Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern
Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business App.
Speaker 1: Listen on demand wherever you get your podcasts, or watch
Speaker 1: us live on YouTube.
Speaker 2: Julia Cornet on Now Micropolicy Perspectives on the Fed on
Speaker 2: our economy, Did Julia there's a dual mandate jobs inflation?
Speaker 2: I'm sorry, real economic growth matters too. Are you marking
Speaker 2: down your real GDP and your nominal GDP?
Speaker 3: Well, we're definitely marking down our real GDP. We do
Speaker 3: now expect a recession to start in the second half
Speaker 3: of this year in the United States. And nominal GDP
Speaker 3: that's another question, because we do expect a burst of
Speaker 3: infla from these tariffs. That's one of the things that
Speaker 3: one of the factors we expect we'll take the US
Speaker 3: economy into recession is the hit to profits, the hit
Speaker 3: to purchasing power. Yeah, it looks like it's a difficult
Speaker 3: road ahead.
Speaker 2: Could you model out a five percent and plus unemployment rate?
Speaker 2: Or someone this weekend said, can we go to six percent?
Speaker 3: Sure? Sure, I don't see I mean, there's two there's
Speaker 3: two ways to look at a potential recession in the US.
Speaker 3: On the one hand, the US economy has been an
Speaker 3: extraordinary shape going into this. There aren't obvious imbalances in
Speaker 3: the US economy. We don't have an over indebted consumer.
Speaker 3: The banking sector looks pretty healthy, so that would argue
Speaker 3: for maybe a milder recession. On the other hand, I mean,
Speaker 3: we're just seeing a generational change. This is an existential
Speaker 3: shift in the role of the US economy and the
Speaker 3: global economy and the global world order and capital markets,
Speaker 3: and that could certainly argue for a deeper recession. So
Speaker 3: on average, we put pencil in an average post war recession,
Speaker 3: and that certainly gives you an unemployment rate close to
Speaker 3: six percent.
Speaker 4: So, Julia, I guess if you think about these tariffs here,
Speaker 4: what are the upside from your perspective for this tariff policy.
Speaker 3: You know, I don't see a lot of upside. I
Speaker 3: don't see a coherent strategy. It is, you know, a
Speaker 3: strategy of pushing our allies away rather than pulling them
Speaker 3: closer to address maybe some of the real issues we
Speaker 3: have in terms of trading practices with China. So the
Speaker 3: and the method of on again, off again, not knowing
Speaker 3: what the ask is in terms of these bilateral negotiations,
Speaker 3: it just seems very chaotic. So in addition to the
Speaker 3: actual hit from the tariffs themselves, there's just tremendous uncertainty
Speaker 3: as to you know, what the policy will be if
Speaker 3: you negotiate a deal, will it stick or will that
Speaker 3: be renigged upon you know a few months down the road.
Speaker 3: The US has become an unreliable negotiating partner.
Speaker 4: So Julia, let's you know, we talk about this economy,
Speaker 4: we have to talk about about the consumer here. How
Speaker 4: do you view the consumer here today? How precarious a position,
Speaker 4: if any, is the consumer facing right now?
Speaker 3: So going into this, you know, the labor market is
Speaker 3: pretty solid, but it has cooled a lot. And what
Speaker 3: we had seen was that we'd seen a rotation away
Speaker 3: from strength amongst the lower wage consumer towards the economy
Speaker 3: really being driven by kind of the wealth effects and
Speaker 3: the higher end consumer. Last year. So middle consumers had
Speaker 3: already gotten pretty budget conscious, pretty you know, they had
Speaker 3: been hit more disproportionately by higher interest rates, so they
Speaker 3: were already feeling a bit of a squeeze and hiring
Speaker 3: can consumers have been doing well and certainly had really
Speaker 3: strong portfolios going into this year, but now that foundation
Speaker 3: has taken a bit of a hit, and we would
Speaker 3: certainly affect some additional downside ahead in terms of asset valuations.
Speaker 2: We welcome all of you across the nation this morning.
Speaker 2: Paul Sweeny and Tom Kane. This is Bloomberg Surveillance on YouTube.
Speaker 2: Good morning, humbled by the global reach of YouTube. Subscribe
Speaker 2: to Bloomberg podcasts and of course on Android Auto Apple
Speaker 2: car play as well. Good morning to Bloomberg eleven three
Speaker 2: to zero in New.
Speaker 5: York, Julia Cornado with us.
Speaker 2: Megan Clark of Saint John's University will join us here
Speaker 2: in a bed, Doctor Coronado. The tumultuous time that we're in,
Speaker 2: does a FED find a new process, a new path,
Speaker 2: or do they just say we're going to get through
Speaker 2: April May June out to Jackson Hall.
Speaker 3: You know, I think the FED is going to approach
Speaker 3: its mandates the the way it always has. It's going
Speaker 3: to look at the state of the economy and the
Speaker 3: risks to the economy. I think what we've heard is
Speaker 3: a sort of stern message from share Powell in the
Speaker 3: sense that they're facing difficult trade offs, at least in
Speaker 3: the near term. They don't know. They see risks to
Speaker 3: their employment mandate, they see risks to their inflation mandate.
Speaker 3: They go in opposing directions in terms of the policy prescription.
Speaker 3: So they're just going to have to see which one
Speaker 3: is the dominant influence. But the starting point in terms
Speaker 3: of their own assessment is that we are in balance
Speaker 3: in the labor market. So they're checking the box on
Speaker 3: their full employment mandate right now, but they are not
Speaker 3: checking the box on their inflation mandate. We are not
Speaker 3: at two percent. We've gotten a lot closer. The underlying
Speaker 3: dynamics look okay, but if we experience an inflationary shock
Speaker 3: on top of that, that pushes them further away from
Speaker 3: already a gap that they're not particularly happy with.
Speaker 2: Doctor Cornetta, Thank you so much, Greatly appreciated, Julia cornetto
Speaker 2: micropolicy Perspectives.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android
Speaker 1: Auto with the Bloomberg Business app. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station.
Speaker 1: Just say Alexa play Bloomberg eleven thirty Paul.
Speaker 2: Sween and I begin our coverage of the death of
Speaker 2: Pope Francis, and what we're trying to do is bring
Speaker 2: you informed people about his life, the present, and the
Speaker 2: future that we will see for the Catholic Church and
Speaker 2: it's reach across one point four billion people worldwide. We
Speaker 2: start strong with Excellence out of Fordham University, Boston College.
Speaker 2: Meghan Clark joins US now with Saint John's at University,
Speaker 2: where she does important work on moral theology, among others. Meghan,
Speaker 2: thank you so much for beginning our coverage of the
Speaker 2: death of the Pope. You wrote a while back on
Speaker 2: Thomas Aquinas and you said good is to be done
Speaker 2: and pursued, and evil is to be avoided. How permanent
Speaker 2: is the method, the process, the pastoral effort of Pope
Speaker 2: Francis or do you look at it as a one
Speaker 2: off pope versus what the future would bring.
Speaker 6: I think that Pope Francis, I don't think anyone it's
Speaker 6: wise to call him a one off in terms of
Speaker 6: the impact that he had on both the Roman Catholic
Speaker 6: Church and the world. What Pope Francis really showed us
Speaker 6: is how to take the method of Vatican two and
Speaker 6: really globalize it and live it in ways that inspired
Speaker 6: billions of people.
Speaker 2: Do we understand how unique he was? I've always thought
Speaker 2: from a distance from the church that we really don't
Speaker 2: understand the there where he took over from Pope Benedict.
Speaker 2: How unique was I believe thirteen twelve years ago.
Speaker 6: We knew something was a little bit different when he
Speaker 6: came out in all white and insisted that before he
Speaker 6: give the audi the Square his blessing, that he asked
Speaker 6: everyone to pray for him. I think that every pope
Speaker 6: is a little bit unique, and they bring all of
Speaker 6: their life experience and their challenges and their gifts and
Speaker 6: their graces. But there is something about Pope Francis's humility
Speaker 6: and humanity that just deeply connected with people.
Speaker 4: Megan Now, the Catholic Church, in the Holy See and
Speaker 4: the cardinals they turned their attention to electing.
Speaker 7: A new pope.
Speaker 4: What are the pulls and pushes in that we're going
Speaker 4: to see over the coming days.
Speaker 6: So it's going to take a while, and Pope Francis
Speaker 6: will have all of the papal funeral process, and a
Speaker 6: whole lot of people have to get to Rome before
Speaker 6: they will begin a conclave. But really the most important
Speaker 6: thing for everyone in that room is going to be
Speaker 6: really trying to figure out and pray where is the
Speaker 6: Holy Spirit guiding them to really figure out what the
Speaker 6: church needs? And that's you know, we're here in the
Speaker 6: United States, but it's a global church, and so kind
Speaker 6: of what we think of here often as kind of
Speaker 6: the big issues aren't always the big issues for the
Speaker 6: cardinals coming from places like Congo or Al Salvador or
Speaker 6: all across the world.
Speaker 4: And Megan, you know, the Catholic Church, the Holy see
Speaker 4: it is not unlike or not too dissimilar to a
Speaker 4: lot of countries around the world where there are profound
Speaker 4: liberal elements of the church and profound conservative elements of
Speaker 4: the church. To what extent will they have to, I guess,
Speaker 4: agree on electing a next pope who was maybe the
Speaker 4: upper hand?
Speaker 7: Do you think?
Speaker 6: I think the realities the majority of the College of
Speaker 6: Cardinals were elevated to the status of cardinal by Pope
Speaker 6: Francis at this point, and so I think that's going
Speaker 6: to be something that because he has been pope for
Speaker 6: for quite time. I think the reality of how to
Speaker 6: continue the level of engagement globally, not just of kind
Speaker 6: of church leaders, but of the people. That happened over
Speaker 6: the last two three years with the Synod, you had
Speaker 6: really mobilizing and conversations starting in every small diocese across
Speaker 6: the world. And so I think there is going to
Speaker 6: be attention to continuing this to be a listening church,
Speaker 6: as Pope Francis has tried to show us how to
Speaker 6: be to be a listening Meghan.
Speaker 2: Clark at Saint John's with us as we continue our
Speaker 2: coverage of markets challenged this morning, looking to the events
Speaker 2: in Washington as well, and also the death of Pope Francis.
Speaker 2: Meghan Clark again out of Fordham in Boston College. Just
Speaker 2: with very early work, her book The Vision of Catholic
Speaker 2: Social Thought was profound in twenty fourteen, Megan, as simple
Speaker 2: as I can, this is a pope that had to
Speaker 2: deal with social media. I go back through my childhood,
Speaker 2: pauled all of us in our experience. These are popes
Speaker 2: that moved its slow motion.
Speaker 5: How does a.
Speaker 2: Catholic church and your study of its theology, how does
Speaker 2: it change in a world of social media.
Speaker 6: It has to be more responsive and more visibly present
Speaker 6: in ways it didn't have to before. And I think
Speaker 6: we saw that with Pope Francis's attention to the environment.
Speaker 6: He really focused our attention most on the environment, on
Speaker 6: the plight of migrants around the world, and did that.
Speaker 6: He knew how to do that by both what he said,
Speaker 6: but also where he went and who he met with,
Speaker 6: and he would go to the people in places and
Speaker 6: so things like his first visit was to migrants at
Speaker 6: Lampadusa was something that was a pastoral choice to do,
Speaker 6: but it also was in a global media world something
Speaker 6: that was astute.
Speaker 2: Okay, But his parents were Italian, he was in Argentina,
Speaker 2: the first pope since the fifteenth century I believe to
Speaker 2: be outside of the Italian European orbit. You're saying that
Speaker 2: it is now entrenched with his work of twelve years.
Speaker 6: I think the institutional changes that Pope Francis made, as
Speaker 6: well as the pastoral message of really focusing our attention
Speaker 6: on the margins of society and the world and on
Speaker 6: the need to protect our common home.
Speaker 3: Are they were.
Speaker 6: They were priorities before Francis, but he moved them to
Speaker 6: the center. And I think that that's that's something that's
Speaker 6: going to stick around.
Speaker 7: Megan, is there a front runner to be the next hope?
Speaker 4: Is there maybe a geographic part of the world that
Speaker 4: maybe needs to show leadership.
Speaker 6: I think that there's really no way. I'm a scholar
Speaker 6: and uh a theologians, so I'm not going to I'm
Speaker 6: not I'm not going to play into the politics. I
Speaker 6: will say that, you know, with Pope Francis, the Holy
Speaker 6: Spirit certainly surprised everybody. So we will see.
Speaker 2: Megan, that was beautifully answered, and that a compliance at
Speaker 2: Saint John's University is in of your ability to dodge
Speaker 2: Pole's difficult question.
Speaker 5: And Megan, what to me is so interesting?
Speaker 2: And thank you so much for forgetting our coverage of
Speaker 2: this process, if you will, of the Catholic Church. We
Speaker 2: all have our images, but one of them is a
Speaker 2: recent movie.
Speaker 5: Did you see Conclave?
Speaker 7: I did?
Speaker 2: I did?
Speaker 5: How often? Mark was it? Professor?
Speaker 6: Well, Hollywood always takes its liberties. But the thing that
Speaker 6: I will say about that movie is that I do
Speaker 6: think you get a sense of the difficulty that lays
Speaker 6: before the cardinals in the coming weeks, as well as
Speaker 6: everything else aside everybody who will be in that room
Speaker 6: to determine who will lead my church. It is going
Speaker 6: to be people who, in goodwill are prayerfully trying to
Speaker 6: figure out who is the best, because it's not about ideologies,
Speaker 6: it's not about positions theological or political. You know, you're
Speaker 6: you're electing a person and the person that Mark Sorry
Speaker 6: for him, Mario Bergoglio had had the grace to lead
Speaker 6: the church really powerfully and beautifully. One of the highlights
Speaker 6: most important moments of my life is getting to meet
Speaker 6: Pope Francis after working on a project in twenty twenty two.
Speaker 2: And.
Speaker 3: You know, there.
Speaker 6: There is just something that was communicated by just being
Speaker 6: around a holy man that yeah, they got to try
Speaker 6: and figure out who has the grace and the strength.
Speaker 2: And thank you so much, we hope we can call
Speaker 2: on you in the next coming days. A full bite
Speaker 2: scholar out of Fordham and Boston College and now at
Speaker 2: Saint John's University. It's shocking Paul hurt accomplishments in so
Speaker 2: many short years. The only equivalent I can think of
Speaker 2: is Elizabeth.
Speaker 5: Economy on China. It's just overwhelming what Megan.
Speaker 2: Clark has accomplished within the academics of the Catholic shirt.
Speaker 1: You're listening to the Bloomberg surveillance podcast. Catch US live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Apple Karplay and Android Auto with the Bloomberg Business app,
Speaker 1: or watch US live on YouTube.
Speaker 5: Got to Makunda with us this morning.
Speaker 2: He's at Yale University with some outstanding books out, including
Speaker 2: Picking Presidents. Thrilled that he could join us today. Very
Speaker 2: busy news cycle here the Vick's thirty one point eighty
Speaker 2: two dollar in retreat. So at Yale, you can't get
Speaker 2: admitted unless you read eight hundred seventy six pages of
Speaker 2: Jonathan Spence. The Search for Modern China can't go to Yell.
Speaker 2: I've actually read it cover to cover every word it was,
Speaker 2: you know, to write a passage in all that if
Speaker 2: you know, forget about giving the Chinese leadership. Jonathan Spence
Speaker 2: is a search for modern China. What if we gave
Speaker 2: him your book Picking Presidents? What do you see out
Speaker 2: of Beijing? Is they look back on the presidency You've
Speaker 2: studied so well?
Speaker 5: Oh?
Speaker 8: I will quote so I lived in Beijing in twenty sixteen,
Speaker 8: the first time Trump won, And I will quote a
Speaker 8: senior Chinese official who said to me, if you guys
Speaker 8: want to give US leadership of the world.
Speaker 7: We will take it.
Speaker 8: And that's basically the simplest answer, except this time it's
Speaker 8: that on steroids. If there is a source of American
Speaker 8: influence and power relative to China that has been weakened
Speaker 8: by that has not been wetted by this administration, I
Speaker 8: don't know what it is.
Speaker 2: Urgent message here for surveillance World. David Gura sends it
Speaker 2: a note thank you, David for listening this morning.
Speaker 5: In your three hour work week. Gura also read every
Speaker 5: page China.
Speaker 2: So in twenty sixteen you were in Beijing and those
Speaker 2: red doors were shocked at what was happening. How do
Speaker 2: they negotiate? I don't people say we're negotiating. I'm like,
Speaker 2: after the Japanese news this weekend, really are we negotiating?
Speaker 5: Professor?
Speaker 8: I mean, I'm sure that they're talking, because they'll be
Speaker 8: back channel discussions at all times. But yeah, it is
Speaker 8: a cliche to quote Sansu about the Chinese. I'm not
Speaker 8: going to do that, but I'll say it is a
Speaker 8: general rule of strategy that when your enemy is making
Speaker 8: a mistake, get out of the way, exactly, and I
Speaker 8: think the Chinese see that quite clearly.
Speaker 2: Oh, I just don't see negotiation going on, whether it's
Speaker 2: with Vietnam or Poland, I just don't get.
Speaker 4: I don't know, but yeah, I guess one of the
Speaker 4: questions if you talk the administration, what we're experiencing now
Speaker 4: is short term pain for a longer term gain of
Speaker 4: re ordering global economics where more manufacturing comes back to
Speaker 4: the US.
Speaker 7: Is that a how do you kind of view that?
Speaker 5: Look?
Speaker 8: So I find this astonishing that they have made a
Speaker 8: diagnosis that's not crazy, right, Like, the US probably should
Speaker 8: have a lot more manufacturing, both for economic and for
Speaker 8: national security reasons. That's something you'd find a consensus on
Speaker 8: across the political spectrum. Except every policy they've adopted is
Speaker 8: going to take us further away from that goal, not closer. Taxing,
Speaker 8: intermediate imports. Much of the stuff that the United States
Speaker 8: imports is things that are used as components in manufacturing.
Speaker 8: This is going to cripple American manufacturing. It's not going
Speaker 8: to help it.
Speaker 7: So how do you think this plays out here?
Speaker 4: I mean, at some point the economic pushback, whether it's inflation,
Speaker 4: whether it's slower economic.
Speaker 7: Growth, that's going to become an issue for people. How
Speaker 7: do you think that's going to play out.
Speaker 8: It is I'm Thorston's slock from Apollo yesterday or just
Speaker 8: set on emails, and he's predicting a four percent drop
Speaker 8: in US GDP this year with nonlinearities that could make
Speaker 8: it much worse, right, because that doesn't account for, say,
Speaker 8: supply chain collapses that are worse than anything we saw
Speaker 8: in COVID, which we're already starting to see the first
Speaker 8: lines up that's about the same size decrease in GDP
Speaker 8: is the two thousand and eight financial crisis with more
Speaker 8: potential on the downside than the arsen This administration is
Speaker 8: not insensitive political pressures. We just saw that back off
Speaker 8: with the tariffs, when the bond market clearly frightened even
Speaker 8: Donald Trump into saying we can't, we need to back off.
Speaker 8: But this is not primarily, from what I can tell,
Speaker 8: a set of economic policies. This is a cultural reorientation
Speaker 8: of the country, you know, a cultural revolution. Al Krugman
Speaker 8: said this morning, which a lot of people are starting
Speaker 8: to make a comparison. I'm not sure economics are going
Speaker 8: to be a driver in the short term.
Speaker 2: I Gotama Kundu with us here at Yale University, with
Speaker 2: wonderful books and the presidency. This is off your remit,
Speaker 2: but I got to ask Hannah Jang writing it up
Speaker 2: in Secondaries Investors, which is a wicked internal investment website.
Speaker 5: If you will. For like private credit, private equity, your.
Speaker 2: Yale is rumored from four sources to sell up to
Speaker 2: six billion of private equity portfolio. Harvard's been turned upside
Speaker 2: down fourteen. Oh, this was maybe Yale's out dodged a
Speaker 2: bullet so far. And I don't want you to speak
Speaker 2: for Yale on the unleashing of private equity, but I
Speaker 2: do want you to speak about your study of the
Speaker 2: silence of leverage that's out there. We're all walking around, Oh,
Speaker 2: we're not leveraged like eighty seven or ninety eight, really
Speaker 2: are we?
Speaker 8: So there's so much of the market that has become
Speaker 8: less and less transparent over time, right between private credit,
Speaker 8: sort of different things. I'm actually my greatest concern is
Speaker 8: we don't know. We don't know, right, Yeah, that the
Speaker 8: FED is going to try to make policy in the
Speaker 8: dark to an extent that is not like you know,
Speaker 8: it's not new, but it's not easy. At the same
Speaker 8: time that the President is putting enormous pressure on it,
Speaker 8: and threatening to fire the chairman of the FED. That's
Speaker 8: not a great combination.
Speaker 7: So where do you think we go over the next
Speaker 7: six to twelve months here?
Speaker 4: Is there a role for Congress to push back or
Speaker 4: do we just kind of sit back and say, let's
Speaker 4: see how these policies play out.
Speaker 8: I mean, of course there's a role for Congress, sure
Speaker 8: that I see them taking it, partly because of jerry mandering,
Speaker 8: partly because the Senate is such a favorable terrain for
Speaker 8: the Republicans in this midterm that a lot of the
Speaker 8: Republican senators are going to say, hey, I'm fine, my
Speaker 8: only challenge is from the right. That being said, if
Speaker 8: we really take a two thousand and eight style downturn
Speaker 8: or worse as was in the offing a couple of
Speaker 8: weeks ago, Republicans are going to be worried. They're going
Speaker 8: to see something that looks a lot like nineteen thirty two,
Speaker 8: right where essentially a Republican power was wiped out for
Speaker 8: a generation. And at that point the party may respond,
Speaker 8: it's just my fears it'll be too late.
Speaker 2: There's a lot of portraits in the Oval Office right now,
Speaker 2: which is the most important presidential portrait for President Trump,
Speaker 2: is it Andrew Jackson or someone else I'm missing, so.
Speaker 8: It used to be Andrew Jackson. I don't think he
Speaker 8: put the portrait up. But he has somehow become obsessed
Speaker 8: with William McKinley, who he believes that McKinley's tariffs made
Speaker 8: the United States more prosperous than it's ever been. He
Speaker 8: says this over and over again. It's I genuinely think
Speaker 8: he's like, maybe only secure policy belief is the value tariffs,
Speaker 8: but just not that that McKinley's tariffs. Any economists will
Speaker 8: tell you we're not a success. They were a disaster.
Speaker 5: And he renigged on him.
Speaker 2: He renigged maybe two harsh folks, but President McKinley reversed.
Speaker 8: I believe McKinley was, however, was a more much more
Speaker 8: traditional Republican. He was an establishment Republican. He was backed
Speaker 8: by the reproblem of establishment. Mark Hannah, the call Rove
Speaker 8: of his generation, was the sort of the.
Speaker 5: Power fact to you.
Speaker 8: He was the power factor by.
Speaker 5: Lane and Ma and all that.
Speaker 2: Trump is not like, yeah, I got I got one
Speaker 2: minute left here. But one day I woke up, folks
Speaker 2: in my ute, and I realized I had no clue
Speaker 2: about late nineteenth century America. It was unspoken. My grandparents
Speaker 2: would talk about it. I grew up in a really
Speaker 2: strange house, so I read the two volume Allan Nevins. Yeah,
Speaker 2: on Grover Cleveland, Alexander. I always say that nobody in
Speaker 2: the modern day gets what I'm doing anyways from Glover clear,
Speaker 2: I mean it was all party politics.
Speaker 3: Then.
Speaker 2: There's a lot of similarities between a political system now
Speaker 2: and back then, isn't there there are?
Speaker 8: And the American political system does not function well when
Speaker 8: it is evenly split like that is a rule of
Speaker 8: American politics that goes back right to the beginning that
Speaker 8: we forget all the time. What we have when we
Speaker 8: have a well functioning government is a dominant party and
Speaker 8: a subordinate party, and usually that goes for a generation
Speaker 8: or two at a time. If the downturn right now,
Speaker 8: Republicans have the power. But if this collapse, if we
Speaker 8: get a collapse, we.
Speaker 2: Could keep this a four hour conversation. I got thirty
Speaker 2: seconds wearing God's name. Are the Democrats if they took
Speaker 2: forty nine percent of the.
Speaker 8: Vote, struggling emerging and I think coming out of their shock.
Speaker 8: Corey Booker's twenty five hour marathon. When he did it,
Speaker 8: you know I was, we were all very.
Speaker 5: Skeptical for twenty of your lectures. That Yeah, he got.
Speaker 8: Three hundred and fifty million likes on TikTok, three hundred
Speaker 8: and fifty million. I think we're still they are starting
Speaker 8: to understand this new social media environment, and maybe some
Speaker 8: players are starting to get their subtraction.
Speaker 2: Never enough time got him, Thank you so much got
Speaker 2: him a Kunda. Can't say enough about his efforts here
Speaker 2: with the Yale School, and of course picking presidents is
Speaker 2: the book.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Apple Corplay and Android
Speaker 1: Auto with the Bloomberg Business App. You can also listen
Speaker 1: live on Amazon Alexa from our flagship New York station,
Speaker 1: Just say Alexa play Bloomberg eleven thirty tru Menus.
Speaker 2: With us with met Life here this morning, as we
Speaker 2: pick up the pieces with a challenging market, I'm just
Speaker 2: going to cut to the chase. You got the best
Speaker 2: title of a note. I've seen trade war as hell.
Speaker 2: And there we were at seven pm last night watching
Speaker 2: gold out over thirty four hundred dollar weakness bring that
Speaker 2: back to the vanilla Barbell's sixty forty portfolio. Or are
Speaker 2: they separate from how you would look money out three years?
Speaker 9: I mean, they're not separate.
Speaker 5: You know.
Speaker 9: One of the things I've always looked at is the
Speaker 9: relationship between gold and the behavior of financial assets, and
Speaker 9: when people are moving towards gold, it's a sign that
Speaker 9: they've lost faith in something. Right, We're not really sure what,
Speaker 9: you know. Typically I'd always looked at that as a
Speaker 9: measure of FED credibility, but this could just be a
Speaker 9: policy credibility story. And it's pretty clear that the policy
Speaker 9: credibility story is beginning to weaken and that's creating problems.
Speaker 9: And with the rollback in those tariffs we saw last week,
Speaker 9: you know, we actually moved to a recession call when
Speaker 9: the tariffs were put in place. We waited until that
Speaker 9: Wednesday for them to actually be put in place because
Speaker 9: we figured he could pull back before then. But you know,
Speaker 9: once he put him in place, the damage was done.
Speaker 9: By the time two o'clock in the afternoon rolled around,
Speaker 9: they and they pulled them back. You know, Equity markets
Speaker 9: have been down sharply, the wealth effect has been crippled,
Speaker 9: and upper income consumers are the ones you have to
Speaker 9: watch going forward now, and my guesses are going to
Speaker 9: pull back and start saving a little more for a
Speaker 9: rainy day.
Speaker 4: How much damage does just the discussion of tariffs in
Speaker 4: the back and forth and back and forth.
Speaker 7: How much real economic damage has that done? Well, we
Speaker 7: see that in significantly lower GDP numbers going forward.
Speaker 5: Do you think.
Speaker 9: I think you'll see it because it hit the equity
Speaker 9: market so hard, you know, in terms of actually you know,
Speaker 9: the terriffs themselves. I think you know, as long as
Speaker 9: there is a tariff policy put in place and companies
Speaker 9: can figure out how they have to adapt to it,
Speaker 9: it's when it keeps changing, right, And so it's a
Speaker 9: matter of you know, you can't adapt to something that's
Speaker 9: constantly changing. And if you can't adapt because something is
Speaker 9: constantly changing, you're just going to wait to figure out
Speaker 9: where to put your money.
Speaker 5: Right.
Speaker 9: So there's two reasons you wait to put your money.
Speaker 9: One is there's no time value to money, right, So
Speaker 9: zero interest rates. That's why zero interest rates are bad.
Speaker 9: And now we have you can have the best idea
Speaker 9: in the world and you put it in place, and
Speaker 9: you put the money up to do it and then
Speaker 9: there's a policy pronouncement that completely makes it an irrational
Speaker 9: decision that you've just made and spend a lot of
Speaker 9: money on. So the smart thing to do then is
Speaker 9: just not to spend the money.
Speaker 7: What's your recession call these days?
Speaker 9: So we're sixty percent that we're going to have a
Speaker 9: recession that looks like ninety ninety one.
Speaker 7: So ninety ninety one that wasn't very fun. No, it
Speaker 7: wasn't very fun.
Speaker 9: But you know, there was a shock, right, We had
Speaker 9: a new World order shock right where we thought kind of, oh,
Speaker 9: there's no wars that are going to be fought, and
Speaker 9: all of a sudden there was a war, and it
Speaker 9: was a big war, and there was a price shock
Speaker 9: attached to it, so kind of like the tariff shock.
Speaker 5: You know.
Speaker 9: The difference this time around, though, is it's not really
Speaker 9: clear how you retreat from that. Right in ninety ninety one,
Speaker 9: once it was clear that the Allies were going to
Speaker 9: win the war, it was very obvious what was going
Speaker 9: to happen, and then people could move on and kind
Speaker 9: of begin to kind of invest again. This time around,
Speaker 9: it might you know, the faith might be damaged a
Speaker 9: little more and it might take a little longer to
Speaker 9: get out.
Speaker 7: Of so a procession risk at sixty percent, where was that,
Speaker 7: I don't know.
Speaker 9: Three or four months ago, we were at thirty when
Speaker 9: the initial tariff talk started. We went to forty. We
Speaker 9: went up to seventy five when you know when we
Speaker 9: made our recession call, and then they pulled tariffs back
Speaker 9: and that obviously took the risk down a little bit,
Speaker 9: but we still think the damage has been done.
Speaker 2: In nineteen ninety, yeah, that's the year that the Red
Speaker 2: Sox waved.
Speaker 5: Jim Rice is right, it's like.
Speaker 7: The worst thing ever red Lynd Jim Rice.
Speaker 2: The Red Sox in nineteen ninety set a record for
Speaker 2: most double plays in a season.
Speaker 7: Hitting into double plays.
Speaker 2: Yeah, okay, we're I mean, Mayna said he'd only come
Speaker 2: out on Patriots States.
Speaker 5: So we'll do.
Speaker 9: The minor leagues are tough.
Speaker 2: Yeah, well they sent Buckner down to them, the minor
Speaker 2: leagues in nineteen ninety.
Speaker 5: I mean, it's difficult to.
Speaker 2: Say the least. Okay, this is all great, but the
Speaker 2: bottom line is, I don't get Catharsis, I don't get panic.
Speaker 2: Everything's waiting for a policy maturity at the White House.
Speaker 5: I don't want you to predict that.
Speaker 2: But that's one outcome, right that they go, oh, Gilda
Speaker 2: Radner economy, Gilda Radner trade.
Speaker 5: Wark, Oh never mind, that's out there, Drew.
Speaker 7: Isn't it.
Speaker 9: And that's the problem. Once again. You can put any
Speaker 9: policy in place almost and people will figure out how
Speaker 9: to adapt to it. Right. There are a lot of
Speaker 9: smart people trying to figure these things out. They'll figure
Speaker 9: it out, but you can't figure out something that's constantly
Speaker 9: moving around. It's harder to hit a moving target than
Speaker 9: it is to hit a stationary target. And what Wall
Speaker 9: Street needs are stationary target.
Speaker 5: Okay, so you're an insurance company. Do you buy bonds?
Speaker 5: Is that the answer?
Speaker 9: You take a real hard look at what bonds you're
Speaker 9: buying and make sure that they are all weather bonds
Speaker 9: and bonds that can basically are unlikely to be hit
Speaker 9: by teriff implications, unlikely to see massive credit changes to those.
Speaker 9: But it becomes increasingly difficult because once again, you're never
Speaker 9: sure which one's going to actually go into place and
Speaker 9: how long it's going to last.
Speaker 5: For you didn't wear your surveillance bow tie today.
Speaker 9: I didn't wear my surveillance bow tie. But on my
Speaker 9: way in here, I noticed more people in suits wearing
Speaker 9: ties and begin to wonder what I'd like to see
Speaker 9: as a study about whether people who wear ties to
Speaker 9: work make better decisions.
Speaker 5: You were legendary ubs.
Speaker 2: You work for a guy named Maury Harris, and you
Speaker 2: guys would do these twelve and fourteen page reports, which
Speaker 2: we all hated because it was like ed Heim and stuff.
Speaker 5: You had to read it.
Speaker 2: Yeah, It's like you couldn't like read page one and
Speaker 2: you know, look smart. You had to actually read the thing,
Speaker 2: and buried on page seven or page nine was a
Speaker 2: maddest wisdom buried on page seven, page nine. Right now,
Speaker 2: where's your wisdom on the labor economy?
Speaker 9: Well, I think we were having labor problems before all
Speaker 9: the tariff noise. And the number I'm really paying the
Speaker 9: most attention to right now is the work week, which
Speaker 9: had been in kind of free fall for a long time,
Speaker 9: and it's just at a level that's not consistent with
Speaker 9: having all these people employed. And so you know, the
Speaker 9: solution to that obviously becomes, you know, once a firm
Speaker 9: has to figure out or make sure that they don't
Speaker 9: miss their earnings estimates. So the more volatile equities become,
Speaker 9: the more important it is for firms not the misser
Speaker 9: earnings targets. And when you're worried about missing your earnings targets,
Speaker 9: you worry about your expenses. And if you've got people
Speaker 9: working the shortest work week they've worked since the Great
Speaker 9: Financial Crisis, it's pretty obvious to figure out where those
Speaker 9: expense cuts are going to come from.
Speaker 7: So tie that into the consumer. How's the consumer doing
Speaker 7: out there? Is the consumer as.
Speaker 4: Concerned as the financial markets on my screen show over
Speaker 4: the last three or four months.
Speaker 9: I think the change is actually that we had lower
Speaker 9: income workers facing more and more strains, and you saw
Speaker 9: them straining to kind of save the holidays for their families,
Speaker 9: and we saw a big pickup in consumer credit, and
Speaker 9: then right after that we saw a big decline or
Speaker 9: a big increase in people saying they're not gonna be able
Speaker 9: to make their payment minimum payment in the next three months.
Speaker 9: I think the shock from the tariff story is going
Speaker 9: to really impact the wealth effect because for the wealth
Speaker 9: effect to work on the equity basis, it really needs
Speaker 9: to be a sustained equity market rally, or it needs
Speaker 9: to seem permanent, and it takes longer for that to
Speaker 9: seem permanent than other wealth effects like housing, because home
Speaker 9: prices don't tend to be as volatile, and so the
Speaker 9: disruption that we saw in equities from that is going
Speaker 9: to have long lasting effects in terms of people's willingness
Speaker 9: to spend money.
Speaker 7: So where do you think the FED fits in here?
Speaker 5: Real quick?
Speaker 9: Their job basically is to just stay out of the way.
Speaker 9: They can't actually cut rates because the data is not there,
Speaker 9: so they're gonna have to lag. They're gonna have to
Speaker 9: wait for unemployment to move noticeably higher before they can
Speaker 9: cut rates. With political cover.
Speaker 2: Drew, Thank you so much, Tremadus with us with Matt
Speaker 2: Lives today.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto
Speaker 1: with the Bloomberg Business app. You can also watch us
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.
Speaker 5: With our newspapers.
Speaker 2: This morning, future is negative seventy two, A bit of lightness,
Speaker 2: lead some a tale with the newspapers.
Speaker 7: What do you have, Let's do it.
Speaker 10: Let's talk about the Massa marathon. All right, so it's
Speaker 10: getting underway right this morning. It brings in a lot
Speaker 10: of business. Though, for like the local restaurants from Framingham
Speaker 10: to Brookline to the Boston Stretch, so some of them
Speaker 10: are actually opening early. So places like Eastern Standard a
Speaker 10: kitchen and drink breakfast Bloody Mary start pouring.
Speaker 7: At eight o'clock.
Speaker 3: Can't be that.
Speaker 10: That's of course not for the runners, but for the
Speaker 10: spectators want to get there early and have that.
Speaker 7: And then for the runners they have a lot.
Speaker 10: Of deals too, because after you're finished, you need something
Speaker 10: to eat, right, you gotta get your energy back in yes,
Speaker 10: carbs exactly. So you can get like a free cup
Speaker 10: of clam chowder, legal seafood. If you're a runner, you
Speaker 10: can get a twenty guinness. But you know what after
Speaker 10: a race, actually I did they gave you like I
Speaker 10: think it was like bud lighter cordsely. I don't even know,
Speaker 10: but they say having a beer after the race.
Speaker 2: You where you have the aluminum foil around you afterwards.
Speaker 10: I wore that proudly around. I would not. You could
Speaker 10: have a beer after it's actually very good for you. Okay,
Speaker 10: So we've talked about you know, there's talking about women
Speaker 10: getting cosmetic anti aging procedures.
Speaker 7: Well, interest face. You know, yes, invest in the face.
Speaker 10: But it's not just women. It's men really who are
Speaker 10: doing it too, So this is plastic surgeon spoke to
Speaker 10: Business Insider. He told them some of the most popular treatments. Okay,
Speaker 10: really are you ready for The first is actually the
Speaker 10: link to baldness. I'm not pointing anyone answer. You all
Speaker 10: have a beautiful out of hair here.
Speaker 5: You can't see.
Speaker 7: That folks exactly.
Speaker 10: But they're getting these platelet rich plasma injectables because they
Speaker 10: don't want the plugs anymore. So these are apparently a
Speaker 10: little bit less invasive, less expensive. Yes, the botox, so yes,
Speaker 10: you can get a couple of those injections. Men are
Speaker 10: getting more of those.
Speaker 4: But an on lift that No, no, that's not the one.
Speaker 4: The headline is breast reduction is more common than you think.
Speaker 10: All right, they well, you know you think about it,
Speaker 10: like when everyone's talking about weight loss drugs. No, they're
Speaker 10: just going for the straight on surgery can get down question.
Speaker 2: Of course, if you do repeat bowtox doesn't at some
Speaker 2: point not work.
Speaker 10: No, it keeps it stimuluated. Again, Yeah, you have to
Speaker 10: keep doing it, like every six months maybe or so.
Speaker 5: Someone has it you can tell, right.
Speaker 10: You can tell by the lines up here, like if
Speaker 10: they don't look surprised, if you don't seen any lines
Speaker 10: on the forehead, that's kind of a Telltickly, okay, quickly.
Speaker 10: So Wall Street Journal is talking about baseball's greatest hitters,
Speaker 10: right Babe, Ruth Lugaric, Joe Demajo, Mickey Mantle. But they're saying,
Speaker 10: who is on the way to become the next time? Yes,
Speaker 10: Aaron Judge six foot seven, ten season with the Trust
Speaker 10: fun he does no blue eyes. He celebrated his thousands
Speaker 10: MLB game by hitting his three hundred and twenty first
Speaker 10: home run, the exact number that Ruth had in one
Speaker 10: thousand games with the Yankees. So he's setting like all
Speaker 10: these records. But they're saying, the only thing that may
Speaker 10: keep him from heading that like highest echelon is kind
Speaker 10: of his age because most of those, you know, elite
Speaker 10: hitters were regulars by twenty one, but you know, Judge
Speaker 10: joined the Yankees at twenty four, so he has kind
Speaker 10: of a late start. But he's catching up, Like, sure.
Speaker 7: Yeah, we're watching it now.
Speaker 4: I bet they got to win a World Series with
Speaker 4: him in his prime and.
Speaker 5: He's got to show up and we're seeing through this weekend.
Speaker 5: I think it was the second base of magnificence.
Speaker 7: He's got a gun. You can watch a basis.
Speaker 5: Yeah, it's really really quite good, is that it? Yes,
Speaker 5: thank you, Lisa, Thank you so much.
Speaker 2: On some Monday newspapers needed over.
Speaker 5: We can greatly appreciate that.
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
Speaker 1: and anywhere else you get your podcasts. Listen live each
Speaker 1: weekday seven to ten am Easter and on Bloomberg dot Com,
Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app.
Speaker 1: You can also watch us live every weekday on YouTube
Speaker 1: and always on the Bloomberg terminal