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Speaker 1: Bloomberg Audio Studios, podcasts, radio news.

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Speaker 2: By Kelly JP. Morgan, Acid Management joins us Now for more. David,

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Speaker 2: Welcome to the program. How encouraging is that data this morning.

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Speaker 2: I don't really think it changes a narrative much.

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Speaker 3: I think, you know, Mike m keey was pointing out

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Speaker 3: that airfares are down five point four percent. Actually lodging

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Speaker 3: hotels and motels and so forth was down four point

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Speaker 3: three percent. So I think what we're seeing is a

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Speaker 3: lot of softness in the travel industry, which I think

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Speaker 3: is going to get worse over the course of this year.

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Speaker 2: It is a.

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Speaker 3: Calm before the inflation storm. We're going to get some

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Speaker 3: higher inflation out of the tariffs. I mean, remember we

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Speaker 3: left the ten percent universal tariff in place. That's a

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Speaker 3: lot higher than anything we've seen really for decades, so

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Speaker 3: that's high. And then of course there's enormous tariff on

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Speaker 3: China which is going to clog supply chains and push

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Speaker 3: our prices to so I think we will get some

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Speaker 3: inflation there. But what I actually see in the data

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Speaker 3: looking to get the travel numbers is a sort of

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Speaker 3: a deflationary tinge to the economy or or slow down

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Speaker 3: tinge to the economy ready, So you know, you know,

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Speaker 3: I'm glad that the market rallied yesterday, and say, I'm

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Speaker 3: glad that we've got rid of the worst of the

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Speaker 3: reciprocal tariffs apart from on China. But I think that

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Speaker 3: we are far from out of the woods here. I

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Speaker 3: think that these data do sort of still suggest that

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Speaker 3: there is a slowdown coming in the economy.

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Speaker 1: So the slowdown is what worries you more than the inflation. David,

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Speaker 1: if I'm hearing you correctly, at a time or CPI

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Speaker 1: just came in when you strip out energy and food

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Speaker 1: at the lowest level going back to twenty twenty one,

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Speaker 1: are you saying that that's really what markets ought to

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Speaker 1: be focused on, both bond and stock.

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Speaker 3: Yes, because people talk about stagflation all the time, but

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Speaker 3: really it's always flation stag You get the inflation first,

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Speaker 3: and then you get the stagnation. And the problem is that,

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Speaker 3: you know, with labor for the labor supply falling away,

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Speaker 3: with these impediments to trade, with cutbacks in government spending,

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Speaker 3: government grants, and so forth, through a lot of fiscal

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Speaker 3: drag this year, I can see a lot of things

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Speaker 3: that are going to slow the economy down. You know,

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Speaker 3: we'll get a temporary surge and inflation from this, but

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Speaker 3: I think we're going to be left with a pretty

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Speaker 3: stagnant economy off towards And the real question is, you know,

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Speaker 3: does that revolt in the House yesterday in terms of

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Speaker 3: House members who are fiscal hawks, is that really something

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Speaker 3: or not? Are we going to have a bigger deficit

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Speaker 3: and fiscal stimulus next year or not. If we have

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Speaker 3: fiscal stimulus, then I start worrying about inflation again. But

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Speaker 3: in the absence of major fyscal stimulus, I think that

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Speaker 3: people need to worry about recession more than inflation.

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Speaker 1: Here, our bonds still the best bet us treasure is

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Speaker 1: in that type of scenario, recession comes very much back

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Speaker 1: on the table.

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Speaker 3: Well, yes, I mean I think that first of all,

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Speaker 3: I think, you know, long term interest rates at four

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Speaker 3: point three percent, four point two percent on a ten

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Speaker 3: year treasury, I think that's fine, and I think people need,

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Speaker 3: you know, i'd be level weight and fixed income. I

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Speaker 3: realize that we may have a mild recession here, but

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Speaker 3: you know, longer term, whatever recession we have, we'll we'll

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Speaker 3: pull out of it again. And these bond deals are

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Speaker 3: reasonable for the long run. I don't expect inflation to

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Speaker 3: hang around the long run, because you know, we'll get

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Speaker 3: these tariffs and then then you know, tarffs just don't works,

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Speaker 3: and eventually we'll pull back from them and that'll act

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Speaker 3: you have a deflationary impulse in the economy. So long term,

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Speaker 3: I'm not that worried about inflation. I am worried that

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Speaker 3: there won't be much dynamism about the economy overall.

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Speaker 2: David, I appreciate the update. I know you're busy this morning,

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Speaker 2: so thanks for making time for us. David Kelly there

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Speaker 2: of JP Morgan Asset Management,