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Speaker 2: This is Bloomberg Business Week Insight from the reporters and
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Speaker 2: Podcast with Carol Masser and Tim Stenovek on Bloomberg Radio.
Speaker 3: We do want to kick off this hour with Moran.
Speaker 3: Today's inflation print. US consumer prices rose at the slowest pace.
Speaker 4: In four months.
Speaker 3: That was in the month of February, offering some reprieve
Speaker 3: ahead of tariffs that are expected to drive costs higher
Speaker 3: here in the United States. The BLS saying nearly half
Speaker 3: of the advance though in the overall measure in February
Speaker 3: was due to shelter costs, but it is still decelerating
Speaker 3: from the prior month. So we wanted to get more
Speaker 3: on the print, and we've got a great person to
Speaker 3: do just that.
Speaker 5: We're back with us as Bloomberg Economics US economist store
Speaker 5: Paul he joins us here in any Bloomberg Business Week
Speaker 5: studio a good inflation read. Is there a big caveat here,
Speaker 5: Stuart that it's came before the tariffs have really kicked in.
Speaker 6: That's the first caveat. Yes, they came before most of
Speaker 6: the tariffs kicked in. We get the big retaliatory tariffs
Speaker 6: on April second. Of course Trump doesn't want to do
Speaker 6: it on April Fool's Day. I think that the other
Speaker 6: thing to keep in mind with this report is that
Speaker 6: most of the disinflation came from things like core services
Speaker 6: excluding shelter, some of the supercore services indexes, things like airfares,
Speaker 6: where there was a big seasonal factor dragging down airfares.
Speaker 6: Now we know the demand for air travel hasn't been
Speaker 6: super robust. We heard guidance from Delta. We also could
Speaker 6: just see the TSA numbers. But when you have such
Speaker 6: a big seasonal factor in play accounting for so much
Speaker 6: of the month to month disinflation, I sort of discount
Speaker 6: today's reading. And then beyond that, we do have goods
Speaker 6: core goods excluding autos and including autos boosting inflation both
Speaker 6: headline and core. When you have core goods boosting inflation
Speaker 6: as opposed to providing a minor amount of drag, which
Speaker 6: it typically does, we should be a little bit concerned.
Speaker 6: Add on top of that, used auto prices continuing to
Speaker 6: rise during the month and when you think about auto
Speaker 6: supply chains and auto manufacturing and tariffs coming against Canada
Speaker 6: and Mexico, you have to be a little bit concerned.
Speaker 6: Add on top of all of that.
Speaker 3: Final a lot of additions.
Speaker 4: I'm just going to point.
Speaker 6: Out somehow I go deep into the details and I
Speaker 6: always find, you know, the opposite of a silver lining.
Speaker 6: But the one final one that I would point out
Speaker 6: is that inflation actually became more pervasive. If you count
Speaker 6: the number of core spending line items that are seeing
Speaker 6: excessive inflation right now. Disinflation and deflation became less pervasive
Speaker 6: during the month. So again there are a lot of
Speaker 6: caveats that we actually have to keep in mind when
Speaker 6: we look at this report. It's going to be a
Speaker 6: really long last mile to the FEDS two percent inflation target.
Speaker 3: Is that why initially I think we saw yields back off,
Speaker 3: but we've moved off. I know we had also had
Speaker 3: a treasury auction today, but you've got what a tenure
Speaker 3: right now yielding almost four thirty four point twenty nine,
Speaker 3: and I'm looking at the sure end of the yell curve.
Speaker 3: Of course, most sensitive to what we might get from
Speaker 3: the Fed three ninety seven So is that why.
Speaker 4: We are seeing yield high or what's your thinking that.
Speaker 6: There was a little bit of a treat in rate
Speaker 6: cut bets. We did see a full three cuts for
Speaker 6: the year priced as of last night today after the
Speaker 6: CPI report, we got just about, you know, sixty eight
Speaker 6: basis points or just a touch under three cuts fully priced.
Speaker 6: And I think that that's a part of it. Looking
Speaker 6: at some of the details of this report, it's not
Speaker 6: the most inspiring report, and when we had tariffs coming
Speaker 6: while we have goods adding to inflation, it could be
Speaker 6: a little bit of a problem.
Speaker 5: Was the market reaction to this report incorrect in your view?
Speaker 5: The equity market reaction.
Speaker 6: Look, I mean it's going to be tough for a
Speaker 6: classically trained economist to say that the market is wrong.
Speaker 4: But are allowed to comment.
Speaker 5: We're giving you these is that because the market is
Speaker 5: never wrong.
Speaker 6: I the market is never wrung. I think that the
Speaker 6: retreat in rate cut bets is probably the right move.
Speaker 6: I think that when you start looking at equities, you
Speaker 6: have other things that are in play, including earning's guidance
Speaker 6: and so on.
Speaker 3: So is the Fed fed beating next week right second
Speaker 3: of the year? Is their job getting more difficult based
Speaker 3: on what you say, all these caveats in the inflation
Speaker 3: print reminds us that inflation it ain't over. And then
Speaker 3: you've got tariffs being loaded on.
Speaker 4: So are they in a.
Speaker 3: Tricky spot At the same time we do see signs
Speaker 3: of growth slowing down.
Speaker 7: Yeah, so the FED is in a tricky spot.
Speaker 6: Tariffs make it especially difficult for the FED to achieve
Speaker 6: its dual mandate because you have two things that are
Speaker 6: going on. You have upward inflation pressures that are coming
Speaker 6: from input costs as a consequence of the tariffs. But
Speaker 6: a sort of rebalancing of the economy that comes with
Speaker 6: the implementation of tariffs can be demand destructive. So the
Speaker 6: extent to which those higher input costs can then get
Speaker 6: passed the long to consumer prices isn't abundantly clear quite yet,
Speaker 6: and we know that firms are going to try to
Speaker 6: pass along those costs. Question is just how much to
Speaker 6: man destruction there is.
Speaker 5: You mentioned the airlines, the disinflation that we saw in
Speaker 5: the airlines and the numbers today when it comes to
Speaker 5: airline comes to airline prices. We saw that play out
Speaker 5: yesterday with the market reaction to Delta and American airlines
Speaker 5: coming out and updating their guidance because of soft consumer demand.
Speaker 5: Given everything that we've seen just in the last couple
Speaker 5: of weeks, in your view, how's the consumer doing?
Speaker 7: How is the economy doing?
Speaker 6: We do see higher prices weighing on consumers. We do
Speaker 6: see it in discretionary spending categories. One thing that was
Speaker 6: especially difficult to judge starting in January was the effect
Speaker 6: of weather. Consumers did pull back across the board, But
Speaker 6: one of the reasons why spending was so terrible in
Speaker 6: the month of January is because auto sales were down.
Speaker 6: Nobody wants to spend their time walking on auto dealer's lot.
Speaker 7: During a polar war.
Speaker 6: Attax auto numbers were back up in February, and we
Speaker 6: can expect to see some improvement in retail sales that'll
Speaker 6: come on Monday. Still sharpening our pencils, but overall, it
Speaker 6: does look like consumers are pulling.
Speaker 7: Back quite a little bit.
Speaker 6: We do see credit card default auto loan defaults all
Speaker 6: on the rise, and for that reason, we should expect
Speaker 6: consumers to show a little bit more precautionary savings in
Speaker 6: the months ahead. And when you see consumer consumer sentiment
Speaker 6: and buying plans retreating, you would expect that to be
Speaker 6: reflected in subsequent months and actual spend.
Speaker 3: We are going to talk at the end of this
Speaker 3: hour about the wealth effect, and I am curious if
Speaker 3: you guys are also you and the team sharpening your
Speaker 3: pencils over the idea that with all the volatility that
Speaker 3: we're seeing in the equity markets and stocks pulling back,
Speaker 3: you know, fairly dramatically here in twenty twenty five, that
Speaker 3: for those who are the wealthiest sect of our economy,
Speaker 3: who spend a lot in our economy, there are some
Speaker 3: concerns about that having an economic impact.
Speaker 6: That's right, So of course there is a wealth effect
Speaker 6: that works in both directions. Right, So for every additional
Speaker 6: dollar and accumulated wealth, you could expect a few cents
Speaker 6: of additional spending for those who have the most exposure
Speaker 6: to equity markets, stocks retreating nearly ten percent off the
Speaker 6: all time highs. I think that the thing to though,
Speaker 6: keep in mind is the accumulated wealth since the pandemic.
Speaker 6: It's still something like fifty trillion dollars and accumulated well
Speaker 6: since the pandemic. Yes, what we've seen over the past
Speaker 6: couple weeks puts a dent in it, and it will
Speaker 6: make the upper end of the income distribution a bit
Speaker 6: more cautious in their spending behaviors. Is it the sort
Speaker 6: of thing that's good? Is that negative wealth effect enough
Speaker 6: to derail spending completely? Probably not, And there is still
Speaker 6: plenty of credit that can smooth over any sort of
Speaker 6: bumps in the road real quickly.
Speaker 4: Twenty seconds PPI. What do we need to know?
Speaker 6: Keeping an eye really on PPI for airfares, hospital cost,
Speaker 6: physician services, because that's what ends up going into core
Speaker 6: PCE spending. But based on what we have right now,
Speaker 6: fed's favored inflation index, the PCE price Index should have
Speaker 6: a relatively favorable reading at this point based on what
Speaker 6: we know about February.
Speaker 3: Great stuff as always, Stuart, Thank you so much, Bloomberg
Speaker 3: Economics US economist Stuart Paul, all right, the latest US
Speaker 3: inflation print may ultimately cause some relief ahead of US tariffs.
Speaker 4: The tariffs are happening tim.
Speaker 5: At twelve oh one am this Wednesday morning, President Donald
Speaker 5: Trump's twenty five percent tariffs on steel and aluminum imports
Speaker 5: came into force. It triggered concern across export reliant Asia
Speaker 5: and immediate reprisals from the European Union in Canada as
Speaker 5: the global trade war enters a rocky phase, Carol. Meantime,
Speaker 5: Canada announced new twenty five percent tariffs on about twenty
Speaker 5: point eight billion dollars of US made products, including steel
Speaker 5: and aluminum.
Speaker 8: Yeah.
Speaker 3: Indeed, and these retaliatory measures by Canada will also apply
Speaker 3: to consumer items such as computer sporting goods. They match
Speaker 3: the US tariff's dollar for dollar, and they're going to
Speaker 3: take effect at twelve oh one am New York time.
Speaker 3: All right, so let's get an update on this tariff
Speaker 3: trade war between the US and Canada as it relates
Speaker 3: in particular to the metals market in industry back with
Speaker 3: US as Bloomberg News Metals and Mining Heavy Machinery reporter
Speaker 3: Jodoe an expert on this space. So all right, not
Speaker 3: fifty percent, twenty five percent? How does that change any
Speaker 3: of the conversation like that we had with you yesterday.
Speaker 9: I think it goes back to what most of the
Speaker 9: market was expecting, what most buyers were anticipating, and what
Speaker 9: producers were anticipating. And to be clear, none of them
Speaker 9: wanted this on either side. Well, I mean American steelmakers
Speaker 9: probably did to some level, but people actually making business
Speaker 9: decisions are saying, Okay, well, at least we got what
Speaker 9: we were planning for the past month or so. I
Speaker 9: think that's the first part. The fact that the fifty
Speaker 9: percent did get walked back allowed for people to breathe.
Speaker 9: I spoke to I spoke to somebody in the market
Speaker 9: today in the steel market, who said, yesterday it was hectic,
Speaker 9: but today I'm getting almost no phone calls.
Speaker 4: And are they making trades.
Speaker 9: Well, they're in the service center space, so they don't trade,
Speaker 9: but they do supply important end markets in the United States.
Speaker 7: Can you just you know?
Speaker 5: Fortunately, at Bloomberg, we have a great feature on the
Speaker 5: terminal where I can go and look at this chart
Speaker 5: from our bloombergy economics team that has tariffs and when
Speaker 5: they were enacted and what's expected to That's super helpful
Speaker 5: for me because I'm having trouble keeping track of all this.
Speaker 9: It's helpful for me too.
Speaker 5: Okay, remind us why these were imple in the first place,
Speaker 5: and what the off ramp for these are.
Speaker 9: The Trump administration put twenty five percent steeled terriffs and
Speaker 9: ten percent aluminum terraffs into place back in twenty eighteen
Speaker 9: as a part of his initial move on trade. In
Speaker 9: the years since, the United States gave exemptions to various
Speaker 9: countries and various products for these for these imports for
Speaker 9: various reasons, and many of them were approved under the
Speaker 9: Trump administration and others were approved under the Biden administration.
Speaker 9: Trump sat down in the early part of his term
Speaker 9: and probably was even having conversations before he got into
Speaker 9: office in which the steel lobby and various individuals in
Speaker 9: the aluminum lobby said you got to get rid of
Speaker 9: the exemptions because they're no longer having the impact of
Speaker 9: giving more production and more profit to the producers inside
Speaker 9: the United States. So he clearly sat down with his
Speaker 9: advisors and said, we're going to re implement it with
Speaker 9: no exemptions, and by the way, we're going to bump
Speaker 9: up the aluminum tariff to twenty five percent.
Speaker 5: But there is there is this related at all to
Speaker 5: border crossings or fentanyl or is there an off ramp
Speaker 5: for these in the near future.
Speaker 9: Section two thirty two is what he okay.
Speaker 5: So they implemented this on security.
Speaker 9: Right, So I think a key thing right, and this
Speaker 9: is a great question, right, is he knew and his
Speaker 9: administration knew that the Section two thirty two terrifts in
Speaker 9: twenty eighteen had been tested in the courts and they
Speaker 9: had stood up because Section two thirty two was implemented
Speaker 9: under Kennedy right and gives the authority to the President
Speaker 9: of the United States broad reaching power to implement terriffs
Speaker 9: on imports that they deem threaten national security. So under
Speaker 9: that umbrella, they were able to re implement that statute
Speaker 9: with the twenty five percent tariff and pull off all
Speaker 9: the exemptions. That's why this this in particular, had nothing
Speaker 9: to do with the Mexico Canada across the board tariffs.
Speaker 9: That's why this one went into effect. And for the
Speaker 9: most part, people in the markets in the steel and
Speaker 9: aluminum market said, Okay, well, maybe we're not pumped with this,
Speaker 9: but at least we know how it works.
Speaker 4: Well, do they feel like that's it?
Speaker 3: Because the reason I asked you about the trade, and
Speaker 3: you're right, it was not the right company to be asking.
Speaker 3: But one of the things that stuck with me from
Speaker 3: what you said yesterday that the folks that are trading
Speaker 3: in these markets are free to even make a bet
Speaker 3: because it's just things change and it's not just you know,
Speaker 3: weekly changes, monthly changes, it's like hourly changes.
Speaker 9: And it's largely because of the President of the United
Speaker 9: States coming out and saying, unexpectedly, we're putting we're putting
Speaker 9: tariffs on all imports from Canada and Mexico, right, and
Speaker 9: then days later saying, actually, we're going to delay that,
Speaker 9: and then later on coming out and saying we're going
Speaker 9: to do something called reciprocal tariffs. These are things that
Speaker 9: people in my markets that I cover steal on aluminum
Speaker 9: that is like a totally different component that was not
Speaker 9: on their radar, that they had to start figuring out
Speaker 9: what it actually meant to their markets. And as I
Speaker 9: said to you guys yesterday, the anecdote of the person
Speaker 9: putting on a copper trade right, that was, oh my gosh, Okay,
Speaker 9: So he's we think he's going to put import terriffs
Speaker 9: on a lot of things, and we think copper might
Speaker 9: be one of the things. And the President the United
Speaker 9: States comes out at the end of January and says,
Speaker 9: steal on aluminum, terariffs are coming back on and by
Speaker 9: the way, we're going to do copper too. Well, suddenly
Speaker 9: you see the price of copper go up that trader says, great,
Speaker 9: that's a good play for us. And then by Monday,
Speaker 9: the President of United States comes back out and says, actually,
Speaker 9: we're going to walk a few things back, including copper,
Speaker 9: which we might have to do a Section two thirty
Speaker 9: two investigation on. So it's unclear that we might actually
Speaker 9: do this.
Speaker 7: Oh, go ahead.
Speaker 9: So these traders are saying, that's the uncharted territory. We
Speaker 9: know Section two thirty two for stealing aluminum, but all
Speaker 9: these other terriffs are new, and they're coming under things
Speaker 9: like IPA, like trade terrifts that weren't actually put into
Speaker 9: place the first time around. So the Trump administration this
Speaker 9: time around has deald even further into books that were
Speaker 9: dusted off. I mean section two thirty two. I had
Speaker 9: trade lawyers tell us in twenty eighteen, we didn't know
Speaker 9: what Section two thirty two was. We had to actually
Speaker 9: go back into the stacks to read up everything to
Speaker 9: understanding in a long time. And listen. I spoke to
Speaker 9: wilber Ross a month ago and asked him some follow
Speaker 9: up questions on this, and he did make the point. Remember,
Speaker 9: Section two thirty two was tried in the courts and
Speaker 9: was upheld and he knows that is one tool he
Speaker 9: has in his back pocket that he can go through
Speaker 9: with the president does the president of United States, And
Speaker 9: that's what we saw go into effect last night at
Speaker 9: twelve o one or this morning.
Speaker 5: So essentially, the new tariffs that have been imposed this week,
Speaker 5: they've been tested in the mechanism, has been tested in
Speaker 5: the courts.
Speaker 7: That's right.
Speaker 5: These are in the view of the prop Trump administration.
Speaker 5: These are safe, These are good to go.
Speaker 9: These won't be challenged probably, so that's probably how they feel.
Speaker 10: Now.
Speaker 9: The question is will they walk some of it back,
Speaker 9: in other words, will they go into exemptions. That's unclear
Speaker 9: to me. But we did have reporting in our main
Speaker 9: bar story yesterday that we knew of a meeting between Alcoa,
Speaker 9: the CEO of Alcoa, Bill Opplinger, some Rio Tanto officials,
Speaker 9: and the US Aluminum Association president in which they sat
Speaker 9: down with the Commerce Department in the past couple of
Speaker 9: weeks telling the Commerce Department you need to not implement
Speaker 9: the aluminum terras on imports from Canada. Now they had
Speaker 9: the conversation, which at least indicates to the market that
Speaker 9: they're listening to people. So maybe they end up do
Speaker 9: giving exemptions. But as of this point, Trump made it
Speaker 9: very clear we're not giving any exemptions. And remember, the
Speaker 9: biggest people who are against exemptions are the US steelmakers,
Speaker 9: New Core Corporations, Steel Dynamics, US Steel, and Cliffs all
Speaker 9: came out with a letter on Friday and said, mister President,
Speaker 9: do not give exemptions because that will just undo everything
Speaker 9: that we have here.
Speaker 4: Don't ever go away.
Speaker 3: No, it's just it's a complicated, and as Jim said,
Speaker 3: we're trying to keep up to date on what's new,
Speaker 3: what's old, what's on top of each other, because it
Speaker 3: makes a difference in terms of the implications for the industry,
Speaker 3: for companies, for costs, for inflation.
Speaker 4: For the economy. Thank you, Thank you.
Speaker 3: Bloomberg News Medals and Mining Heavy Machinery reporter Jode, who
Speaker 3: is never going to leave us.
Speaker 2: You're listening to the Bloomberg Business Week podcast. Catch us
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Speaker 2: or watch us live on YouTube.
Speaker 10: Well.
Speaker 3: With a lot continuing to come out of the White
Speaker 3: House and Trump administration regarding Tariff's, geopolitics and so much more.
Speaker 3: We wanted to do deep dive into how the United
Speaker 3: States relationship with the world is changing short term and
Speaker 3: possibly longer term, and to try and really suss out
Speaker 3: what President Trump's an endgame and agenda may be when
Speaker 3: it comes to the global role of the US government.
Speaker 3: And to that we turn once again to Ed Price.
Speaker 3: He's a former British Trade official official now non resident
Speaker 3: Senior Fellow over at NYU. He has advised members of
Speaker 3: the European and British parliaments, writes regularly about politics, economic
Speaker 3: policy and more just tying it all together, and he
Speaker 3: joins us here in studio.
Speaker 7: Welcome, Welcome, Thank you very much, Carol.
Speaker 3: You were doing okay, like trying to keep up with
Speaker 3: the headlines and make sense of it all. And I
Speaker 3: think we too are all trying to think longer term change.
Speaker 3: Disruption We talk about it all the time. Can be
Speaker 3: good and we'll get to that in just a moment.
Speaker 3: But you have a recent column he wrote about for Barons,
Speaker 3: and you get into how President Trump's rise marks the
Speaker 3: end of a long progressive era in the United States,
Speaker 3: and you seize on at least you kick it off
Speaker 3: the column with something that the President said in his
Speaker 3: recent joint address to Congress, saying he wants the United
Speaker 3: States to be the most dominant civilization over ever to
Speaker 3: exist on the face of this earth.
Speaker 4: So what is he striving for? What is he in
Speaker 4: your view?
Speaker 11: In my view, he is a good thing for America,
Speaker 11: the nation, and America the democracy, because everybody's talking about
Speaker 11: America and the democracy, and we're sitting here doing this again.
Speaker 11: And he is potentially a very bad thing for the
Speaker 11: Republic and the Union and the United States. And it
Speaker 11: might seem strange to make that distinction, because as things stand,
Speaker 11: we very often think of those things as the same. Right,
Speaker 11: we will say USA and we'll say America interchangeably. And
Speaker 11: as I try to argue in this column, I may
Speaker 11: be wrong. I think that Trump's absolute structural purpose, is
Speaker 11: foundational purpose, is to split those two things in half,
Speaker 11: to get them away from the war from the other.
Speaker 5: Explain how he does that and what that means. People
Speaker 5: might hear you and say, wait a second, these things
Speaker 5: sound like something that are inextricably bound.
Speaker 7: So they're not.
Speaker 11: In my opinion, right, seventeen seventy six is the moment
Speaker 11: that the American nation was born and it was born
Speaker 11: of breaking the law and defying a king. So that's
Speaker 11: the rebelliousness, right, that's the flags on the back of pickups.
Speaker 11: It's great, it's all American. Seventeen eighty nine, when the
Speaker 11: Constitution is ratified, is the moment that we chose to
Speaker 11: be legalists and chose to be a republic. Alexander Hamilton
Speaker 11: in that intereigrament was saying, look, should we have a
Speaker 11: king right? And they were arguments about how powerful the
Speaker 11: president should be. These arguments have never been resolved, and
Speaker 11: we saw with Nixon, we saw with Kennedy the imperial presidency,
Speaker 11: because again, we haven't decided as a nation what exactly
Speaker 11: our republic is fought. So, if President Trump truly wanted
Speaker 11: to create a presidency with unlimited powers, he wouldn't be
Speaker 11: able to do it within the existing seventeen eighty nine
Speaker 11: United States framework.
Speaker 7: He would have to somehow.
Speaker 11: Appeal to the seventeen seventy six animal spirits to misuse
Speaker 11: the term of the nation.
Speaker 4: So is that where doge comes in?
Speaker 7: Doge goodness me?
Speaker 11: So Elon Musk is supposed to be a genius. He
Speaker 11: doesn't realize he's the foe gay right, he's the four guy.
Speaker 11: He's going to be ousted at some point when DOGE
Speaker 11: goes too far, which it will probably into entitlements.
Speaker 4: Trump will need, which is what they are dealing with,
Speaker 4: which is what they want.
Speaker 7: To do as we speak.
Speaker 11: Trump is going to need someone that wasn't affirmed by
Speaker 11: this confirmed by the Senate to get rid of quickly,
Speaker 11: and that's Musk. And I think we saw Musk on
Speaker 11: Fox the other day sweating it a little bit with
Speaker 11: Kudlog because it looked like he's starting to realize that
Speaker 11: maybe he's in trouble. His businesses aren't doing very well
Speaker 11: and so on. So DOGE is the kind of battering ram.
Speaker 11: It's like the vanguard that's seeing how far, like a
Speaker 11: test balloon, how far this stuff can go, and when challenged,
Speaker 11: must will be quite easy to peel off.
Speaker 3: Well, when is I just you know, because I think
Speaker 3: it's safe to say that some have thought government has
Speaker 3: gotten really big, and there's some security in that in
Speaker 3: that you don't move fast and break things that maybe
Speaker 3: shouldn't be broken. But at the same time, it's very
Speaker 3: easy to get lazy over existing structure, and waste does
Speaker 3: get created. And you know whether it's you know, so,
Speaker 3: what's the balance between good efficiency and disruption, especially.
Speaker 4: In a government like the United States.
Speaker 7: Well, I guess there's two points. Right.
Speaker 11: One is that whether or not the American people want
Speaker 11: a big government is debatable. That's why we have elections.
Speaker 11: Whether or not the Americans want an all powerful government
Speaker 11: was already decided at the aforementioned Constitutional Congress, Right, So
Speaker 11: I'm very careful to try and prize away an efficient
Speaker 11: government from the size of the government. Donald Trump wants
Speaker 11: a smaller government, which he then says is more efficient.
Speaker 11: So those of us who are worried, and this is
Speaker 11: the second point, those of us who are worried about
Speaker 11: fiscal and debt, will go, Okay, that makes sense, But
Speaker 11: that's disingenuous because what he actually wants is a more
Speaker 11: powerful government.
Speaker 4: He wants a concentration of power.
Speaker 7: Scentration of power.
Speaker 11: So Lord Acton famously says that power corrupts, and absolute
Speaker 11: power corrupts.
Speaker 7: Absolutely.
Speaker 11: I think power accumulates as well, and this is what
Speaker 11: we should be watching for.
Speaker 5: I want to go back to what you said about
Speaker 5: Elon and Doge, because I think a lot of people
Speaker 5: have been proven wrong over the past few months. When
Speaker 5: they said this is a honeymoon that is going to
Speaker 5: end badly. These two look pretty.
Speaker 7: Close at this point.
Speaker 5: And given Elon's status as the wealthiest person in the world,
Speaker 5: he proved in this election cycle that he's incredibly powerful
Speaker 5: with helping to elect people.
Speaker 10: Mm hm.
Speaker 7: And you'll say he might be there longer than I think.
Speaker 5: I think I am, yeah, just because he has the resources,
Speaker 5: and you know, he has said he wants to use
Speaker 5: these in other parts of the ballot.
Speaker 11: So the president with respect has a long and storied
Speaker 11: history of using and discarding people. And I don't think
Speaker 11: that Elon Musk rule of his wealth is I.
Speaker 5: Mean, there are many books written by those people who
Speaker 5: want there's ascribe.
Speaker 11: There's a library of people that have been have been
Speaker 11: let down by the president?
Speaker 7: Shall we say?
Speaker 11: I guess I'm contending. I mean I can see too
Speaker 11: that maybe the time is something I can possibly forecast.
Speaker 11: But I think the function of putting Musk into this
Speaker 11: thing called doge is that he's easy to get rid of.
Speaker 11: He's easy to point out later and say this guy
Speaker 11: made these mistakes, not me right, and at that point
Speaker 11: he's gone.
Speaker 3: So when you hear things like Canada and this is
Speaker 3: something I think we all too are asking ourselves. You
Speaker 3: know again, what is the endgame here? Do you think
Speaker 3: in terms of President Trump?
Speaker 11: Honestly, I mean I might regret saying this. Okay, maybe
Speaker 11: this is my last appearance on your show.
Speaker 7: I don't know. I think he's serious. I think he's serious.
Speaker 3: Canadians are if we if it ever comes off kind
Speaker 3: of jokey on air, I'll be honest with you.
Speaker 4: We've had people reach out and say, hey, this is serious.
Speaker 7: We don't think this is a I think it's dead serious.
Speaker 11: I think Donald Trump's vision is a big sharpie around
Speaker 11: the entire of North America, including Greenland, with Trump Land
Speaker 11: written on it. And I think that there's some strategic
Speaker 11: sense to this, right because of the world of you know,
Speaker 11: you look at the Second World War, it was just
Speaker 11: who can get the biggest load of resources in one place.
Speaker 11: And if you look at Russia and China, they kind
Speaker 11: of have Eurasia on lock. So it would strategically make
Speaker 11: sense for the America, the North Americans to converge together,
Speaker 11: if not for the fact that we don't behave like that.
Speaker 11: And the very reason for this country is law. As
Speaker 11: I said, seventeen eighty nine. So the seventeen eighty nine
Speaker 11: edition of the United States cannot annex Canada. It tried,
Speaker 11: it failed, It just didn't work. But the sort of
Speaker 11: pre seventeen seventy six bubbling rebelliousness of the nation might
Speaker 11: And I feel that he's, as I say, dead serious.
Speaker 5: If he's dead serious, are you saying or predicting that
Speaker 5: he might in fact try to make Canada the fifty
Speaker 5: first state.
Speaker 11: I don't know that he would make it the fifty
Speaker 11: first state. I feel like that's a meme, but I
Speaker 11: think he would try to bring heal. He talks about
Speaker 11: it all the time, and Hue might or be it.
Speaker 11: I imagine that the Republicans would never be elected again
Speaker 11: because all of my Canadian friends are pretty liberal. I
Speaker 11: don't know how that works, right, but I think that
Speaker 11: what he wants is some control over the North American hemisphere.
Speaker 11: It's almost like the Monroe Doctrine is being extended north
Speaker 11: and being extended north at the expense of these polities
Speaker 11: that already exist, in particular Denmark and Canada.
Speaker 3: If we go along with your thinking, and some others
Speaker 3: think that he too is not kidding, is it something
Speaker 3: that could happen without US military action.
Speaker 11: Well, I mean at some point the Canadians would not
Speaker 11: be happy about this, right, I mean, you can't tell
Speaker 11: us sovereign state you now belong to us. Others have
Speaker 11: tried that in history, Napoleon, Stalin, Hitler, and it never
Speaker 11: ends well. So I think that the US military would
Speaker 11: have to at some point invade. I mean this again,
Speaker 11: it's like amazing to hate yourself say this on a
Speaker 11: live stream. So I don't think Canada.
Speaker 3: But to be fair, the president has talked about it,
Speaker 3: So start kind of carrying it out, like how this
Speaker 3: might happen?
Speaker 11: Sure, Sure, I think I think it's not impossible. I
Speaker 11: mean you could come in from Greenland. We have bases there.
Speaker 5: We're Bloomberg. We got to talk market's big picture and
Speaker 5: the way that they have responded to big picture President
Speaker 5: Trump's policies over the last few weeks, or what they
Speaker 5: view as his policies. Do you think it's fair to
Speaker 5: say that the equity and bond markets have not necessarily
Speaker 5: been a check on the president.
Speaker 11: He said to himself, to him, right, you don't look
Speaker 11: at the stock market anymore?
Speaker 5: Yeah, But I mean he said a lot of things
Speaker 5: he said, you take that to heart.
Speaker 7: I think he's unrestrained. I think at this.
Speaker 11: Point he's he's not thinking about popularity in the way
Speaker 11: that he has previously. Something has changed in his demeanor.
Speaker 5: He's not running for reelection, so or.
Speaker 11: Well, I mean, let me respect that he's not supposed to.
Speaker 7: He's not supposed to run for reelection. Again.
Speaker 3: This is whole goes back to this whole thing.
Speaker 7: This is this whole thing.
Speaker 11: I think he's fundamentally trying to reshape North America. I
Speaker 11: think Russia is a distraction. We of course, we have
Speaker 11: to talk about markets race, so I don't want to
Speaker 11: pivot away from that. Yeah, but the question for me
Speaker 11: is China. Is he getting ready to hand Taiwan over
Speaker 11: py Ukraine?
Speaker 3: And full credit to our producer Ceci because she said,
Speaker 3: you know, as we were planning for this about how
Speaker 3: Trump and his cabinet have signaled that they're content to
Speaker 3: sit back on Taiwan and China. You have Treasury Secretary
Speaker 3: Pssent even said he doesn't see China taking action against
Speaker 3: Taiwan in this term. So what does this messaging tell
Speaker 3: you is the seating ground on global democracy? Should we
Speaker 3: feel confident that Trump's presence is enough of a deterrent.
Speaker 4: Only got about forty five to fifty seconds.
Speaker 11: Democracy is okay because we voted for him. The republic
Speaker 11: might not be. And this is what I mean. It
Speaker 11: might be that there's a period of massive populism in
Speaker 11: this country, including the seating of Taiwan, and democracy in
Speaker 11: Taiwan is in trouble, But in this country it's doing
Speaker 11: pretty well. And that's a real head scratcher, right, because
Speaker 11: we may choose to abandon democratic allies.
Speaker 4: But democracy would continue here.
Speaker 7: Democracy here, I think for a while.
Speaker 3: Yep, I'm going to squeeze in one more question because
Speaker 3: your column ends with all of this political disruption doesn't
Speaker 3: necessarily mean the end of an era, but rather the
Speaker 3: beginning of one.
Speaker 4: Twenty five seconds.
Speaker 11: Said it before, Trump wants some sort of empire, some
Speaker 11: sort of imperium. I don't know if you would brand
Speaker 11: it like that. I don't know if you would be
Speaker 11: honest like that. But at core, he wants to solidify power,
Speaker 11: move himself to send to stage, and create some kind
Speaker 11: of autaki in North America.
Speaker 4: Always an interesting perspective in view at Price.
Speaker 3: Thank you so appreciate you coming in, Senior fellow non
Speaker 3: resident at NYU, former British trade official.
Speaker 4: Right here on Bloomberg Business Week.
Speaker 1: You're listening to the Bloomberg Business Week podcast. Catch us
Speaker 1: Live weekday afternoons from two to five these during listen
Speaker 1: on Applecarplay and Android Otto with the Bloomberg Business app,
Speaker 1: or watch US Live on YouTube.
Speaker 7: So much of the.
Speaker 5: Focus on tariffs this week has been around what's going
Speaker 5: on in Canada.
Speaker 4: Canada?
Speaker 5: Yeah, like a lot.
Speaker 7: A lot.
Speaker 5: Jo Joe gave us a good update on that earlier.
Speaker 4: Back and forth.
Speaker 5: Yeah, but let's not forget that earlier this month, the
Speaker 5: US and post twenty five percent tariffs on USMCA non
Speaker 5: compliant goods. This information I got thanks to a great
Speaker 5: Bloomberg compilation of the measures that happened.
Speaker 8: Is obsessed.
Speaker 5: I was like, Carol, you got to see this thing, and.
Speaker 4: Helix stood over me on my desk.
Speaker 5: No, no, no, I'm gonna send this to you.
Speaker 3: Pull it up, pull it up.
Speaker 5: Pay Yeah, it's really helpful. So if you have to
Speaker 5: check it out on the terminal Mexico for its part.
Speaker 4: How do you get it?
Speaker 7: I don't know.
Speaker 4: Oh, okay, I'll set you'll figure it out.
Speaker 5: We'll figure it out. You tweeted out, I was hoping
Speaker 5: you wouldn't ask me how to get it. Mexico, for
Speaker 5: its part, will wait until seeing what US policy is
Speaker 5: unveiled on April second before taking any steps to respond
Speaker 5: to tariffs. This is for Mexican President Claudia Shinbaum. She
Speaker 5: said this earlier today. Mexico is the US's largest trading partner,
Speaker 5: it's the second largest economy in Latin America, and it's
Speaker 5: a key focus of this year's Milk and Global Opportunity Index. It's,
Speaker 5: in the Institute's words, something that explores the economic landscape
Speaker 5: of countries worldwide, del businesses make investment decisions, and governments
Speaker 5: identify policies for attracting foreign capital. Maggie sweet Tech is
Speaker 5: Senior director of Research at the Milican Institute. She's also
Speaker 5: the lead author of the report. She joins US from
Speaker 5: Santa Monica, California. Maggie, did this report and how you
Speaker 5: went into it change it all given what we've heard
Speaker 5: from the Trump administration just in the first couple of
Speaker 5: first few weeks of this administration.
Speaker 10: No, it hasn't really so, as you mentioned the top end.
Speaker 10: As we mentioned in the report, this report really provides
Speaker 10: an objective benchmark for evaluating developative attractiveness of countries for
Speaker 10: foreign investors. And so the fundamentals of the attractiveness of
Speaker 10: the countries hasn't changed. The situation around perhaps this are
Speaker 10: very evolving. But the factors that we measure in the
Speaker 10: Global Opportunity Index, such as the abundance of human and
Speaker 10: natural resources and other aspects business perception, are the strength
Speaker 10: of the financial services and financial markets. Those factors really
Speaker 10: have not been affected by you know, the pivots that
Speaker 10: have been happening lately.
Speaker 5: But what if the difficulty in bringing a product into
Speaker 5: the United States is affected by this administration and it
Speaker 5: makes it less attractive to perhaps build a factory in
Speaker 5: a place like Mexico. If a tariff of twenty five
Speaker 5: percent will be charged on that good when it does
Speaker 5: come over the border, doesn't that need to be taken
Speaker 5: into account.
Speaker 8: Well, that does need to be taken into account.
Speaker 10: However, what I will say is that again, this report
Speaker 10: really looks at the fundamentals, what is at the basis,
Speaker 10: So what will change is capital flows probably and the short, medium,
Speaker 10: and possibly long term. Now, these countries such as for example,
Speaker 10: you were talking about Mexico. Mexico is one of the countries
Speaker 10: with the highest level of economic openness on our index,
Speaker 10: and it's economic openness not stems, of course from its
Speaker 10: strong relations with countries such as the United States, but
Speaker 10: also from the abundance of international free trade agreements that
Speaker 10: has with countries across the world. So while United States
Speaker 10: is of course very important and the main trade partner
Speaker 10: from countries such as Mexico, they also have connections across
Speaker 10: the world and those so far had not been affected
Speaker 10: by the changing the in trade situation.
Speaker 3: Well, and I think Maggie to Tim's point, like just
Speaker 3: you know, we feel it. We talked to a lot
Speaker 3: of folks who manage a lot of money, you know,
Speaker 3: trying to make decisions, trying to make sense, you know,
Speaker 3: in some cases kind of being in limbo until we
Speaker 3: understand kind of what policy really what it will amount to,
Speaker 3: because it can sometimes seem to in terms of conversations
Speaker 3: or comments out of the White House change from hour
Speaker 3: to hour, from week to week, from day to day.
Speaker 3: So I'm just wondering what that, you know, I think
Speaker 3: we're trying to get into.
Speaker 4: Does the world does the world kind of feel.
Speaker 3: That way, whether it's Latin America, South America or elsewhere.
Speaker 8: I'm sure it does.
Speaker 10: And so what I would say is that because of
Speaker 10: that precisely is why I would say that all of
Speaker 10: the information that has been coming out, it's a bit
Speaker 10: too soon to judge what effects is going to have
Speaker 10: in the medium and long term. However, what we can
Speaker 10: look at is again the basis of what already has
Speaker 10: been established in those countries. As you were saying yourself
Speaker 10: at the top, there are also the terrors that were
Speaker 10: imposed last week right now, they do not apply to
Speaker 10: USMCA compliant roots. A lot of the lot of the
Speaker 10: trade that is happening between Mexico and the United States
Speaker 10: is within those sectors that are.
Speaker 8: Compliant with the USMCA.
Speaker 10: So again, you know, we really, I think everybody still
Speaker 10: has to figure out how this will what will actually
Speaker 10: end up happening in the in the medium term, and how.
Speaker 8: This will impact capital enflos.
Speaker 10: Now, however, within that framework, the Global Opportunity Index does
Speaker 10: provide information about what are the potential attractive factors for countries,
Speaker 10: for countries within Latin America, whether the person could still
Speaker 10: be strengthened within that region, and so that really provides
Speaker 10: a little bit more of information that will that should
Speaker 10: apply in the long term regardless.
Speaker 8: Of what happens well, Maggiet with the current trade situation, well, it.
Speaker 5: Raises the question though the Trump administration has been very
Speaker 5: forceful in saying that it wants to make it better
Speaker 5: for companies to do business in the US and worse
Speaker 5: for companies to do business outside of the United States.
Speaker 5: We hear this every day or something along those lines
Speaker 5: every single day from the President. You focus at the
Speaker 5: Milking Institute on global opportunity. Does the global opportunity for
Speaker 5: companies and for governments decline with an American first policy
Speaker 5: because America becomes a more attractive place to do business?
Speaker 8: Well, so I would say again.
Speaker 10: That that whether America becomes more attractive or not depends
Speaker 10: on multiple factors. There are a lot of the United
Speaker 10: States is ranked third on our Global Opportunity in Texas here,
Speaker 10: so it definitely is a country that has a very
Speaker 10: high attractiveness to investors. It has and that is without
Speaker 10: saying right, So, how does again, will shape the capital
Speaker 10: flows across across countries is stough to be seen.
Speaker 8: There. It is important to also know that a.
Speaker 10: Lot of the factors that are being produced, all of them.
Speaker 10: A lot of the manufacturing that is produced to the
Speaker 10: United States is dependent on components that comes from abroad,
Speaker 10: so a certain level of exchange may still be very
Speaker 10: favorable to countries. How much production happens within the United States.
Speaker 10: Of course, it's good to bring production inside the borders,
Speaker 10: but not everything can be produced within the United States.
Speaker 3: No, that's fair, and we've certainly heard that from other
Speaker 3: folks in this studio.
Speaker 4: Maggie, thank you so much. Maggie sweet Tech.
Speaker 3: She's senior director of research at the Milcoine Institute, lead
Speaker 3: author of the report that we were just talking about.
Speaker 3: She's joining us from the West Coast on this Wednesday.
Speaker 2: Mac, Now about you let me drive?
Speaker 1: Oh no, no, no, no, this is not a twenty.
Speaker 2: Day please, I want to drive.
Speaker 8: It's a good question.
Speaker 2: This is the drive to the clothes.
Speaker 8: Dot Punk for me.
Speaker 12: Effect.
Speaker 2: Well, Jona Don on Bloomberg Radio, you.
Speaker 5: Just heard from Charlie and Bill Maloney the kind of
Speaker 5: round trip that we saw in the US stocks.
Speaker 8: Where was he?
Speaker 5: Bill's in New Jersey? I think I don't know where
Speaker 5: he is. You can never tell with that background. No,
Speaker 5: but he's allowed to work out of the office.
Speaker 7: One day away.
Speaker 4: He can do it anyway.
Speaker 5: That guy is here by the way, like you know,
Speaker 5: pre six am or pre five hour.
Speaker 4: He really is judgment judgementcall.
Speaker 5: You highlighted something really interesting today in our prep you.
Speaker 5: This is from the Market's Life blog. The word uncertainty
Speaker 5: is appearing on the Bloomberg terminal at its fastest paced
Speaker 5: since November of twenty twenty, as global markets are whipsawed
Speaker 5: by trade wars and recession fears.
Speaker 3: I love stuff like this when we go through either
Speaker 3: earning season and what you know, CEOs are using the most.
Speaker 5: And I love the word clouds.
Speaker 3: Word clouds right cool. Just you know whether or not
Speaker 3: it becomes a reality. But sentiment is an important thing
Speaker 3: in terms of markets.
Speaker 5: Hey, let's figure out what Philip Palumbo is thinking. He's
Speaker 5: founder and CEO and CIO at Plumbo Wealth Management. He
Speaker 5: joined us from Great Neck, New York. Philip, good to
Speaker 5: have you back with us. It has been a while
Speaker 5: since we spoke. What are you hearing from your clients
Speaker 5: right now? As we've seen market's whips over the last
Speaker 5: couple of weeks.
Speaker 12: Don't use the word perfectly uncertainty. I mean it's a
Speaker 12: word that everybody's using. Everybody's very fearful of Trump, and
Speaker 12: is the way he's erratic, and how quickly he's moving
Speaker 12: forward with all his game plan that he talked about
Speaker 12: during the campaign. Nobody realized, really thought that he'd move
Speaker 12: as quickly as as he is moving. And it's scaring
Speaker 12: a lot of clients.
Speaker 5: So do they understand do they buy into this notion
Speaker 5: and do you buy into this notion that the president
Speaker 5: is not paying attention to financial markets or does not
Speaker 5: care about what he sees with financial markets? As he said, Yeah,
Speaker 5: I don't buy into that.
Speaker 12: No, So I think he's got one eye on tariffs
Speaker 12: and one eye on the overall market. I definitely think
Speaker 12: it's really important to him to understand the account where
Speaker 12: the economy's going, where the market's going, because Trump is
Speaker 12: a scorecard type person and I can't imagine he's not
Speaker 12: really looking at the markets. And at some point there'll
Speaker 12: be a Trump put that will be put into place.
Speaker 3: So in terms of where you want to put money,
Speaker 3: then are you trading for maybe future Trump headlines that
Speaker 3: might undo tariffs and undo some other things like how
Speaker 3: do you kind of get your head around it? Then
Speaker 3: fail in terms of if you think that ultimately he's
Speaker 3: going to look at the markets and maybe, you know,
Speaker 3: see some of the impact and then will we.
Speaker 4: Undo some of the things that he's done already In your.
Speaker 12: View, it's a lot bigger than that. It's more about
Speaker 12: the way I describe it is you have you know,
Speaker 12: one side of the barbell is the tariffs, and you
Speaker 12: got the doge, which is the cutting of the deficit,
Speaker 12: which is really contracts an economy. The other side of
Speaker 12: it is deregulation and the extension of tax cuts, which
Speaker 12: actually can improve an economy. And it's his bed. And
Speaker 12: you know Besson talked about this last week. You know
Speaker 12: that they're trying to go from public spending government public
Speaker 12: spending to private spending, and if they get that right,
Speaker 12: that's going to be beneficial to the overall economy. So
Speaker 12: for us, it's not about trading, it's about Okay, you know,
Speaker 12: uncertainty creates opportunity, Volatility creates opportunity. And if you look
Speaker 12: at someone these businesses, I mean, if you want to
Speaker 12: look at the mag seven and video and Amazon as
Speaker 12: an example, and these these businesses, they're they're multiple has
Speaker 12: been cut in half, right, So when they're growing at
Speaker 12: ten to fifteen, twenty percent or thirty percent or even
Speaker 12: greater than that. And look at the forward multiple the
Speaker 12: market trading pretty much where they're trading, and the SMPS
Speaker 12: projected to grow this year around seven. So there's always
Speaker 12: opportunities with volatility. You know, people got to get excited
Speaker 12: about this opportunity with volatility because it's an opportunity to
Speaker 12: put money to work with great businesses over the long term.
Speaker 12: Now just caveat is is can it go lower?
Speaker 9: Yeah?
Speaker 12: Can we get a bear market? Can we go into recession?
Speaker 12: You absolutely can. Nobody can time that, nobody can figure
Speaker 12: that out. You just have to look at opportunities as
Speaker 12: it comes to you in buying great businesses at a
Speaker 12: cheap price.
Speaker 5: Well, I want to talk about some of those companies
Speaker 5: that you do argue are great businesses. Some of the
Speaker 5: stock picks that you sent along to our producer, Paul Brennan,
Speaker 5: North of Grumman on your radar ticker NOC down three
Speaker 5: point four percent today, a star war when it comes
Speaker 5: to Pentagon contracts and government contracts. Why are you bullish
Speaker 5: on this company in a doge world?
Speaker 12: Yeah, Well, we'll think more about all globally, right, So
Speaker 12: globally defense spending is going to increase. You know, we
Speaker 12: have to restock from what we gave to Ukraine. All
Speaker 12: of that is going to be beneficial to no Throb.
Speaker 12: In addition to that, you know they're winning major defense contracts.
Speaker 12: You know that will last greater than ten years. So
Speaker 12: free cast flow estimate's going forward on average and looking
Speaker 12: at around sixteen percent. So we think that beneficiaries of that.
Speaker 12: And if you think about where they're trading today, they're
Speaker 12: trading around twenty percent below fair market value. You know,
Speaker 12: So from our standpoint, we think at this level here,
Speaker 12: if you're a long term investor, we think you can
Speaker 12: do very well.
Speaker 5: The company, though, still gets close to ninety percent of
Speaker 5: its revenue just from the United States, So if there
Speaker 5: are cutbacks in the unit, if there are cuts in
Speaker 5: the United States, that's a really big deal. I mean,
Speaker 5: very little of its revenue comes from outside the US
Speaker 5: accordinate to the terminal.
Speaker 12: All right, there's good and bed to that. In my opinion,
Speaker 12: I don't feel that the DOGE is really going to
Speaker 12: go after defense spending as maybe some people are anticipating.
Speaker 12: I just think that that's an area you know, especially
Speaker 12: think about Trump when he's looking for if we want
Speaker 12: to secure our country, especially all the money we spent
Speaker 12: in Ukraine and different types of defense that we brought
Speaker 12: over there. We got to restock and we got to
Speaker 12: strengthen our country, and it starts with defense. So we
Speaker 12: really believe that you will continue to see spending there.
Speaker 12: We don't see much of a decrease in that area.
Speaker 10: You know.
Speaker 3: It's interesting though, because we have heard comments from President
Speaker 3: Trump say, you know, let's cut our military budget in half,
Speaker 3: let's cut back on defense spending, you know, And I
Speaker 3: think he has tried and heeds, I guess maybe hopeful
Speaker 3: all of getting others like President Putin to do the
Speaker 3: same thing in terms of cutting back or China right
Speaker 3: in particular.
Speaker 4: So I do.
Speaker 3: Wonder that if he follows through or makes any progress
Speaker 3: on that, what does that mean for somebody like Northrop Grumman.
Speaker 5: To your point, Pete Hegseth, the Defense Secretary, said the
Speaker 5: beginning immediately, this was back in February, the Pentagon will
Speaker 5: pull eight percent, which is about fifty billion dollars from
Speaker 5: non lethal programs in the current budget. Did you look
Speaker 5: at that as not affecting a company like Northrop Grumman,
Speaker 5: because we did see some pullback on companies such as
Speaker 5: palant Here at that time, and.
Speaker 12: That's why you've seen some pressure on the stock. But overall,
Speaker 12: it's the major defense contracts that they already won that's
Speaker 12: ten years or greater that's going to add to the
Speaker 12: bottom line. We don't see them coming back contracts. I mean,
Speaker 12: they're really important to our country. And you know northroply
Speaker 12: what they do and especially all the missile programs that
Speaker 12: they're part of. We don't believe that's going to be.
Speaker 3: Cut real quickly. There's two big financials that you like.
Speaker 3: JP Morgan is one name that you like. It is
Speaker 3: down about eighteen percent since mid February. We know financials,
Speaker 3: you know, definitely were riding a high for a while.
Speaker 3: Certainly coming off the elections. You still think JP Morgan
Speaker 3: is a bye.
Speaker 12: Yeah, So that's exactly right. So it was buying a
Speaker 12: room to sell on the news, right. So after an
Speaker 12: orderation day, most of the financials decreased a lot from
Speaker 12: that point. But at the end, if you think about
Speaker 12: I think where we're going with the economy, you know,
Speaker 12: we think of JP Morgan, you know, the large bank
Speaker 12: in the world great on the commercial side. On the
Speaker 12: investment bank and side, we do think M and A
Speaker 12: activity will pick up. If you look at M and
Speaker 12: A activity for January was down thirty percent relative to
Speaker 12: last ed and so we're not concerned about that because
Speaker 12: we feel like the deregulation hasn't been really embedded in
Speaker 12: the economy yet. So once some of this black cloud
Speaker 12: subsides that we think financials would be big beneficiaries, and
Speaker 12: you're buying him at a lot cheaper price than they
Speaker 12: were just a couple of three weeks ago.
Speaker 5: All right, let's leave it there. There are a couple
Speaker 5: more stocks I want to talk about, but we're running
Speaker 5: out of time, so I do want to have you
Speaker 5: back with us very soon. Philip always good to check
Speaker 5: in with you. Philip Plumbo is the founder of CEO
Speaker 5: and CIO at Plumbo Wealth Management.
Speaker 2: This is the Bloomberg Business Week podcast, available on Apple, Spotify,
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