WEBVTT - US Consumer Sentiment Rises, Presidential Election 0:00:02.400 --> 0:00:09.119 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:09.119 --> 0:00:13.320 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:13.320 --> 0:00:15.800 Eastern on Apple car Playing and Broud Auto with the 0:00:15.800 --> 0:00:19.720 Bloomberg Business App. Listen on demand wherever you get your podcasts, 0:00:19.920 --> 0:00:22.280 or watch us live on YouTube. 0:00:23.079 --> 0:00:26.400 Well of the latest reading on consumer confidence just down, 0:00:26.520 --> 0:00:29.360 in fact, reaching a seven month high. Let's break it 0:00:29.400 --> 0:00:31.840 down right now with Joy and Shuey, director of the 0:00:31.960 --> 0:00:35.479 University of Michigan, surveys of consumers joining us. You're in 0:00:35.520 --> 0:00:41.599 ann arbor, right, That's correct. So it doesn't necessarily reflect 0:00:41.640 --> 0:00:45.880 the outcome of the election, because it looks like pretty confidence. 0:00:46.280 --> 0:00:50.160 People were pretty confident about the economy of the US. 0:00:51.760 --> 0:00:54.200 That's correct. So I want to note that the data 0:00:54.200 --> 0:00:57.160 that we're releasing today, the interviews ended on Monday, prior 0:00:57.200 --> 0:00:59.800 to the election, and so what we saw on the 0:00:59.800 --> 0:01:02.160 EU of the election and the two weeks leading into it, 0:01:02.200 --> 0:01:04.959 consumers we're feeling much more confident about the future of 0:01:04.959 --> 0:01:07.800 the economy. Not much change in current conditions, but in 0:01:07.880 --> 0:01:10.440 terms of the future of the economy, we saw improvements 0:01:10.720 --> 0:01:15.360 in terms of business conditions, personal finances, people's incomes, unemployment rates, 0:01:15.600 --> 0:01:18.640 consumers were really feeling like the future of the economy 0:01:18.680 --> 0:01:19.880 was on an upper trajectory. 0:01:20.640 --> 0:01:23.520 Joan, what did the survey tell us about how Americans 0:01:23.560 --> 0:01:25.800 are thinking about the future path of inflation. 0:01:27.280 --> 0:01:30.600 With inflation, we saw a very slight decrease in short 0:01:30.640 --> 0:01:35.080 one inflation expectations as well as a very small increase 0:01:35.120 --> 0:01:38.760 in long run expectations. So consumers are broadly expecting inflation 0:01:38.800 --> 0:01:42.280 to continue stabilizing. You know, they continue to be pretty 0:01:42.280 --> 0:01:45.520 frustrated by high prices, though. We have over forty percent 0:01:45.520 --> 0:01:47.880 of consumers continuing to tell us that high prices are 0:01:47.880 --> 0:01:50.560 eroding their personal finances in spite of the fact that 0:01:50.600 --> 0:01:54.360 they have fully acknowledged and noticed that inflation has slowed. 0:01:55.200 --> 0:01:59.560 What can we extrapolate from this about consumer spending or 0:01:59.600 --> 0:02:04.320 anything else in terms of consumer behavior overall? 0:02:04.360 --> 0:02:06.400 You know, consumers have been telling us all year long 0:02:06.600 --> 0:02:09.120 that the future of the economy is highly contingent on 0:02:09.200 --> 0:02:11.679 the election, and so the fact that the election has 0:02:11.720 --> 0:02:14.480 been resolved means that consumers are really starting to adjust 0:02:14.480 --> 0:02:16.920 their views for the future, which will allow them to 0:02:16.960 --> 0:02:19.880 plan and think more strongly about about the kinds of 0:02:19.919 --> 0:02:24.120 purchases they want to make. Consumers have told us that 0:02:24.160 --> 0:02:28.760 their high priced concerns for large purchases like durable goods, cars, 0:02:28.760 --> 0:02:33.320 and homes, those have all eased this month, and so 0:02:33.440 --> 0:02:37.160 things for them are headed in the right trajectory. However, 0:02:37.560 --> 0:02:40.720 they're still feeling you know, they're still not feeling as 0:02:40.760 --> 0:02:43.480 happy about the economy as they did prior to the pandemic. 0:02:43.680 --> 0:02:46.000 JO and always a pleasure. Thanks for being with us 0:02:46.200 --> 0:02:48.519 today and Happy Friday. Joined sure that the director of 0:02:48.560 --> 0:02:51.760 the University of Michigan surveys of consumers. 0:02:53.320 --> 0:02:57.200 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:02:57.280 --> 0:03:00.800 weekdays at ten am Eastern on applecar Plays and Android 0:03:00.840 --> 0:03:04.000 Auto with the Bloomberg Business. You can also listen live 0:03:04.120 --> 0:03:07.280 on Amazon Alexa from our flagship New York station, Just 0:03:07.320 --> 0:03:09.960 say Alexa Play Bloomberg eleven thirty. 0:03:11.280 --> 0:03:16.560 Paramount Global, the parent of CBSTV, MTV and it namesake 0:03:16.600 --> 0:03:20.600 Hollywood Movie Studio, reported third quarter sales that missed analyst instiments. 0:03:20.800 --> 0:03:23.080 Let's break it down right now with our next guest, KEITHA. 0:03:23.280 --> 0:03:28.160 Raganoth and the Bloomberg Intelligence Analyst. Thanks for being with us. 0:03:28.440 --> 0:03:31.120 Shouldn't we really be focusing on streaming here? 0:03:33.080 --> 0:03:36.440 Well, we should, I mean streaming is making up only 0:03:36.480 --> 0:03:40.040 twenty five percent of total revenue. John, but remember they 0:03:40.080 --> 0:03:43.160 are in the midst as most of the old media companies. 0:03:43.440 --> 0:03:45.920 Paramount is in the midst of this whole transition away 0:03:45.960 --> 0:03:48.800 from the linear TV model to the streaming model. And 0:03:48.840 --> 0:03:51.520 the reason we need to focus on streaming is because 0:03:51.640 --> 0:03:56.240 up until this point, streaming was really weighing on overall profitability. 0:03:56.360 --> 0:03:59.960 So we saw the streaming segment contribute to something like 0:04:00.160 --> 0:04:03.480 two to two and a half billion dollars in losses, 0:04:04.280 --> 0:04:07.760 and that was really pressuring overall company profitability. Now what 0:04:07.800 --> 0:04:11.200 has happened now is we're finally seeing, you know, some 0:04:11.240 --> 0:04:13.560 signs of a turnaround. There's some signs of hope for 0:04:13.600 --> 0:04:16.800 the streaming business because for the second straight quarter in 0:04:16.839 --> 0:04:21.280 a row, Paramount actually posted a positive profit number. So 0:04:21.600 --> 0:04:24.919 that is definitely good news. The bad news, however, which 0:04:25.000 --> 0:04:27.320 is kind of causing a little bit of you know, 0:04:27.360 --> 0:04:31.039 the fall in the stock after the earnings call, is 0:04:31.080 --> 0:04:33.240 because they said that in the fourth quarter they're again 0:04:33.360 --> 0:04:37.440 going to go back to some amount of streaming losses. However, 0:04:37.640 --> 0:04:40.040 the long term view still is that you know, the 0:04:40.360 --> 0:04:44.360 streaming business, which is Paramount plus their streaming platform, will 0:04:44.400 --> 0:04:47.599 be profitable in twenty twenty five, at least in the US. 0:04:48.120 --> 0:04:52.080 How does that stuck up with paramount streaming competitors. I 0:04:52.120 --> 0:04:54.440 feel like these days, you go and you turn on 0:04:54.520 --> 0:04:58.800 your Roku TV and there's maybe six or seven different 0:04:59.320 --> 0:05:02.680 options for streaming, and I don't know if I if 0:05:02.720 --> 0:05:05.400 Paramount is you know, the first one that comes up 0:05:05.480 --> 0:05:07.880 on at least my suggested apps to click on. 0:05:08.839 --> 0:05:11.000 Now, you bring up a very very good point. I mean, 0:05:11.000 --> 0:05:14.720 there's absolutely no doubt that, you know, Netflix has won 0:05:14.720 --> 0:05:17.680 the streaming wars. They are the default go to option. 0:05:18.240 --> 0:05:20.160 But when you kind of look across the board and 0:05:20.200 --> 0:05:22.839 you look at some of the other streaming services, Paramount 0:05:22.839 --> 0:05:25.480 definitely is there. Of course, they might not be your 0:05:25.640 --> 0:05:29.680 first choice as you kind of gravitate to streaming, but 0:05:29.720 --> 0:05:32.320 they definitely have a lot of content that people want 0:05:32.360 --> 0:05:34.960 to watch. So they have a lot of content from 0:05:35.000 --> 0:05:38.479 their linear TV platform itself, you know, a lot of 0:05:38.520 --> 0:05:41.240 sports content. They're one of the streaming platforms that's pretty 0:05:41.240 --> 0:05:45.400 sports heavy with NFL with UEFA, so people definitely like that. 0:05:45.520 --> 0:05:47.839 And then they have some pretty good scripted content as well, 0:05:47.839 --> 0:05:50.520 you know, whether you're talking about Star Trek or Yellowstone, 0:05:50.880 --> 0:05:51.880 they have Telsa King. 0:05:52.240 --> 0:05:53.080 So they have a lot. 0:05:53.040 --> 0:05:55.400 Of you know, good pieces that people want to watch. 0:05:55.400 --> 0:05:57.800 But you're absolutely right when it comes to scale and 0:05:57.880 --> 0:06:01.600 streaming is you know, a game of scale. They're nowhere 0:06:01.640 --> 0:06:04.200 near Netflix or even Disney Plus. They have only about 0:06:04.240 --> 0:06:08.240 seventy million subscribers on their Paramount Plus platforms. Obviously the 0:06:08.279 --> 0:06:12.920 competitive dynamics still working a little bit against Paramount. Having 0:06:12.960 --> 0:06:15.600 said that, though, I mean, not all bad. 0:06:16.440 --> 0:06:19.279 What's the update with the merger with Skydance Media. 0:06:20.760 --> 0:06:23.039 So the sky Dance Media, I mean, of course, this 0:06:23.240 --> 0:06:26.320 was a merger John that was in the works for 0:06:26.680 --> 0:06:29.960 almost ever was going on and on the saga. It 0:06:30.000 --> 0:06:32.880 is going to close sometime in the first half of 0:06:32.920 --> 0:06:35.640 twenty twenty five, and so we're seeing that a lot 0:06:35.640 --> 0:06:38.800 of the progress that the company has made in terms 0:06:38.839 --> 0:06:41.719 of cutting costs, in terms of cost efficiencies, in terms 0:06:41.760 --> 0:06:44.960 of restructuring, that's all the first step towards you know, 0:06:45.040 --> 0:06:48.600 achieving the two billion dollars in annual cost synergies that 0:06:48.920 --> 0:06:52.680 sky Dance has laid out, you know, after mergers. So 0:06:52.880 --> 0:06:55.359 you know that will kind of happen sometime I guess 0:06:55.400 --> 0:06:57.640 next year, and then you know, we kind of get 0:06:57.680 --> 0:06:59.800 a whole fresh set of eyes here, you know, a 0:07:00.080 --> 0:07:03.720 new management team, some new capital, one and a half 0:07:03.760 --> 0:07:06.479 billion dollars that goes straight to you know, the balance sheet. 0:07:06.839 --> 0:07:10.280 So all of those are definitely positives. But the hard 0:07:10.400 --> 0:07:14.440 truth is that the backdrop continues to be very, very difficult. 0:07:14.520 --> 0:07:16.880 Well, is this the joint venture partner they were looking 0:07:16.920 --> 0:07:18.760 for for streaming or something else? 0:07:19.640 --> 0:07:20.200 Now this is. 0:07:20.160 --> 0:07:22.560 Something Now, this is something else. So this is you know, 0:07:22.600 --> 0:07:24.880 the whole the sky dance, which is you know, an 0:07:24.880 --> 0:07:28.880 independent studio has been led of course by David Ellison 0:07:30.040 --> 0:07:32.720 has been wanting to buy Paramount for the longest time, 0:07:32.760 --> 0:07:34.800 and of course their main interest was really in the studio, 0:07:34.880 --> 0:07:37.080 but then ultimately they decided that they could do something 0:07:37.080 --> 0:07:38.920 with the entire company and kind of give it more 0:07:38.960 --> 0:07:40.280 of this tech driven focus. 0:07:40.920 --> 0:07:43.800 Always a pleasure, appreciate it. Getha Ragananthan and the Bloomberg 0:07:43.840 --> 0:07:45.040 Intelligence Analyst. 0:07:46.600 --> 0:07:50.480 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:07:50.560 --> 0:07:53.200 weekdays at ten am Eastern on Apple car Play and 0:07:53.320 --> 0:07:56.280 Enroud Auto with the Bloomberg Business app. Listen on demand 0:07:56.320 --> 0:08:00.680 wherever you get your podcasts, or watch us live on YouTube. 0:08:01.720 --> 0:08:05.000 I'm John Tucker along with Emily GRIFFEO. We are in 0:08:05.080 --> 0:08:07.960 for Alex and Paul today. So what is the panther 0:08:08.000 --> 0:08:11.520 ahead for the Federal Reserve after yesterday's twenty five bases 0:08:11.600 --> 0:08:14.320 point cut. Daniel Di Martino Booth is the CEO and 0:08:14.360 --> 0:08:18.200 the chief strategist for QI Research. Good to see you again. 0:08:18.400 --> 0:08:20.760 It's great to be here in studio, New. 0:08:20.680 --> 0:08:22.960 York on this beautiful day Friday. Thank you very much 0:08:23.000 --> 0:08:26.760 forf So what was your takeaway from the FED meeting yesterday? 0:08:27.640 --> 0:08:30.720 So we were speaking offline before I came on, and 0:08:30.880 --> 0:08:32.800 I you know, I think it was the guests. 0:08:32.840 --> 0:08:34.920 Indeed, indeed, I think I think. 0:08:34.880 --> 0:08:37.240 The version of Chair Powell who showed up yesterday was 0:08:37.280 --> 0:08:42.000 like the Dirty Harry version, extremely succinct, very few words. 0:08:42.200 --> 0:08:46.319 He wasn't scripted, he wasn't reading his answers, he wasn't nervous. 0:08:46.720 --> 0:08:51.480 He was expecting all of the political angles that the 0:08:51.520 --> 0:08:54.199 reporters were going to take, and he was ready for them, 0:08:54.240 --> 0:08:55.400 and he cut them off at. 0:08:55.280 --> 0:08:58.280 The past time and again. So how are we. 0:08:58.240 --> 0:09:01.440 Supposed to make sense of the market action and what 0:09:01.600 --> 0:09:03.679 is driving i mean treasury yields? 0:09:03.720 --> 0:09:04.000 Right now? 0:09:04.000 --> 0:09:05.320 We were also just talking about this. 0:09:05.840 --> 0:09:08.520 They've dropped about sixteen. 0:09:08.080 --> 0:09:11.560 Basics sixteen basis points on the tenure in a matter 0:09:11.600 --> 0:09:13.920 of two days. In fact, the ten year dropped four 0:09:13.960 --> 0:09:17.160 basis points the minute he was asked by a reporter 0:09:17.800 --> 0:09:20.960 that if you're asked to step down by President Trump, 0:09:21.040 --> 0:09:23.560 will you And he said no, And so she rephrased 0:09:23.559 --> 0:09:25.640 the question and he looked over his glasses and he 0:09:25.679 --> 0:09:29.600 said no. And at that minute, the tenure yield drop 0:09:29.600 --> 0:09:32.600 four basis points. So I think I think markets right 0:09:32.640 --> 0:09:37.760 now are celebrating continuity and steadiness and the fact that 0:09:38.400 --> 0:09:42.200 I think the Fed's going to continue to cut rates. 0:09:42.760 --> 0:09:44.320 I really do see that as a path forward. 0:09:44.360 --> 0:09:46.360 I know a bunch of sales side banks this morning 0:09:46.360 --> 0:09:47.640 have come out and said they're going to be much 0:09:47.640 --> 0:09:50.800 fewer cuts in twenty twenty five. As a nine year 0:09:50.880 --> 0:09:53.960 veteran of the FED, it's extremely rare for us to 0:09:53.960 --> 0:09:57.600 have seen the pause in the hiking cycle. It would 0:09:57.600 --> 0:10:02.319 be nearly unprecedented to see a paw in an easing cycle. 0:10:02.640 --> 0:10:06.600 We tend to see unemployment rates tick up in chunks, 0:10:07.360 --> 0:10:11.000 and we were just a smidge of a percentage away 0:10:11.120 --> 0:10:13.600 from the unemployment rate having been four point two percent 0:10:14.080 --> 0:10:16.880 in October, and we know that layoffs have picked up 0:10:16.880 --> 0:10:20.800 appreciably since September, so we can see what's coming. 0:10:21.040 --> 0:10:22.000 And I think. 0:10:21.840 --> 0:10:25.760 Powell leaned on the employment mandate yesterday with good reason, 0:10:26.200 --> 0:10:28.760 and he said, I'm not making any decisions. There's two 0:10:28.760 --> 0:10:32.840 inflation reports, there's one employment report. Before we meet again, I'll. 0:10:32.760 --> 0:10:33.120 Let you know. 0:10:33.679 --> 0:10:36.400 Can the Fed be at all preemptive when it comes 0:10:36.440 --> 0:10:40.120 to it's not their mandate, but fiscal policy. 0:10:41.160 --> 0:10:42.760 Well, the answers no. 0:10:43.480 --> 0:10:46.640 When you land on day one at the Fed, you 0:10:46.720 --> 0:10:49.200 learn two things. You learn about the lag effect of 0:10:49.200 --> 0:10:51.480 monetary policy, which we're still seeing. 0:10:51.520 --> 0:10:53.160 I mean, BC, why go pull it up. 0:10:53.400 --> 0:10:57.079 You've had thirty bankruptcies in September and October since two 0:10:57.120 --> 0:11:00.960 thousand and your average two month average is twenty large bankruptcy. 0:11:01.000 --> 0:11:04.200 So pull up BCY, goo on on Bloomberg. But the 0:11:04.200 --> 0:11:06.200 second lesson you learn at the FED is never talk 0:11:06.240 --> 0:11:10.520 about the dollar. Fiscal policy is the purview of the 0:11:10.600 --> 0:11:15.319 Treasury Department. Now, Powell said yesterday, if things begin to 0:11:15.360 --> 0:11:18.720 go haywire, I'm telling you right now, our debt levels 0:11:18.720 --> 0:11:22.920 in this country are way too high. They're absolutely untenably high. 0:11:23.000 --> 0:11:27.079 He said that, But in terms of can the Fed 0:11:27.200 --> 0:11:31.920 preemptively take part in crafting legislation, because that's effectively what 0:11:31.960 --> 0:11:34.160 a lot of the reporters were asking him, Well. 0:11:34.280 --> 0:11:38.199 I guess more anticipating on the next ridge, the bond 0:11:38.320 --> 0:11:41.120 vigilantes ring to saddle up and ride. 0:11:41.800 --> 0:11:44.120 You know, we'll see, we will see. 0:11:44.400 --> 0:11:49.120 I think markets are mistaking flow for stock. In other words, 0:11:49.720 --> 0:11:52.680 if we see an extension of the tax cuts, is 0:11:52.679 --> 0:11:55.480 that going to be equivalent to depositing cash in US 0:11:55.480 --> 0:11:58.480 household bank accounts that's going to reignite inflation overnight. 0:11:58.800 --> 0:12:01.400 No, it's just going to be continuation of the status quo. 0:12:01.760 --> 0:12:04.440 So at the margin, we're not going to see money 0:12:04.480 --> 0:12:06.920 pumped into the economy the way that we did with 0:12:06.960 --> 0:12:09.120 the first and the second and the third stimulus checks, 0:12:09.480 --> 0:12:11.079 or with the child tax credit. 0:12:11.120 --> 0:12:11.880 Being in cash. 0:12:12.160 --> 0:12:14.920 Cash is a much different instrument when it comes to 0:12:14.960 --> 0:12:19.360 monetary policy and the transmission mechanism. It's immediate, as opposed 0:12:19.400 --> 0:12:22.720 to the FED lowering interest rates and then saying okay, 0:12:22.760 --> 0:12:25.839 banks go to be easier on your lending standards now 0:12:25.880 --> 0:12:28.839 that barring costs are lower, so you be the transmission 0:12:28.880 --> 0:12:30.040 mechanism into the economy. 0:12:30.200 --> 0:12:31.960 So much different dynamics. 0:12:32.200 --> 0:12:35.480 If we're not talking about this new administration mailing out 0:12:35.559 --> 0:12:36.400 checks on day one. 0:12:37.000 --> 0:12:42.439 So should investors then not be worried about inflation reigniting? 0:12:42.760 --> 0:12:45.080 Because I've been seeing a lot of notes in my 0:12:45.160 --> 0:12:49.360 inbox all talking about Trump's policies are going to increase inflation, 0:12:49.760 --> 0:12:51.960 yields are going to go up. Who knows what's going 0:12:52.000 --> 0:12:52.760 to happen to stocks. 0:12:52.840 --> 0:12:55.880 You know, if you listen to the likeliest candidate on 0:12:55.920 --> 0:12:57.679 the terminal last night, the where it's a very good 0:12:57.720 --> 0:13:04.040 profile of potential Treasury secretary candidates under Trump, if you 0:13:04.120 --> 0:13:06.000 listen to what a lot of them are saying, they're saying, 0:13:06.000 --> 0:13:07.800 you know what, companies, We're going to give you two 0:13:07.880 --> 0:13:10.080 years to build a factory in the United States, and 0:13:10.120 --> 0:13:14.360 if you don't re on shore or on shore and 0:13:14.480 --> 0:13:17.680 move your supply chains away, then we're going to penalize you. 0:13:18.280 --> 0:13:21.040 That's a much different take than imposing tariffs on day one. 0:13:21.640 --> 0:13:24.480 So I think people should listen to who these. 0:13:24.280 --> 0:13:25.360 Potential candidates are. 0:13:25.360 --> 0:13:29.000 And I think that the second Trump term, I'm not 0:13:29.360 --> 0:13:32.839 beginning to suggest that there's wisdom here or that he's 0:13:32.880 --> 0:13:35.960 not going to fly off the handle for any reason 0:13:36.000 --> 0:13:37.800 at all, but I think this time he's going to 0:13:37.840 --> 0:13:40.120 take more counsel. I think this time he's going to 0:13:40.160 --> 0:13:42.160 listen to those around him a little bit more and 0:13:42.200 --> 0:13:44.880 be more thoughtful about who he brings into his administration. 0:13:45.520 --> 0:13:48.920 Back to tax policy. With respect to corporate tax policy, 0:13:49.080 --> 0:13:52.360 is from where you sit, it's a fifteen percent corporate 0:13:52.440 --> 0:13:55.800 rate really feasible. And what are the pay for is 0:13:55.840 --> 0:13:57.120 for that? Yeah, multipart quids. 0:13:57.280 --> 0:13:59.760 Milton Friedman would tell you there's no free lunch, right, So, 0:14:00.040 --> 0:14:02.160 I mean, you have to find a way to pay 0:14:02.200 --> 0:14:06.520 for these things realistically. And I think that that's where 0:14:06.520 --> 0:14:08.720 the construct of the new Congress is going to come 0:14:08.760 --> 0:14:15.480 in and how they're going to not just throw promises 0:14:15.520 --> 0:14:17.560 out there that you can't pay for. 0:14:18.280 --> 0:14:19.240 And that's a good thing. 0:14:20.320 --> 0:14:24.960 So the instantaneous aspect of tax cuts, I think is. 0:14:24.920 --> 0:14:28.080 A big presumption because it ain't free. 0:14:28.840 --> 0:14:32.800 How does this bleed into different sectors of the stock market, 0:14:32.800 --> 0:14:35.440 because we've seen a really big bid in small cap 0:14:35.480 --> 0:14:41.120 stocks this week. I guess on the bet that if 0:14:41.160 --> 0:14:44.760 you have more domestic manufacturing, you're going to do better 0:14:44.880 --> 0:14:48.080 in Trump's economy, does that mean. 0:14:48.600 --> 0:14:49.920 In small caps right now? 0:14:50.040 --> 0:14:53.800 In theory, what you cannot do with small tax is 0:14:54.760 --> 0:14:57.640 wave a magic wand and make their leverage go away. 0:14:58.040 --> 0:15:00.720 You can't make the small cap sector any healthier than 0:15:00.720 --> 0:15:03.200 it is when you're talking about their balance sheets, and 0:15:03.240 --> 0:15:04.920 that's really what has to be addressed first. 0:15:04.920 --> 0:15:05.640 And I think that. 0:15:05.560 --> 0:15:10.240 What we're seeing here is a lot of technical movements, 0:15:10.640 --> 0:15:13.440 whether you're talking about this whiplash effect in the bond 0:15:13.480 --> 0:15:16.680 market or this rush into the rustle that wasn't even 0:15:16.680 --> 0:15:19.640 sustained for a day, excuse me, for two trading days. 0:15:20.160 --> 0:15:24.920 So I think investors, or at least veteran investors I'm 0:15:24.920 --> 0:15:27.520 showing my age here, are going to be really focused 0:15:27.680 --> 0:15:31.880 on top line revenue growth, cash flow generation, the ability 0:15:31.920 --> 0:15:35.360 to protect dividends going forward, and that that's what's going. 0:15:35.200 --> 0:15:36.640 To be important. 0:15:36.800 --> 0:15:39.760 We have just seen a month where according to macro 0:15:39.960 --> 0:15:44.880 Edge they track layoff announcements, in September they were about 0:15:44.920 --> 0:15:48.800 fifty thousand. In October there one hundred and nine thousand. 0:15:49.040 --> 0:15:51.600 And we've seen one company after another in the current 0:15:51.600 --> 0:15:54.360 earning season prior to retailers of reporting. 0:15:54.440 --> 0:15:56.200 Continue to say. 0:15:56.400 --> 0:16:00.280 We're going to bolster our margins by laying off. They 0:16:00.320 --> 0:16:02.680 were just you guys were just talking about Paramount and 0:16:02.880 --> 0:16:04.440 laying off fifteen percent of its workforce. 0:16:04.640 --> 0:16:06.640 So we have to bear all this. 0:16:06.560 --> 0:16:09.720 In mind, and until CEOs and CFOs get out of 0:16:09.800 --> 0:16:13.160 the cost cutting mode to protect their margins, I think 0:16:13.160 --> 0:16:15.800 we have to be realistic about what sectors are going 0:16:15.800 --> 0:16:17.160 to benefit and what sectors aren't. 0:16:17.280 --> 0:16:20.240 Is anybody baking the tax cuts getting back to that 0:16:20.320 --> 0:16:21.680 into the rastimates right now? 0:16:22.200 --> 0:16:23.480 I think a lot of people are. 0:16:23.520 --> 0:16:25.680 I think a lot of I think I think a 0:16:25.720 --> 0:16:29.600 lot of strategists on the street right now are baking 0:16:29.760 --> 0:16:33.560 in tariffs yesterday and tax cuts yesterday in the effect 0:16:33.560 --> 0:16:35.400 that it would have on the bond market. 0:16:35.600 --> 0:16:38.720 I think the bond mar those tariffs are to some 0:16:38.880 --> 0:16:44.840 extent intended as a pay for for any anticipated tax 0:16:44.920 --> 0:16:48.200 cuts the corporate quote or personal. But that's not going 0:16:48.240 --> 0:16:49.120 to do it right. 0:16:50.000 --> 0:16:52.560 Not even not realistically and not even close. 0:16:52.880 --> 0:16:53.320 That's right. 0:16:53.720 --> 0:16:55.920 So I. 0:16:57.400 --> 0:16:59.720 Mean, I'm an independent research firm. I can say whatever 0:16:59.720 --> 0:16:59.960 I want. 0:17:00.360 --> 0:17:02.320 I think the streets getting ahead of itself, and I 0:17:02.400 --> 0:17:05.240 think the rally in the bond market is saying that 0:17:05.440 --> 0:17:06.000 out loud. 0:17:07.080 --> 0:17:10.640 Yeah, any other messages you are extracting from the bond 0:17:10.680 --> 0:17:11.240 market at this. 0:17:11.200 --> 0:17:16.440 Point, Well, the United States does not live on an island. 0:17:17.200 --> 0:17:20.520 And when you see factory orders retrenching, when you see 0:17:20.520 --> 0:17:23.119 import volumes falling, I'm going to be paying attention to 0:17:23.520 --> 0:17:27.360 the PPI and CPI data that come out of China tonight. 0:17:28.000 --> 0:17:31.919 I think until we stop stop getting deflationary impulses and 0:17:32.000 --> 0:17:35.879 waking up to hearing Michelin and Volkswagen and layoffs and 0:17:35.960 --> 0:17:39.600 countries with really strict labor standards, until we stop hearing that, 0:17:39.640 --> 0:17:41.560 I think we have to appreciate the United States is 0:17:41.600 --> 0:17:43.840 part of a global economy and the rest of the 0:17:43.880 --> 0:17:46.280 countries in the world and how they're faring is going 0:17:46.320 --> 0:17:47.440 to affect our country as well. 0:17:47.520 --> 0:17:49.080 I don't know if it's part of your remit, but 0:17:49.240 --> 0:17:52.000 Europe we have the sick man. Well, we have many 0:17:52.040 --> 0:17:54.639 sick men in Europe right now, are in total panic. 0:17:54.800 --> 0:17:58.000 Yeah, France is definitely sicker than most people want to appreciate, 0:17:58.200 --> 0:18:01.560 and we forced our banking system to capitalized after the 0:18:01.600 --> 0:18:06.920 financial crisis in many ways Europe did not. So yeah, 0:18:06.960 --> 0:18:08.440 I think you're going to see a much more aggresive 0:18:08.480 --> 0:18:12.760 rate cutting campaign there and we'll see how that plays out. Look, 0:18:12.840 --> 0:18:16.119 bond yields are down, dollars stronger today. Not everything plays 0:18:16.119 --> 0:18:17.280 out exactly the script. 0:18:18.400 --> 0:18:23.280 Okay, just one more period, just another minute, the Basil 0:18:23.280 --> 0:18:30.600 three endgame. So increasing the capital requirements for the financialist institutions, 0:18:30.840 --> 0:18:33.120 does that just get ignored at this point like forty 0:18:33.160 --> 0:18:35.680 five seconds? And is that a good thing? Well, it's 0:18:35.680 --> 0:18:36.879 a good thing for the financials. 0:18:36.880 --> 0:18:38.160 But it's a good thing for the financials. 0:18:38.200 --> 0:18:41.439 But we're still we're still in the comment period, and 0:18:41.520 --> 0:18:45.440 Michael Barr and j Powell are intent on pressing forward 0:18:45.840 --> 0:18:48.800 with this, and they've backed off of their more stringent 0:18:48.840 --> 0:18:51.320 capital requirements to begin with a few months ago. 0:18:51.880 --> 0:18:52.800 I don't think that. 0:18:52.800 --> 0:18:56.000 We should necessarily say that Basil three endgame is. 0:18:55.960 --> 0:19:00.240 Over all, right. Thanks, Thanks for showing up. Daniel Di Martino, 0:19:00.040 --> 0:19:03.520 both CEO and chief strategist for QI Research. 0:19:05.160 --> 0:19:09.040 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:19:09.119 --> 0:19:12.640 weekdays at ten am Eastern on applecar Play and Android 0:19:12.680 --> 0:19:15.440 Otto with the Bloomberg Business app. You can also listen 0:19:15.560 --> 0:19:18.680 live on Amazon Alexa from our flagship New York station, 0:19:19.040 --> 0:19:22.760 Just say Alexa play Bloomberg eleven thirty. 0:19:23.440 --> 0:19:26.080 I'm John Tucker along with Emily Graffeo. We are in 0:19:26.119 --> 0:19:29.520 for Alex Steele at Paul Sweeney today, and this is 0:19:29.960 --> 0:19:33.560 Bloomberg Intelligence. Let's move on to our next guest and 0:19:33.600 --> 0:19:37.359 our next subject today, what is the impact of the 0:19:37.400 --> 0:19:41.000 Trump presidency on tax policy. Let's break that down right 0:19:41.040 --> 0:19:44.359 now with Erica York. She's senior Cannabist Research director with 0:19:44.480 --> 0:19:48.640 Tax Foundation Center for Federal Tax Policy. Thanks for being 0:19:48.640 --> 0:19:52.480 with us, appreciate it. Happy Friday by the way. Hey, So, 0:19:52.560 --> 0:19:55.520 there are a couple of fronts here as I understand it, 0:19:55.960 --> 0:20:01.360 the corporate tax rate as well as exten the existing 0:20:01.960 --> 0:20:03.480 Trump tax cuts. 0:20:03.240 --> 0:20:05.600 Right, that's right. 0:20:05.760 --> 0:20:08.880 So one of the things that President elect Trump will 0:20:08.920 --> 0:20:11.080 have to deal with is the expiration of the twenty 0:20:11.080 --> 0:20:14.480 seventeen tax law, that's the Tax Cuts and Jobs Act. 0:20:14.640 --> 0:20:17.800 It lowered the corporate tax rate, permanently, made a lot 0:20:17.840 --> 0:20:20.200 of changes on the international tax side, and it also 0:20:20.359 --> 0:20:24.359 temporarily cut taxes for the vast majority of American taxpayers. 0:20:24.800 --> 0:20:28.439 Lowered rates, double the standard deduction, increased the child tax credit, 0:20:28.920 --> 0:20:32.119 lots of moving pieces, but those all sunset after the 0:20:32.200 --> 0:20:35.000 end of twenty twenty five. And so that's the first 0:20:35.119 --> 0:20:37.400 major thing that Congress is going to have to deal with. 0:20:37.480 --> 0:20:40.440 What do we do about that tax cliff? Trump promised 0:20:40.480 --> 0:20:43.560 extending all of those tax cuts, which we've estimated would 0:20:43.560 --> 0:20:46.040 come with a price tag of more than four trillion 0:20:46.080 --> 0:20:49.000 dollars in lost revenue over the next decade. And then, 0:20:49.000 --> 0:20:52.760 of course, on the campaign trail, Trump outlined trillions dollars 0:20:52.880 --> 0:20:56.000 trillions of dollars more in tax cuts. He talked about 0:20:56.080 --> 0:20:59.200 further reductions to the corporate tax rate, He talked about 0:20:59.240 --> 0:21:03.880 exempting income, social security benefits over time pay from taxes, 0:21:04.280 --> 0:21:07.199 and creating a new deduction for auto loan interest. 0:21:07.840 --> 0:21:10.760 So I want to zoom out and ask you about 0:21:10.760 --> 0:21:15.200 how investors should be thinking about how these tax cuts 0:21:15.200 --> 0:21:18.000