on the unemployment rate. 0:11:01.080 --> 0:11:02.120 Okay, if it were to. 0:11:02.040 --> 0:11:06.000 Come out, and you know, I think you know what 0:11:06.040 --> 0:11:09.280 people need to kind of answer is why do you 0:11:09.320 --> 0:11:12.920 think that stops? And what gets it to stop? Because 0:11:12.960 --> 0:11:17.200 I think when you look at it bottoms up like 0:11:17.280 --> 0:11:20.480 which you know, if you kind of go industry by industry, 0:11:21.000 --> 0:11:24.040 it's really hard to see where the growth and employment 0:11:24.120 --> 0:11:25.240 is coming from at the moment. 0:11:25.760 --> 0:11:28.040 Well, and on that, you know, I'm thinking about, Neil. 0:11:28.160 --> 0:11:31.280 Great to be talking with you again, the dual mandate, right, 0:11:31.320 --> 0:11:33.800 and so I'm just wondering if we continue to see weakness, 0:11:34.040 --> 0:11:36.560 you know, in the labor market. And then we just 0:11:36.600 --> 0:11:39.439 talked about Treasury Secretary Scott Best and kind of deflecting 0:11:39.480 --> 0:11:42.319 when it came to inflation, I sees out and about 0:11:42.320 --> 0:11:45.640 talking about the administration's policies. I mean, we've heard from 0:11:45.679 --> 0:11:49.199 Fetcher J. Powell about the struggles on both of those mandates. 0:11:49.240 --> 0:11:50.600 Do you think it's going to be a bit of 0:11:50.600 --> 0:11:54.800 a squeeze for the Fed, for the US economy, for 0:11:54.840 --> 0:11:58.400 all of us in terms of weaker labor market staying 0:11:58.440 --> 0:12:01.679 that way an inflationary is kind of staying that way. 0:12:02.840 --> 0:12:04.920 Well, I don't. I mean, my own view of it 0:12:04.960 --> 0:12:07.200 is that I don't view the trade offs as nearly 0:12:07.240 --> 0:12:11.400 as onerous as as the FED does. I mean, I 0:12:11.440 --> 0:12:15.760 think there's more downside risk to the labor market than 0:12:15.800 --> 0:12:20.080 there is upside risk to inflation. You know, at the 0:12:20.160 --> 0:12:23.120 end of the day. Inflation is three percent this year, 0:12:23.200 --> 0:12:25.439 it was three percent last year. The difference between this 0:12:25.559 --> 0:12:28.120 year and last year is tariffs. So that would tell 0:12:28.160 --> 0:12:32.680 me what that underlying inflation is probably slowing. And you 0:12:32.679 --> 0:12:34.360 know the fact that it's really hard to make a 0:12:34.400 --> 0:12:36.360 case for why tariffs are anything more than a one 0:12:36.440 --> 0:12:40.800 off lends support to the idea of the FET should 0:12:40.800 --> 0:12:45.440 continue to cut interest rates here in terms of and remember, 0:12:45.559 --> 0:12:49.840 you know, to me, the big story is that employment 0:12:49.920 --> 0:12:54.800 tends to evolve potentially in nonlinear ways. It kind of 0:12:55.440 --> 0:12:57.839 you know, once it gets once like an increase in 0:12:57.880 --> 0:13:01.400 the unemployment rate really gets going to keep ongoing. And 0:13:02.480 --> 0:13:05.400 that's why you have this sort of you know, it's episodic, right, 0:13:05.440 --> 0:13:07.840 I mean you see big spikes in the uneployment rate 0:13:07.840 --> 0:13:12.920 at times, right, Yeah, that's not really the case with inflation. 0:13:13.000 --> 0:13:15.280 And so in other words, inflation tends to move in 0:13:15.320 --> 0:13:19.760 a more linear way, and you know, particularly outside of 0:13:19.760 --> 0:13:23.920 commodities and unemployment, that's not necessarily the case. It tends 0:13:23.960 --> 0:13:27.720 to be more nonlinear in fashion. And I think that's 0:13:28.120 --> 0:13:31.600 what you know, frankly, the FED and you know, the 0:13:31.600 --> 0:13:34.600 the markets might be missing is the sort of downside 0:13:34.800 --> 0:13:39.960 kind of growth tail risks associated with with the labor markets. 0:13:40.480 --> 0:13:43.880 What if the Supreme Court comes back and says the 0:13:43.920 --> 0:13:47.280 tariffs are not legal as they're implemented, Does that change 0:13:47.280 --> 0:13:47.680 your view? 0:13:49.040 --> 0:13:51.400 No? I mean I think if you if you think 0:13:51.440 --> 0:13:54.840 that the Supreme Court is going to be the institution 0:13:54.960 --> 0:13:58.240 in Washington, d c. With the last word on tariffs, 0:13:58.280 --> 0:14:00.680 I think you're I mean, I'd like to have some 0:14:00.760 --> 0:14:01.559 of what you're smoking. 0:14:02.480 --> 0:14:03.960 Well, is that is that because you think there are 0:14:04.000 --> 0:14:07.400 other There are other avenues for the Trump administration department. 0:14:09.440 --> 0:14:12.880 Absolutely, the Congress. I mean, this is really about Congress, 0:14:13.000 --> 0:14:17.959 and Congress is frankly a lazy bunch, okay, And they've 0:14:18.000 --> 0:14:23.480 delegated a lot of their tariff authority to the White House. 0:14:24.240 --> 0:14:28.600 And there's a vast legal architecture from which the president 0:14:28.680 --> 0:14:33.200 can draw from to prosecute a trade war. And you know, 0:14:33.280 --> 0:14:36.400 I think immediately he could probably do a temporary fifteen 0:14:36.440 --> 0:14:40.720 percent baseline tariff, and he can do that for six months, 0:14:40.960 --> 0:14:43.480 and that will, you know, sort of act as a bridge, 0:14:45.120 --> 0:14:47.560 you know, to get towards national security tariffs. So I 0:14:47.600 --> 0:14:50.960 don't think we're out of the woods on tariffs because 0:14:51.000 --> 0:14:53.640 the Skotis rules it one way or the other. I mean, 0:14:53.680 --> 0:14:56.680 it's yeah, I think that's that's sort of wishful thinking 0:14:56.680 --> 0:14:57.280 in my opinion. 0:14:57.360 --> 0:14:58.920 Hey, couple of stories I just want to bring in. 0:14:58.920 --> 0:15:01.040 One was from last week Neil, and it was about 0:15:01.200 --> 0:15:05.040 US consumer sentiment telling to near the lowest on record, 0:15:05.160 --> 0:15:07.120 and part of it was the government shut down weighing 0:15:07.120 --> 0:15:10.000 on the economic outlook, but also high prices sering views 0:15:10.000 --> 0:15:13.760 about personal finances. There were also concerns about the labor 0:15:13.840 --> 0:15:16.040 market continuing to weaken in the future. 0:15:16.560 --> 0:15:17.640 We got that from that report. 0:15:17.680 --> 0:15:19.320 And then we just had a story that our Alexis 0:15:19.360 --> 0:15:22.960 Christophers mentioned about Walgreens no longer giving many of its 0:15:22.960 --> 0:15:26.360 retail workers paid vacation time for Thanksgiving, Christmas another major 0:15:26.440 --> 0:15:29.560 holiday holiday. Is the company looking to cut costs under 0:15:29.600 --> 0:15:31.480 new owners. Like, I just keep thinking about this K 0:15:31.640 --> 0:15:35.360 shaped economy and there's just so many people, and I 0:15:35.400 --> 0:15:37.640 think about the snap benefits, how many people are on 0:15:38.040 --> 0:15:43.400 food stamps and getting assistants, Like this economy doesn't feel great, 0:15:43.480 --> 0:15:45.440 and yet we have records on Wall Street and we 0:15:45.560 --> 0:15:48.560 have earnings that seem to be okay, and the AI 0:15:48.720 --> 0:15:50.840 spend is out there still in a big way. 0:15:50.880 --> 0:15:53.400 Even if there's been some questions over the last week 0:15:53.520 --> 0:15:54.120 or so. 0:15:54.120 --> 0:15:57.000 So I don't know, from an economic perspective, are we 0:15:57.040 --> 0:15:58.480 in a good economy or no. 0:15:59.440 --> 0:16:00.800 I mean I think we're in a very in a 0:16:00.840 --> 0:16:04.240 deeply imbalanced economy, Carol. And it's been that way for 0:16:04.280 --> 0:16:08.600 a while. Yeah, you know, I've and I recently wrote 0:16:08.640 --> 0:16:12.400 a piece for your colleague Joe Wisenthal on odd Lots, 0:16:12.480 --> 0:16:16.080 you know, just sort of characterizing the The economy is 0:16:16.120 --> 0:16:19.120 really three different things, right. It's you have the housing market, 0:16:19.160 --> 0:16:22.640 which I think is in recession, and you have the consumer, 0:16:22.680 --> 0:16:25.800 which is kind of, let's say, in the mid middle, 0:16:26.720 --> 0:16:28.920 and then you have AI, which is you know, booming. 0:16:28.920 --> 0:16:30.680 And when I go to client meetings and I give 0:16:30.720 --> 0:16:33.600 my sort of outlook on the economy, you know, the 0:16:33.640 --> 0:16:36.120 pushback that I get is kind of what you were describing, right, 0:16:36.160 --> 0:16:40.240 it's you know, AI, it's stocks, it's you know, the 0:16:40.360 --> 0:16:43.160 high end consumer. And people talk about that frankly, as 0:16:43.160 --> 0:16:46.400 if those are three separate things, but they're really deriudive 0:16:46.680 --> 0:16:50.600 of the same thing. And I think that's something to 0:16:50.680 --> 0:16:53.400 keep in mind here. The other thing I would say 0:16:53.640 --> 0:16:56.880 is that, you know, we talk a lot about the 0:16:56.920 --> 0:16:59.560 resilient consumer. We hear a lot about you know, never 0:16:59.560 --> 0:17:02.280 bet again the US consumer. The truth is, the consumer 0:17:02.400 --> 0:17:07.119 never actually gives you a signal ahead of an economic slump. 0:17:07.440 --> 0:17:07.640 Right. 0:17:08.800 --> 0:17:12.320 If you go back historically, consumer spending has never ever 0:17:12.520 --> 0:17:17.240 declined in the quarters leading up to broader economic downturn. 0:17:17.400 --> 0:17:17.680 Interest. 0:17:17.720 --> 0:17:21.480 Sometimes in an economic downturn, consumer spending actually expands, right, Like, 0:17:21.560 --> 0:17:23.480 go back to two thousand and one, right, Like, So 0:17:23.560 --> 0:17:27.119 that's not unusual either. So if you're waiting on the 0:17:27.160 --> 0:17:30.920 consumer to give you a tell, you've probably waited too long, right, 0:17:30.960 --> 0:17:34.639 I mean, consumption has a way of amplifying downturns. But 0:17:34.720 --> 0:17:37.119 I would just say, you know, what's been interesting to 0:17:37.200 --> 0:17:40.840 me is just how quick Yeah, Like the labor markets 0:17:40.840 --> 0:17:43.439 have evolved the way you've expected. Right, It's come for 0:17:43.480 --> 0:17:45.240 the young people first, and I think it's going to 0:17:45.240 --> 0:17:46.280 come for the affluent next. 0:17:46.560 --> 0:17:49.680 Interesting stuff out, Well, this is something we talked about 0:17:49.680 --> 0:17:54.440 the three a's in that Trump economy story. Neil Data 0:17:54.520 --> 0:17:56.760 good to connect again, Come back soon, partner and head 0:17:56.800 --> 0:18:00.240 of economics at Renaissance Macro Research with. 0:18:00.240 --> 0:18:03.399 Us more from Bloomberg Business Week Daily coming up after this. 0:18:07.800 --> 0:18:11.640 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:18:11.720 --> 0:18:14.400 us live weekday afternoons from two to five e's during 0:18:14.640 --> 0:18:17.840 Listen on Apple Karplay and Android Auto with the Bloomberg 0:18:17.880 --> 0:18:21.280 Business app, or watch us live on YouTube. 0:18:21.680 --> 0:18:24.400 Well, a record setting forty two day US government shutdown 0:18:24.440 --> 0:18:26.960 onopath to end as soon as today. 0:18:27.119 --> 0:18:27.840 We're thinking about that. 0:18:27.880 --> 0:18:30.879 But what's really on our minds is the functionality of 0:18:31.160 --> 0:18:34.280 US political parties, in particular, what is happening with Democrats, 0:18:34.640 --> 0:18:37.359 who some or many have said struggle with a single message, 0:18:37.440 --> 0:18:39.840 especially after some of those monitorates broke away. 0:18:39.960 --> 0:18:43.080 Yeah, it's like got some folks scratching their heads. This 0:18:43.240 --> 0:18:44.120 is after they broke away. 0:18:44.119 --> 0:18:47.480 They dropped their demand to renew expiring Affordable Care Acts 0:18:47.520 --> 0:18:51.520 subsidies ACA, and instead security Republican promise to vote on 0:18:51.600 --> 0:18:55.200 extending Obamacare insurance premium credits by mid December. 0:18:55.320 --> 0:18:57.680 Josh Green is Bloomberg Business Week national correspondent. He's the 0:18:57.720 --> 0:18:59.719 author of several books, including the number one New York 0:18:59.760 --> 0:19:02.720 Times bestseller Devil's Bargain, Steve Bannon, Donald Trump, and The 0:19:02.760 --> 0:19:05.480 Storming of the Presidency. He joins us from our Washington 0:19:05.600 --> 0:19:09.679 DC Bureau. Democrats Josh crossing the aisle to end the shutdown? 0:19:10.119 --> 0:19:12.720 Was it a quote terrible mistake, a Senator Elizabeth Warren 0:19:12.960 --> 0:19:17.199 told reporters. Governor Gavin Newsom called it, quote pathetic or 0:19:17.400 --> 0:19:19.879