WEBVTT - Bloomberg Surveillance TV: April 14, 2025 0:00:00.080 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio news. 0:00:11.600 --> 0:00:15.440 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.440 --> 0:00:18.360 with Lisa Bromwitz and a Marie Hordern. Join us each 0:00:18.480 --> 0:00:21.360 day for insight from the best in markets, economics, and 0:00:21.400 --> 0:00:24.720 geopolitics from our global headquarters in New York City. We 0:00:24.760 --> 0:00:27.400 are live on Bloomberg Television weekday mornings from six to 0:00:27.480 --> 0:00:31.000 nine am Eastern. Subscribe to the podcast on Apple, Spotify 0:00:31.200 --> 0:00:33.479 or anywhere else you listen, and as always on the 0:00:33.479 --> 0:00:36.880 Bloomberg Terminal and the Bloomberg Business app. Pina Cheer of 0:00:36.880 --> 0:00:40.240 Academy Securities, writing for the first time in weeks, I'm 0:00:40.240 --> 0:00:43.480 optimistic about the outlook for the economy and for markets, 0:00:43.560 --> 0:00:46.440 but it is tempered slightly by all the measures it 0:00:46.479 --> 0:00:48.479 took to get here. Pete joins us now for more 0:00:48.520 --> 0:00:51.160 peak and Morning Morning. Where's the encouragement come from? 0:00:51.240 --> 0:00:54.640 Well, first, I wrote that like at nine am on Sunday, So. 0:00:55.680 --> 0:00:57.120 I'm buying not quite. 0:00:56.840 --> 0:00:58.080 As encouraged as I was. 0:00:58.680 --> 0:00:58.960 For me. 0:00:59.000 --> 0:01:00.680 What I would really like to say see is a 0:01:00.760 --> 0:01:05.720 true pivot towards domestic growth. Right, Let's get the chipsacked 0:01:05.760 --> 0:01:08.400 money out there, you know, last Thursday at the cabinet meeting, 0:01:08.440 --> 0:01:11.119 a couple of the people talked about shipbuilding. I think 0:01:11.160 --> 0:01:13.559 we have to spend some money do some things domestic growth, 0:01:13.640 --> 0:01:17.000 long term contracts. Either with shipbuild there's something to you know, 0:01:17.000 --> 0:01:19.240 that we can really get our hands around and grow, 0:01:19.520 --> 0:01:22.440 build up manufacturing without necessarily having to fight with the 0:01:22.480 --> 0:01:23.119 rest of the world. 0:01:23.360 --> 0:01:24.679 Do you think it slightly We'll see that. 0:01:25.760 --> 0:01:28.720 I'm increasingly dubious. I did not, like, you know, all 0:01:28.720 --> 0:01:31.360 the mixed messaging we got on tariffs over the weekend, 0:01:31.440 --> 0:01:35.080 right from Friday night, no exception exemptions to more exemptions. 0:01:35.240 --> 0:01:37.280 And I think I'm a little bit worried about bond 0:01:37.319 --> 0:01:39.720 yields as a whole. Partly I do think foreigners should 0:01:39.720 --> 0:01:41.840 be selling. I think you can get better yield than 0:01:41.880 --> 0:01:44.240 your own country. There's all this talk about, you know, 0:01:44.280 --> 0:01:48.120 potentially fees on foreign holdings mar Alago Accord. But beyond that, 0:01:48.160 --> 0:01:49.960 if you just take away, I think we missed three 0:01:50.000 --> 0:01:52.480 things last week. The budget for the military. Trump wants 0:01:52.480 --> 0:01:54.440 to do a trillion instead of eight hundred billion. That's 0:01:54.520 --> 0:01:56.360 going to add to the budget. We just had very 0:01:56.400 --> 0:01:59.560 large debt ceiling raises that gives them the opportunity. And finally, 0:01:59.640 --> 0:02:02.880 dose the Thursday More Cabinet meeting basically said they're targeting 0:02:02.920 --> 0:02:04.760 one hundred and fifty billion for this year instead of 0:02:04.760 --> 0:02:07.480 a trillion, and places like the Wall Street Journal things 0:02:07.480 --> 0:02:09.280 are reporting that they can't even come up with one 0:02:09.360 --> 0:02:11.880 hundred and fifty billion. So we are not on the 0:02:11.919 --> 0:02:14.160 right track on the deficit, which I think was everyone's 0:02:14.200 --> 0:02:16.520 big hope. So I think bond yields lead US lower 0:02:16.880 --> 0:02:19.400 across the board right now, until we do something domestic 0:02:19.440 --> 0:02:19.920 to help. 0:02:19.760 --> 0:02:21.680 Growth, bond yields lead US lower. 0:02:21.800 --> 0:02:22.720 Can you elaborate on that? 0:02:22.840 --> 0:02:25.279 By the way, coming out and saying that you're optimistic 0:02:25.320 --> 0:02:30.320 and then this litany of negatives really is just you know, yes, 0:02:31.040 --> 0:02:33.440 which gives you a thing change so quickly things are 0:02:33.560 --> 0:02:33.920 so what are you? 0:02:34.000 --> 0:02:35.640 And I was very, very very so I was thinking, 0:02:35.639 --> 0:02:37.919 you know, we were like heading towards twenty percent down 0:02:37.919 --> 0:02:40.040 from here, it feels like it might be more controlled. 0:02:40.320 --> 0:02:43.400 I will watch very closely today this. You know, when 0:02:43.440 --> 0:02:46.320 we went through the GFC and even the European debt crisis, 0:02:46.560 --> 0:02:48.359 one thing that always struck me as key when we 0:02:48.440 --> 0:02:50.520 moved to a new leg of the problem was you'd 0:02:50.520 --> 0:02:52.520 get the announcement you were hoping for, so in this case, 0:02:52.600 --> 0:02:54.960 tariff exemptions, and if you don't last a full day 0:02:55.000 --> 0:02:56.960 on the rally, it tends to mean the market's now 0:02:57.000 --> 0:02:59.680 looking through that and saying, Okay, yeah, these exemptions whatever, 0:02:59.720 --> 0:03:01.760 let's what we actually have on the table. And it's 0:03:01.800 --> 0:03:04.040 a lot of problems out there. And the other part 0:03:04.080 --> 0:03:05.720 that makes me a little bit nervous that I think 0:03:05.760 --> 0:03:08.280 we'll see is if we stick to tariff deals. I 0:03:08.280 --> 0:03:10.680 think teriff deals are easy. I think we're going to 0:03:10.760 --> 0:03:13.079 go after trade deals, and to me, trade deals will 0:03:13.120 --> 0:03:15.520 require import quotas something like that on behalf of these 0:03:15.520 --> 0:03:18.080 other countries and possibly restrictions on what they can do 0:03:18.120 --> 0:03:19.840 with China. I don't think that's going to be that 0:03:19.919 --> 0:03:21.480 easy for them to digest. So I think we'll learn 0:03:21.520 --> 0:03:24.320 a lot more in the next coming this week about deals. 0:03:24.639 --> 0:03:27.120 Tariff deals, I'm comfortable with it goes down trade deals, 0:03:27.200 --> 0:03:28.520 I think we take another leag lower. 0:03:28.840 --> 0:03:30.839 You know, I've seen somebody notes where people talk about 0:03:30.880 --> 0:03:34.000 how exhausted they are and how stressful this period is, 0:03:34.040 --> 0:03:36.880 and I was thinking about why, and there's this flood 0:03:37.080 --> 0:03:40.120 of information and it's hard to understand what structure to 0:03:40.160 --> 0:03:43.040 even put them in. What have we learned versus just 0:03:43.080 --> 0:03:46.160 tidbits of information that are coming in at you in 0:03:46.280 --> 0:03:49.320 rapid fire. Have we learned anything from the turmoil of 0:03:49.360 --> 0:03:52.400 the past week. Are we passed peak uncertainty and heading 0:03:52.400 --> 0:03:55.080 into something that we can more concretely hold. 0:03:55.240 --> 0:03:56.960 So the biggest thing for me that I can't quite 0:03:57.000 --> 0:03:59.839 figure out, and I think is really critical, is did 0:04:00.160 --> 0:04:02.560 China get sucked into being more aggressive on tariffs by 0:04:02.720 --> 0:04:04.320 how we play this out. Did we make it look 0:04:04.360 --> 0:04:06.760 like it was the US versus everyone China was more 0:04:06.760 --> 0:04:09.720 aggressive and now regrets it, Or did we learn that 0:04:09.800 --> 0:04:12.440 China really doesn't care, that China spent four years preparing 0:04:12.480 --> 0:04:14.360 for this and is really ready for the fight. 0:04:14.640 --> 0:04:15.840 I lean towards the ladder. 0:04:15.880 --> 0:04:17.719 I will give the people who talk about, you know, 0:04:17.720 --> 0:04:19.960 out of the deal in forty chess, that it could 0:04:19.960 --> 0:04:21.880 be the former, and I it's the former, that's great 0:04:21.880 --> 0:04:23.120 because China will have to back off. 0:04:23.160 --> 0:04:23.880 It was the ladder. 0:04:24.000 --> 0:04:25.560 We're not really prepared for this at all. 0:04:25.760 --> 0:04:27.840 And place you went there is there any sign that 0:04:27.920 --> 0:04:29.760 China's coming to the tango? Do you see an I 0:04:29.800 --> 0:04:30.680 think it's so no. 0:04:30.839 --> 0:04:32.200 I think you know we have to go back and 0:04:32.320 --> 0:04:36.640 we're about fifteen percent of China's exports, and you know, 0:04:36.680 --> 0:04:39.080 I think they exempted twenty five percent, whether it last 0:04:39.200 --> 0:04:42.000 or not, but I think that's also looking at it 0:04:42.040 --> 0:04:44.440 on the raw dollar value. I think from a profit margins, 0:04:44.600 --> 0:04:47.680 you know, we exempted probably China's most profitable things that 0:04:47.720 --> 0:04:50.120 they export to US. I don't see them come to 0:04:50.160 --> 0:04:52.040 the table. I see the rest of the world talking 0:04:52.040 --> 0:04:54.880 to them. We've been so, you know, which is very dangerous. 0:04:54.880 --> 0:04:57.279 And again, if you're in that part of the world, you. 0:04:57.320 --> 0:04:58.680 Probably have to play nice with China. 0:04:58.680 --> 0:05:01.599 Their military is there, their nave growing, It's unclear what 0:05:01.720 --> 0:05:03.719 direction Trump wants to go on some of that, and 0:05:03.720 --> 0:05:05.240 the rest of the world I think is very tired. 0:05:05.279 --> 0:05:08.719 The uncertainty doesn't do well, and everyone knows it's going 0:05:08.760 --> 0:05:11.560 to take years to rebuild manufacturing, which is why I 0:05:11.600 --> 0:05:13.560 go back to I'd be much more optimistic if we 0:05:13.920 --> 0:05:16.799 started doing things domestic. Maybe we buy ten billion dollars 0:05:16.800 --> 0:05:18.320 of navy ships, but they have to be built in 0:05:18.320 --> 0:05:21.160 the US shipyard, and that's going to be ten years 0:05:21.200 --> 0:05:22.880 of delivery, but it can start that process. 0:05:23.000 --> 0:05:24.520 We've talked a lot about the pressure that it's put 0:05:24.600 --> 0:05:26.800 on Europe, and it's push Europe to do things that 0:05:26.920 --> 0:05:28.800 is good for Europe. And I just wonder if this 0:05:28.839 --> 0:05:30.839 pushes China to do things that is good for China 0:05:31.360 --> 0:05:33.240 in line with what the President would actually like to 0:05:33.240 --> 0:05:35.560 say from China, which is a rep banasy the economy 0:05:35.800 --> 0:05:37.240 towards domestic consumption. 0:05:37.800 --> 0:05:38.560 Are you hopeful? 0:05:38.880 --> 0:05:41.080 No, I just don't think Chinese consumed the way we do. 0:05:41.120 --> 0:05:43.600 I think, like quite frankly, no one consumes the way 0:05:43.600 --> 0:05:46.039 the US does. We consume a lot, and that's another 0:05:46.040 --> 0:05:48.680 concern about the economy. Right We're seeing some delinquencies tick 0:05:48.760 --> 0:05:51.120 up with all this uncertainty. I think China's going to 0:05:51.200 --> 0:05:52.560 try and do what they do trade with the rest 0:05:52.600 --> 0:05:55.240 of the world, trade with us, and we're going to 0:05:55.240 --> 0:05:57.760 figure out where they have the opportunities. Again, they've spilled 0:05:57.920 --> 0:06:01.400 the last ten years building up ninety percent of rarest 0:06:01.400 --> 0:06:03.920 and critical minerals are refined in China. We can get 0:06:03.960 --> 0:06:06.000 them anywhere. I think that's not the hard part, whether 0:06:06.040 --> 0:06:09.080 it's cost justified to get it anywhere, it's the refining, 0:06:09.080 --> 0:06:11.080 and again that's going to take years. So China is 0:06:11.080 --> 0:06:13.320 putting all this pressure on us. And again, this was 0:06:13.400 --> 0:06:16.400 ridiculous five years ago. When we talked about this at Academy, Securities, 0:06:16.600 --> 0:06:19.000 the number of things that are really critical to military 0:06:19.000 --> 0:06:21.159 equipment that we are getting from China when we were 0:06:21.200 --> 0:06:24.120 having all this friction with China was insane. So bringing 0:06:24.120 --> 0:06:26.200 those back makes sense. But we've done it in such 0:06:26.200 --> 0:06:28.440 a way that I think we've left ourselves vulnerable in 0:06:28.440 --> 0:06:28.960 the meantime. 0:06:29.040 --> 0:06:31.480 So it seems like we haven't really gotten much clarity 0:06:31.520 --> 0:06:34.720 when it comes to understanding the off ramp between US 0:06:34.720 --> 0:06:36.039 and China negotiations. 0:06:36.320 --> 0:06:37.400 We do have a sense. 0:06:37.200 --> 0:06:39.920 Though, of what that off ramp looks like for President 0:06:39.960 --> 0:06:43.240 Trump to cater to a market, specifically the treasury market. 0:06:43.320 --> 0:06:44.720 And I want to go back to something that. 0:06:44.640 --> 0:06:46.680 You said, which is that you think that the bond 0:06:46.720 --> 0:06:49.160 market is going to lead the rest of the market's 0:06:49.279 --> 0:06:53.000 lower from here. Have we learned something about where that 0:06:53.040 --> 0:06:56.120 Trump put is in terms of what kind of levels 0:06:56.120 --> 0:06:58.440 of bond heals get him nervous. 0:06:59.200 --> 0:06:59.880 A little bit? 0:07:00.000 --> 0:07:01.800 But I think it was very easy with all the 0:07:01.839 --> 0:07:04.640 noise last week to talk about this as being foreign selling. 0:07:04.720 --> 0:07:07.560 This basis trade unwinding, right, So you know, FED said 0:07:07.560 --> 0:07:09.359 they would you know, incur, you know, they would protect 0:07:09.360 --> 0:07:11.360 the bond market, which I think they will, they'll buy 0:07:11.360 --> 0:07:13.360 some here there. I don't think we're going QE, but 0:07:13.400 --> 0:07:14.840 I think it was very easy to think of this 0:07:14.880 --> 0:07:18.120 as a temporary thing. If the conversation starts turning as 0:07:18.200 --> 0:07:20.840 I think it might, that our deficit isn't going away, 0:07:20.880 --> 0:07:23.040 dose isn't being as successful as we wanted, we are 0:07:23.080 --> 0:07:26.520 not being spendthrift. I think that starts putting even domestic 0:07:26.520 --> 0:07:28.840 pressure on yous and people saying, well, maybe even with 0:07:28.920 --> 0:07:31.480 inflation coming down, we're not at the right level. So 0:07:31.520 --> 0:07:33.560 that to me would be a bigger problem, right, and 0:07:33.600 --> 0:07:35.960 it'd be hard them. So what can he do? I'm 0:07:35.960 --> 0:07:36.800 not sure at that point. 0:07:37.400 --> 0:07:39.400 Okay, so if you get to like four seventy five, 0:07:40.080 --> 0:07:41.200 if we get to five. 0:07:42.160 --> 0:07:43.920 I think they're begging to come up with structure. 0:07:44.040 --> 0:07:44.440 I don't know. 0:07:44.480 --> 0:07:47.560 I think they're begging the FED to work for And again, 0:07:47.680 --> 0:07:49.480 a lot of this happened overnight last time. 0:07:49.520 --> 0:07:50.960 If it starts happening more and more. 0:07:50.920 --> 0:07:53.240 During the day, that's where I think the fear comes out. 0:07:53.400 --> 0:07:54.680 But I don't know what he can do other than 0:07:54.720 --> 0:07:58.000 go keeping flip flopping on tariffs. And it feels like 0:07:58.040 --> 0:08:00.680 they're kind of tired of flip flopping. On TARRAF And 0:08:00.720 --> 0:08:03.360 the other part is with the sole deficit. Right, we 0:08:03.360 --> 0:08:05.400 were at one time and it was always confusing how 0:08:05.440 --> 0:08:06.720 much of that was going to be the case. But 0:08:06.840 --> 0:08:09.040 tariffs are going to help reduce our deficit. Well, if 0:08:09.040 --> 0:08:11.200 that income's not really coming in, where are they going 0:08:11.240 --> 0:08:12.680 to get other income? And I think they're going to 0:08:12.720 --> 0:08:17.160 target foreign holders of treasuries again, there's talk about, you know, 0:08:17.240 --> 0:08:18.840 delisting some of the Chinese ADRs. 0:08:18.920 --> 0:08:19.720 I don't see what. 0:08:19.640 --> 0:08:22.240 That really does at this point, but you know that 0:08:22.280 --> 0:08:24.800 probably triggers yet another response from China. And I just 0:08:24.880 --> 0:08:27.600 keep thinking that we expect China to make these simplified moves, 0:08:27.720 --> 0:08:30.400 and we've talked about this before. She has learned something 0:08:30.440 --> 0:08:33.200 Trump one point zero. She was the first one tomorrow lago. 0:08:33.520 --> 0:08:37.200 Every time Trump said tariffs, they raise their hand trade delegation. 0:08:37.400 --> 0:08:40.360 They have played this very differently. So just like Trump 0:08:40.400 --> 0:08:43.040 administration has had four years to plan this, China has 0:08:43.120 --> 0:08:44.080 had four years to plan this. 0:08:44.200 --> 0:08:45.240 And it's beginning to look. 0:08:45.120 --> 0:08:47.800 Like China spent a lot more time and money planning 0:08:47.800 --> 0:08:48.800 this than the US did. 0:08:48.960 --> 0:08:51.120 It doesn't look like a negotiation right now. In fact, 0:08:51.120 --> 0:08:52.760 at least when I were talking about this, yesterday. It 0:08:52.800 --> 0:08:55.520 looks like the US is negotiating potentially, but itself of 0:08:55.600 --> 0:08:57.400 the moment, you're not hearing much back from China. 0:08:57.440 --> 0:08:58.959 I wanted to finish on one final point with. 0:08:58.960 --> 0:09:01.240 You, because you've been very consistent about this, is we 0:09:01.280 --> 0:09:02.640 work our way through learning season. 0:09:03.080 --> 0:09:04.400 You've ready ready rised the. 0:09:04.360 --> 0:09:07.240 Flag about the damage being done to the American brand, 0:09:07.640 --> 0:09:10.480 not about the attractiveness of US assets, but the attractiveness 0:09:10.520 --> 0:09:14.000 of US goods, US services. How much damage has actually 0:09:14.000 --> 0:09:14.440 been done. 0:09:14.520 --> 0:09:15.679 I think we are going to see some of that, 0:09:15.720 --> 0:09:17.599 and it's this first wave is going to be a 0:09:17.640 --> 0:09:19.839 little bit difficult to tell whether it's just because of 0:09:19.880 --> 0:09:23.160 global economic weakness that foreign sales sell down, or you're 0:09:23.160 --> 0:09:25.200 going to have to start looking is there an indication 0:09:25.280 --> 0:09:28.000 that's ay Cadbury, for example, starts doing better than some 0:09:28.040 --> 0:09:30.440 of our brands overseas, and that I think will be 0:09:30.480 --> 0:09:33.040 the real key. Try and figure out pairs where Okay, 0:09:33.120 --> 0:09:36.120 here's a European or other brand and are there sales 0:09:36.120 --> 0:09:39.080 declining or changing relative to the US brands. And I 0:09:39.080 --> 0:09:41.800 think that would be a big shock to the system, 0:09:41.800 --> 0:09:44.080 because I do think people believe and you can see 0:09:44.080 --> 0:09:45.920 it in some of the price action today that there's 0:09:45.920 --> 0:09:49.079 just this huge demand for our brands globally and it's 0:09:49.120 --> 0:09:52.200 only being affected by tariffs. I think we've diminished that 0:09:52.400 --> 0:09:55.200 as part of this overall trading strategy, and that's going 0:09:55.240 --> 0:09:57.560 to be harmful, and I think we may even see 0:09:57.600 --> 0:09:59.320 some companies talk about it. I think it's too early 0:09:59.360 --> 0:10:01.680 this quarter, but as this goes on, I think that 0:10:01.800 --> 0:10:03.200 becomes an issue for the rest of the year. 0:10:03.320 --> 0:10:05.120 Interesting want to watch, Peter, it's going to see you. 0:10:05.240 --> 0:10:07.960 Thanks for dropping by bitter chair there and Academy Securities. 0:10:17.960 --> 0:10:19.600 If you look at for stability in the bond marketing, 0:10:19.600 --> 0:10:21.440 you've got it. At the moment, we're down across the board. 0:10:21.440 --> 0:10:23.600 Here across the curve, we're down six or seven basis 0:10:23.600 --> 0:10:25.960 points at the front end on a ten year maturity, 0:10:25.960 --> 0:10:28.120 the yield is down six to let's call it four 0:10:28.280 --> 0:10:31.120 forty three. Let's turn to the economy. US consumer sentiment 0:10:31.200 --> 0:10:34.280 falling to its second weakest reading on record, while inflation 0:10:34.400 --> 0:10:38.640 expectations saw to multi decade highs Nita Richardson of ABP, writing, 0:10:38.679 --> 0:10:42.600 inflation has made consumers cautious, but rising incomes can help 0:10:42.640 --> 0:10:46.600 cushion any tariff driven price increases if they come neither 0:10:46.640 --> 0:10:49.000 joined us now for more need a good morning. Let's 0:10:49.040 --> 0:10:51.200 just focus on the data and get away from the politics. 0:10:51.520 --> 0:10:53.679 Or income is still rising, you. 0:10:53.640 --> 0:10:56.720 Know, we're seeing that when we look at payroll at ADP, 0:10:56.880 --> 0:10:59.400 they're certainly rising, not as fast as they were two 0:10:59.480 --> 0:11:02.240 years ago, but at a healthy clip, faster than before 0:11:02.280 --> 0:11:05.520 the pandemic. There's also a different source of income that's 0:11:05.679 --> 0:11:08.240 really important to think about, which is the housing market. 0:11:08.280 --> 0:11:12.000 We get housing starts this later this week. Home equity 0:11:12.240 --> 0:11:15.600 for home owners is up almost nine percent from a 0:11:15.640 --> 0:11:18.840 year ago. So no, it's not the highest home equity 0:11:18.880 --> 0:11:21.760 we'd seen on record, but it's close. It's like the 0:11:21.800 --> 0:11:24.480 third highest, and so that's another level of question. 0:11:24.600 --> 0:11:25.400 I don't mean to be. 0:11:25.360 --> 0:11:28.360 Too polyann on a Monday, but I also want to 0:11:28.360 --> 0:11:32.800 give a real data reality check to all the uncertainty 0:11:32.880 --> 0:11:33.760 that's out there in the market. 0:11:33.880 --> 0:11:35.800 I was just going to say, you're not complying with 0:11:35.840 --> 0:11:36.920 the narrative. I love it. 0:11:37.000 --> 0:11:38.600 I think it's great, and I think it's good to 0:11:38.600 --> 0:11:40.800 push back against it because there's so much gloom and 0:11:40.800 --> 0:11:43.720 doom about companies who are frozen, who aren't going to 0:11:43.760 --> 0:11:45.920 be hiring, They're not going to be firing, but job 0:11:45.960 --> 0:11:49.720 mobility just isn't there. You're still seeing just some signs 0:11:49.760 --> 0:11:52.760 the consumers are maintaining resilience through other means, even with 0:11:52.800 --> 0:11:55.199 the stock market that may be rallied last week, but 0:11:55.240 --> 0:11:57.760 certainly didn't feel like it, and even with the idea 0:11:57.840 --> 0:11:59.200 that it might be harder to get a raise. 0:12:00.080 --> 0:12:04.439 I don't discount the sentiment because sentiment usually triggers certain behaviors. 0:12:04.480 --> 0:12:08.480 And you see downbeat sentiment with consumers, with homebuilders, with CEOs, 0:12:08.559 --> 0:12:11.640 everywhere you go. There is a pessimism in the outlook. 0:12:11.880 --> 0:12:14.400 But then when you turn to the raw data, this 0:12:14.440 --> 0:12:17.720 week is super important. Why this is the reference week. 0:12:17.880 --> 0:12:20.240 This is the week that the BLS will start counting 0:12:20.320 --> 0:12:23.960 the number of people who got paid for their employment report, 0:12:24.160 --> 0:12:26.840 and this is the week the ADP will report in 0:12:26.960 --> 0:12:29.280 of two weeks to talk about the labor market. 0:12:29.640 --> 0:12:31.600 And if you look at this week and you. 0:12:31.559 --> 0:12:34.040 Compare it to March, what you're seeing is that hiring 0:12:34.240 --> 0:12:37.960 is still solid. And if you look at one area 0:12:38.000 --> 0:12:41.040 of sentiment that is holding up worker sentiment, we're actually 0:12:41.040 --> 0:12:45.760 going to produce a worker sentiment index tomorrow, publish it 0:12:45.800 --> 0:12:49.160 at adpresearch dot com. What you'll see is that while 0:12:49.200 --> 0:12:52.160 consumers are downbeat, workers are highly engaged. 0:12:52.160 --> 0:12:52.920 They're plugged in. 0:12:53.320 --> 0:12:56.040 Maybe it's because they're cautious about their job loss, but 0:12:56.080 --> 0:12:58.480 they're showing off the hair or engaged, and they are 0:12:58.640 --> 0:13:01.120 productive and they're doing so because they want to make 0:13:01.160 --> 0:13:03.960 sure that they keep those jobs as they move into 0:13:04.000 --> 0:13:04.840 the rest of the year. 0:13:04.920 --> 0:13:07.240 So qui quitting has died basically is what you're saying, 0:13:07.240 --> 0:13:08.079 which is actually. 0:13:07.840 --> 0:13:09.960 Pursueing really welcome. That's fantasting less. 0:13:10.160 --> 0:13:13.600 I'm curious you say that hiring is remaining solid. Is 0:13:13.640 --> 0:13:15.760 it in specific industries they give you a sense of 0:13:15.800 --> 0:13:19.640 contentially whether this is a resilience factor or whether this 0:13:19.800 --> 0:13:21.719 is people getting old and needing to cater to them 0:13:21.720 --> 0:13:22.320 of getting fatter. 0:13:22.600 --> 0:13:25.160 Yeah, that's a great question, because we really do see 0:13:25.200 --> 0:13:27.960 a good news bad news scenario there. We're seeing hiring 0:13:28.000 --> 0:13:30.880 across firm sizes. That's good news, especially if you look 0:13:30.920 --> 0:13:35.040 at small businesses who are price takers in the global 0:13:35.080 --> 0:13:39.520 input market. We're seeing solid hiring across the board, but 0:13:39.640 --> 0:13:42.600 not every industry. In fact, if you look at consumer 0:13:42.679 --> 0:13:47.120 facing industries or somewhat discretionary like leisure and hospitality, it's 0:13:47.160 --> 0:13:50.240 been weaker. If you look at retail also weaker, so 0:13:50.280 --> 0:13:54.000 we're seeing hiring and ironically manufacturing. So we don't know 0:13:54.040 --> 0:13:56.559 if that's pull forward hiring they get ahead of some 0:13:56.600 --> 0:13:59.720 of these tariff and trade changes, or if this is 0:13:59.760 --> 0:14:02.120 a real rebound and we're seeing it in B to 0:14:02.200 --> 0:14:05.160 B services but not so much in consumer facing. In 0:14:05.240 --> 0:14:08.280 the series, that is a sea change, and it's tied 0:14:08.320 --> 0:14:11.280 directly to consumers and how they're feeling about the economy. 0:14:11.360 --> 0:14:14.040 You talked about the importance of expectations. Let's talk about 0:14:14.040 --> 0:14:16.560 how consumers are feeling about this economy. You med Channel 0:14:16.640 --> 0:14:21.360 Friday consumer sentiment almost three year low, inflation expectations, multi 0:14:21.400 --> 0:14:26.240 decade highs unemployment expectations the worst since two thousand and nine. 0:14:26.600 --> 0:14:29.840 Are you seeing anything in the hard data to validate 0:14:30.400 --> 0:14:34.000 consumer confidence that week? That poor that we saw on Friday. 0:14:34.200 --> 0:14:37.840 On the labor market, now, layoffs are at a two 0:14:37.920 --> 0:14:41.320 year low. They continue to hover around those two year 0:14:41.360 --> 0:14:44.640 lows in the private sector. Different for the federal government, 0:14:44.680 --> 0:14:47.640 but in the private sector, we are not seeing that 0:14:47.720 --> 0:14:50.960 kind of upturn and upheaval and pause and hiring that 0:14:51.320 --> 0:14:54.080 is being projected or picked up in the sentiment. Now, 0:14:54.120 --> 0:14:57.600 things can change rapidly I'm not saying that the outlook 0:14:57.680 --> 0:15:00.160 that we're seeing right now is going to be consistent 0:15:00.240 --> 0:15:02.560 six months from now. But if you're looking at the 0:15:02.600 --> 0:15:05.520 starting point in the baseline, you're seeing, and I think 0:15:05.600 --> 0:15:08.760 Chair Pal said this and his recent remarks, a labor 0:15:08.840 --> 0:15:11.600 market that is solid and continues to perform. 0:15:11.800 --> 0:15:14.560 Still this massive, massive sprint lace of bestween the soft 0:15:14.600 --> 0:15:16.800 and hot data. I keep going back to that headline 0:15:16.800 --> 0:15:19.920 from you, Mitch. To see unemployment expectations down at the 0:15:19.960 --> 0:15:23.160 worst levels we've seen since two thousand and nine is 0:15:23.200 --> 0:15:24.080 pretty staggerant. 0:15:24.160 --> 0:15:26.280 It was funny you were mentioned that. In the past 0:15:26.360 --> 0:15:26.880 couple of weeks. 0:15:26.880 --> 0:15:29.360 Lori Cavasina put that out in a report, saying that 0:15:29.400 --> 0:15:32.240 in all of the earnings calls also, corporate executives have 0:15:32.280 --> 0:15:35.520 been talking about how this reminds them of two thousand 0:15:35.560 --> 0:15:38.520 and eight, This reminds them of twenty twenty, This reminds 0:15:38.520 --> 0:15:40.320 them before that of the two thousands. 0:15:40.560 --> 0:15:41.320 You see that in the. 0:15:41.280 --> 0:15:44.960 AAII sentiment survey as well. So at a certain point, 0:15:45.200 --> 0:15:47.960 have we really reached a new paradigm shift though, where 0:15:48.000 --> 0:15:50.960 suddenly the soft data has not been predictive of the 0:15:51.000 --> 0:15:53.280 hard data. Are we going back to something more normal 0:15:53.400 --> 0:15:55.160 where you would normally see a correlation there. 0:15:55.200 --> 0:15:57.160 So the Federal Reserve is not blinking and Native the 0:15:57.200 --> 0:15:59.840 Federal Reserve will be meeting in early May. That meeting 0:16:00.000 --> 0:16:02.680 and Cluthes, we'll get that decision on May seventh. What 0:16:02.840 --> 0:16:05.040 you make have kind of navigated things so far and 0:16:05.160 --> 0:16:06.800 what would you expect to see in a few weeks time. 0:16:06.920 --> 0:16:09.520 I think the Fed is navigated the way Main Street has. 0:16:09.680 --> 0:16:12.640 They're waiting and watching. There hasn't been any big money 0:16:12.680 --> 0:16:16.160 moves that we can identify, and I think it's too 0:16:16.200 --> 0:16:18.840 early on the policy front to make any firm movements. 0:16:18.880 --> 0:16:20.720 And that's what you're seeing from the FED. But it's 0:16:20.720 --> 0:16:23.480 also what you're seeing from small businesses and medium sized 0:16:23.520 --> 0:16:27.200 businesses who can't change operations on a dime. Consumers can't 0:16:27.280 --> 0:16:29.920 change spending patterns on a dime. So what you're seeing 0:16:30.040 --> 0:16:33.160 is an economy that started from a solid baseline in 0:16:33.240 --> 0:16:34.840 wait and see mode, just like the FED. 0:16:35.000 --> 0:16:36.960 You know, there is this discussion that we had and 0:16:37.040 --> 0:16:39.320 it was off air, about whether this FED is going 0:16:39.360 --> 0:16:41.920 to be really just targeting dysfunction in the treasure market 0:16:41.960 --> 0:16:43.800 or whether they actually were going to be looking at 0:16:43.880 --> 0:16:45.800 levels we're not going to close the spreads until the 0:16:45.800 --> 0:16:47.600 spreads get too wide, and then we're going to close them, 0:16:47.640 --> 0:16:50.920 akin to maybe what the ECB has been doing. I 0:16:50.960 --> 0:16:54.960 am curious about this theory that Neil Koshkari put out 0:16:54.960 --> 0:16:56.800 over the weekend saying that we at the FED have 0:16:56.880 --> 0:17:00.320 no ability, zero ability to affect that destination of your 0:17:00.360 --> 0:17:03.360 yields as investors try to get some sort of price 0:17:03.400 --> 0:17:05.840 discovery here. Do you believe that or do you think 0:17:05.920 --> 0:17:08.439 that there is a level at which they do step in. 0:17:09.040 --> 0:17:13.240 Well, I think this comes to your sentiment momentum distinction. 0:17:13.320 --> 0:17:16.760