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Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along
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Speaker 2: Chris Harvey of wels Fargo, Chris, go to see a
Speaker 2: circuit morning, Good morning. You said it a number of
Speaker 2: weeks ago, we had a crisis of confidence last month.
Speaker 2: Have we addressed that crisis of confidence?
Speaker 1: We've addressed it.
Speaker 3: So the big issue was was the administration hearing the
Speaker 3: feedback loop from the markets, from individuals, from people in Congress.
Speaker 3: And the answer is yes, they've heard that, right, and
Speaker 3: they've adjusted their behavior.
Speaker 1: That's a good thing. To your point.
Speaker 3: About what does a trade deal look like, that's a
Speaker 3: big question, right. So what we're saying is, hey, you're
Speaker 3: at the high end of the range. If you get
Speaker 3: some granularity and a trade deal, guess we can break
Speaker 3: out at the high end of the range.
Speaker 1: But you need granularity and what does that exactly look like?
Speaker 1: That's the big question.
Speaker 2: And with who a space economists and let's still worried
Speaker 2: about the heart data catching down to the self spaces
Speaker 2: to investors and they wanted to look through some of
Speaker 2: it focused on the forward look comfort by the policy
Speaker 2: moves down in Washington. How about you write one versus
Speaker 2: the other.
Speaker 3: You can look through the data if you start to
Speaker 3: have confidence that we're moving forward and we're making big
Speaker 3: granular games with folks in Asia, folks in Europe, North America.
Speaker 3: If you believe in that, you'll look through the data.
Speaker 3: If you think, ah, this is kind of a hiccup
Speaker 3: and we're back.
Speaker 1: To tier of tarer of tariff, then you're not going
Speaker 1: to look through it.
Speaker 4: It's that simple trade deals might happen with most of
Speaker 4: the trading partners barring China, though, how do you look
Speaker 4: through any of this when you don't know how the
Speaker 4: trade deal is going to look with China and where
Speaker 4: that final rate is going to settle on.
Speaker 1: Yeah, so I would agree with you that China.
Speaker 3: The administration believes, or seems to believe, the Chinese the
Speaker 3: existential threat, and so you really don't want to deal
Speaker 3: with them. I think a lot of the rhetoric around
Speaker 3: China in the US, that's all that is. I'm not
Speaker 3: expecting anything really positive. But if you do get some
Speaker 3: positive or constructive development from Asia, from the EU, from
Speaker 3: North America, you can start to make some real gains
Speaker 3: and you're not as worried about the economy. The other
Speaker 3: thing that I think the administration is saying is, hey,
Speaker 3: if we're going to dis intermediate China, you're going to
Speaker 3: get some of those spoils.
Speaker 1: You're going to step up to the plate and help
Speaker 1: us out. And that's a good thing.
Speaker 3: And the last thing I would say is that the
Speaker 3: underlying economy, while it's slowing down, wasn't in a bad
Speaker 3: place before all this started.
Speaker 4: You sound positive on trade deals. Do you think we're
Speaker 4: past peak uncertainty.
Speaker 3: I think we're past peak uncertainty, and what we do
Speaker 3: is we look at it this way.
Speaker 1: He went very hard very early.
Speaker 3: In order to get that pressure back, I think you'd
Speaker 3: have to put us into recession. I don't think this
Speaker 3: administration wants to go into recession because what it would
Speaker 3: mean it would mean a higher deficit, more job losses,
Speaker 3: you'd have a negative wealth effect, and popularity won't be
Speaker 3: rising as you get closer to the midterm elections. So
Speaker 3: I think we have but it's not smooth selling from here.
Speaker 2: The stocks have recovered at the index level on the
Speaker 2: SMP since April second, the dollar has not recovered. As
Speaker 2: you look at things right now, given the dislocations of
Speaker 2: the last month, are the certain things being left behind,
Speaker 2: certain things you want to lean into.
Speaker 3: So our thought process isn't that different. We wanted to
Speaker 3: we want a good risk awards. We want to balance
Speaker 3: that with some low vol or defense of the thing
Speaker 3: that's new and different to us is at the margin,
Speaker 3: a lot of the AI trade is looking a lot
Speaker 3: more attractive. A lot of these names are in a
Speaker 3: bear market. The risk awards valuations have come down significantly.
Speaker 3: And we talk about the AI trade, it's things in utilities,
Speaker 3: it's things in industrials, it's things in tech. It's not
Speaker 3: just tech alone. And so what we're seeing on the
Speaker 3: margin is that AI trade or the risk awards is
Speaker 3: becoming a lot more attractive. And that's what we're seeing
Speaker 3: becoming more positive on on.
Speaker 2: The margin outside of the AI trade. Can you say
Speaker 2: the same about the rest of the market at the
Speaker 2: index level? If you look in ATO the SMP this morning,
Speaker 2: the risk reward profile of the s and P five
Speaker 2: hundred going into a couple of weeks of important trade negotiations,
Speaker 2: what's that profile now?
Speaker 1: The profile? So you can go one or two ways.
Speaker 3: Right, if you look at the second half of the year,
Speaker 3: do you believe the Fed is going to be cutting grades?
Speaker 1: We do? Do you believe that.
Speaker 3: The economy is going to go in and slow down?
Speaker 3: But not right, Let's talk about recession for a second. Right,
Speaker 3: If it's a recession because balance sheets are upside on
Speaker 3: the backwards, you can't pull out of that.
Speaker 1: You need the creative destructive process to stop that.
Speaker 3: Here, what we're doing is we're repricing risks, we're repricing expectations.
Speaker 3: You can pull out of that so the economy can improve.
Speaker 3: We haven't had M and A or real M and
Speaker 3: A in a while. We've talked about that. We haven't
Speaker 3: seen the benefits of the deregulation. We can talk about that,
Speaker 3: and then again, if we start moving from tariffs to taxes.
Speaker 1: Right, we go from stick to carrot. It's a lot
Speaker 1: different market.
Speaker 4: But how quickly do you think they actually get this
Speaker 4: tax pill over the finish line?
Speaker 1: How do I think it? Or when do I think it?
Speaker 5: When do you think?
Speaker 3: I think you have to get something granular by say January,
Speaker 3: because nobody wants to stick around in DC in August.
Speaker 3: The other thing is I also think you have to
Speaker 3: check that's the practicality. The other thing is I think
Speaker 3: you have to get it done. You have to get
Speaker 3: that vote on by fourth quarter. Right, If you're going
Speaker 3: to get it done by fourth quarter, you have to
Speaker 3: You're gonna you're gonna wrangle, you're gonna push, you're gonna pull,
Speaker 3: and all that has to happen in third quarter, in September, October,
Speaker 3: and then the votes start going November December, and it
Speaker 3: gets signed signed in December.
Speaker 4: John's asked this question before, which is a really good point.
Speaker 4: Is a removal of a headwind or do you think we're
Speaker 4: going to see a tailwind because they're talking about everything
Speaker 4: like no tax on tips and tax on Social Security.
Speaker 3: I think it's a I don't think it's a tailwin, right,
Speaker 3: It's just not bit for our view, it's just not
Speaker 3: big enough.
Speaker 1: It's just a removal of a headwind.
Speaker 3: And that's positive because you've got some really big headwinds
Speaker 3: in the.
Speaker 1: Form of tarifsontis.
Speaker 4: It's baked in.
Speaker 3: It is baked in. But again, if you you believe
Speaker 3: that deregulation, really you haven't seen the benefits of deregulation.
Speaker 3: You're going to have taxes out of way. What are
Speaker 3: we talking about. We're talking about uncertainty. Suddenly we have certainty.
Speaker 3: Now we can price things a lot differently.
Speaker 2: The Treasury Secretary rights and over the weekend in a
Speaker 2: Wall Street Journal Scot Besson saying this, the American people
Speaker 2: should expect to hear the engine humming during the second
Speaker 2: half of twenty twenty five, which is basically what Chris
Speaker 2: Harvey just told us then.
Speaker 4: And he's basically just talking about the fact that you
Speaker 4: have to look at all these policy proposals together. He
Speaker 4: talks about all the time, this three legged stool, and
Speaker 4: right now everyone's only been talking about tariffs. He's like,
Speaker 4: wait to we start talking about taxes. Wait till you
Speaker 4: start seeing deregulation actually usher itself through the economy.
Speaker 2: We'll see more jobs more manufacturing, more growth, the more
Speaker 2: robust national defense, higher wages, lower taxes, less burden, some regulation,
Speaker 2: cheaper energy, less national debt, less dependence on China. It's
Speaker 2: all of that achievable in the back half of this year.
Speaker 1: That's a lot. Now, is all of that achievable? Probably?
Speaker 1: Not all of that's achievable.
Speaker 3: So some of that is achievable, and as long as
Speaker 3: you make progress on a good chunk of that, I
Speaker 3: think we're in a pretty good spot.
Speaker 1: But yeah, that's that's a lot to do in a
Speaker 1: very short period of talk.
Speaker 4: He adds also one more point to that list, which
Speaker 4: is also with a strong dollar, how is that possible?
Speaker 1: Don't know. So what I do know is that they've
Speaker 1: talked about lower oil.
Speaker 3: We have lower oil. They've talked about lower rates. Rates
Speaker 3: appear to be coming down. I do think we're going
Speaker 3: to be cutting in the second half of the year.
Speaker 5: Dollar.
Speaker 1: I don't know how you get a stronger dollar from here.
Speaker 1: It's questionable.
Speaker 3: He could right, because coming into this year everyone thought
Speaker 3: the dollar strong. It rolled over, so maybe expectations are wrong.
Speaker 3: Once again, we'll see can we.
Speaker 2: Finish on energy equity? So I can mention what's happening
Speaker 2: in the commodity this morning. Brunches down, WTI is down,
Speaker 2: opake plus is pushing. I should say the soundaries are
Speaker 2: pushing more supply into the market. How difficult are things
Speaker 2: on the equity side and energy?
Speaker 3: So we've been underweight energy for a while. It's performed
Speaker 3: pretty well, partly because a lot of stocks are value stocks,
Speaker 3: but now they're beginning to underperform. I would say on
Speaker 3: the energy side, it actually hasn't been a bad year.
Speaker 3: You've seen some pretty good runs on the energy names,
Speaker 3: but I think that's more because of the value stock
Speaker 3: and their characteristics than the underlying fundamentals.
Speaker 2: Chris, it's going to say goodness always. Thanks for dropping
Speaker 2: by Chris Harvey of wels Farka. I guess now it's
Speaker 2: the former Trump White House trade official Kate Klukowitz. Kate,
Speaker 2: welcome back to the program. I just want to set
Speaker 2: this scene because I think things this time around the
Speaker 2: different to what we saw back in the president's first
Speaker 2: term in the White House. The different buckets, the different
Speaker 2: objectives that you've been focused on. Kate, Can we just
Speaker 2: start there?
Speaker 6: Absolutely, because there are many different buckets. You've just focused
Speaker 6: on one, which of course, is China, which I think
Speaker 6: I keep in a separate bucket for now. The President
Speaker 6: is very incentivized at the moment to negotiate deals with
Speaker 6: respect to a different bucket, the reciprocal terriffs. He's very anxious,
Speaker 6: I think, to announce a deal this week to show
Speaker 6: that these reciprocal tariffs are producing the sort of leverage
Speaker 6: he has indicated they will to bring countries to the
Speaker 6: table to resolve these long standing trade imbalances that he
Speaker 6: has so prioritized.
Speaker 2: One way of addressing a trade imbalance, if you're purely
Speaker 2: focused on one thing the trade deficit, would be to
Speaker 2: revisit the purchase agreement struck several years ago. But Kay,
Speaker 2: given the incentives and objectives elsewhere, I'm just wondering whether
Speaker 2: that's sufficient this time around.
Speaker 6: Well, look, I think the President is anxious to show
Speaker 6: some wins here fairly soon. So if I'm a trading
Speaker 6: partner and I'm thinking about what I can do to
Speaker 6: get to the table to get a deal, in principal,
Speaker 6: announce it's through these large scale purchases, because there's something
Speaker 6: that can be achieved relatively quickly, especially when compared to
Speaker 6: some of these long standing non tariff barriers that the
Speaker 6: President has complained about. We heard Treasury Secretary of the
Speaker 6: cent last week's signal that the Trump administration continues to
Speaker 6: be concerned about the Phase one deal and the purchases
Speaker 6: that China has not made. So I think that's a
Speaker 6: fairly good signal that they'd be willing to accep that
Speaker 6: as some down payments kate.
Speaker 4: At the moment, a lot of smoke signals coming out
Speaker 4: of Washington from the President himself almost insinuing that we're
Speaker 4: going to get a deal as soon as this week.
Speaker 4: Who was that going to be with?
Speaker 6: That's a great question, you know, I think if I'm
Speaker 6: a trading partner, I am also watching this press very
Speaker 6: very closely. You know, the President is under increasing pressure
Speaker 6: to produce a deal because, of course, the American public
Speaker 6: are growing concerned about all of these tariffs. I think
Speaker 6: congressional Republicans as well are weighing in privately wanting the
Speaker 6: President to show that we are not going to be
Speaker 6: under these teriff raids forever. So if I'm a foreign
Speaker 6: trading partner and I see this pressure, it does increase
Speaker 6: my leverage as well. You know, we have seen, of
Speaker 6: course increased optimism around talks with Japan, Korea, and India,
Speaker 6: so I suspect one of these nations will will be
Speaker 6: the first to go.
Speaker 4: John mentioned earlier the fact that trade deals take a
Speaker 4: very long time, which is maybe why the administration is
Speaker 4: going to lean on purchase agreements. We know the president
Speaker 4: from the first administration does not like MOUs, but can
Speaker 4: you give us a sense of what kind of outline
Speaker 4: we could see when actually he announces an agreement with
Speaker 4: a trading partner.
Speaker 6: Yeah, you know, trade deals do take a long time,
Speaker 6: and as a former trade negotiator, including with the European Union,
Speaker 6: you know these comprehensive single undertakings take years and years
Speaker 6: and years. These are not those trade deals though, and
Speaker 6: I think it is important to remember the United States
Speaker 6: is bringing to the table one offer, and that is
Speaker 6: not to implement reciprocal tariffs. It's really up to the
Speaker 6: trading partner to signal what it is prepared to do
Speaker 6: in return. So I think the President would be willing
Speaker 6: in principle to accept some very high level commitments that
Speaker 6: it can pocket and then move on toward more regulatory
Speaker 6: reform or longer term tariff reduction. So I do think
Speaker 6: we could have, you know, some of these very high level,
Speaker 6: in principal agreements, not MOUs per se, but agreements from
Speaker 6: our trading partners, as you said, to make high value
Speaker 6: purchases to bring tariffs down unilaterally. But in some ways
Speaker 6: I think we can move faster than some of these
Speaker 6: previous free trade agreements that we had done in the past.
Speaker 2: Okay, you've been in the room. Can you just share
Speaker 2: with us your experience. We all hear lots about the
Speaker 2: European bureaucracy. How difficult is it to negotiate with the Europeans.
Speaker 6: It's incredibly difficult to add, not least of all, of course,
Speaker 6: because the European Union is comprised of twenty seven individual countries. Now,
Speaker 6: of course, they have allowed the European Commission to negotiate
Speaker 6: trade deals on its behalf, but with very different economies
Speaker 6: and very different personalities of these member states. Now, Europe,
Speaker 6: of course, represents quite a lot of significant trade barriers
Speaker 6: that the President often talks about, and these are based
Speaker 6: in historically difficult regulatory environments. So it will be exceptionally
Speaker 6: difficult for the European Union to produce the sort of
Speaker 6: deal that the President is looking for unless the President
Speaker 6: is willing, of course to include topics that are not
Speaker 6: really trade related. Military spending issue always comes to the fore,
Speaker 6: and we'll have to see if the Europeans are willing
Speaker 6: to put that on the table.
Speaker 2: And that has to be done also at the national level. So, Kate,
Speaker 2: when you approach these talks with the Europeans, just what
Speaker 2: do you do differently? Do you push on certain nations
Speaker 2: to put pressure on the Commission on other countries?
Speaker 1: How does this work?
Speaker 5: Yeah?
Speaker 6: Typically the United States, of course, because it has these
Speaker 6: long standing relationships with members state governments, tends to approach
Speaker 6: leader level discussions in that way. The European Commission is
Speaker 6: not the natural counterpart for President Trump and so this
Speaker 6: is another reason, of course that we've seen challenges here.
Speaker 1: Now.
Speaker 6: President Trump, as we saw in his visit to Italy,
Speaker 6: has a very close relationship with the Italians, the Germans,
Speaker 6: and the French and their roles. Of course, we'll play
Speaker 6: leader level discussions as well, and all of this will
Speaker 6: be to create some political pressure on the European Commission
Speaker 6: to come to the table.
Speaker 2: Kay Caluqwitz, Kay, thank you. As always, the former Trump
Speaker 2: has strite official the former sen Lewis FED President Jim
Speaker 2: Fillot joined US for more. Jim, welcome back to the program,
Speaker 2: my friend. How would you approach a meeting like this
Speaker 2: week's meeting given all the information additional information you've had
Speaker 2: to take in over the last month or so.
Speaker 5: I think the committee's in good shape for this meeting.
Speaker 5: Markets aren't expecting a move, and I don't think there
Speaker 5: is going to be a move. A lot of the
Speaker 5: debate will.
Speaker 7: Be about how to approach the meetings through the summer,
Speaker 7: and that's a traditional dynamic of the FAT. But you know,
Speaker 7: they did lower one hundred basis points in the second
Speaker 7: half of twenty twenty four.
Speaker 5: That put them in great position for this year.
Speaker 7: You got the strong jobs report on Friday, You've got
Speaker 7: inflation still coming down, so it's actually looking pretty good
Speaker 7: for the FAT.
Speaker 5: There are things could go a lot of ways.
Speaker 7: In the trade work could go very badly, but I
Speaker 7: think it could also go very well.
Speaker 5: And markets are starting to price that in.
Speaker 7: They're starting to realize this not the US as protectionists,
Speaker 7: to see other.
Speaker 5: Countries that are protectionists, and the.
Speaker 7: Other countries, I think are starting to realize that they
Speaker 7: could come to the table.
Speaker 5: They could probably reduce some of their trade.
Speaker 7: Barriers and some of their non TEARFF trade barriers, and
Speaker 7: they could probably get a deal at least a sketch
Speaker 7: of a deal pretty shortly here.
Speaker 5: So so we'll see exactly how this plays out.
Speaker 7: But from the FEDCE point of view, why do anything
Speaker 7: until you get a little more of the uncertainty result.
Speaker 2: So, Jim, that's an important perspective, and it's a perspective
Speaker 2: that I haven't had much stuff from the FED chat
Speaker 2: j Powell, do you think he has acknowledged sufficiently the
Speaker 2: potential that this goes okay, this goes right. In fact,
Speaker 2: they could be good.
Speaker 5: I haven't heard people talk about it very much. I
Speaker 5: think actually this is yeah. It can go two ways.
Speaker 5: It can go very badly. For sure. You could have let's.
Speaker 7: Say, the Chinese just throw up their hands and say,
Speaker 7: you know, we just can't do it and we're going
Speaker 7: to go some other direction.
Speaker 5: But I don't think they're going to do that.
Speaker 7: I think all the incentives are for them to them
Speaker 7: and many others to come to the table offer something.
Speaker 7: They probably have been two protectionists over the years. They
Speaker 7: have had too many non tear trade barriers. They can
Speaker 7: probably put something on the table that would get a deal,
Speaker 7: and that would be better for everybody. You'd get faster
Speaker 7: growth globally, you'd get faster growth in the US, and
Speaker 7: it would be a good outcome.
Speaker 5: So there is some upside potential.
Speaker 7: That's why I think you've got the stock market sniffing
Speaker 7: this out and moving up nine sessions in a row.
Speaker 4: This is more of a constructive view on what the
Speaker 4: administration is trying to do. Do you think we could
Speaker 4: see the Fed potentially offer two versions dual guidance like
Speaker 4: we've seen from some companies.
Speaker 5: That's been discussed.
Speaker 7: Scenario analysis is a good thing to do in a
Speaker 7: time of high uncertainty, and then you could kind of map.
Speaker 5: Out some potential outcomes.
Speaker 7: And then let the market put its own probabilities on
Speaker 7: those various paths. It's hard to get the committee to
Speaker 7: sort of agree of, well, which scenarios should.
Speaker 5: We have and so on, so it's not the easiest
Speaker 5: thing to do. But if you look at older.
Speaker 7: Staff guidance that goes into the meeting, they have scenario
Speaker 7: analysis in there, and you can look at the ones
Speaker 7: that were released five years ago or so.
Speaker 5: So they do do that.
Speaker 7: It's kind of hard to talk about it at other
Speaker 7: than individual members talking about it.
Speaker 4: Well, we have the of course, the Trader secretary talking
Speaker 4: about things like strategic uncertainty. How difficult does that make
Speaker 4: the FED look not just the next few months, but
Speaker 4: also this entire four years of the Trump administration where
Speaker 4: that is going to be a feature, not a bug.
Speaker 7: The strategic uncertainty, Well, you know, part of a negotiation
Speaker 7: is to take a stake out an extreme position initially
Speaker 7: and stick to it, and that's how you get good
Speaker 7: outcomes from a negotiating perspective. From a monetary policy perspective,
Speaker 7: you always want everything to be perfectly smooth and no
Speaker 7: uncertainty at any point, and so there is a bit
Speaker 7: of a clash and that's just the way it's going
Speaker 7: to be, I think for the next four years.
Speaker 2: Jim, what's on your dashboard at the moment? We mentioned
Speaker 2: that we caught up with the Port of La director
Speaker 2: just before the weekend on Friday, and he mentioned the
Speaker 2: amount of volume that was coming off the rivals this
Speaker 2: week and we were trying to work out the next
Speaker 2: dominoes to fall from there, whether that started a process
Speaker 2: which could spill negatively into the economy. What's on your
Speaker 2: dashboard at the moment for you personally, yeah, I think.
Speaker 5: These the terraces between TRAINA and the US are prohibitive.
Speaker 7: So this isn't about g you can raise your price
Speaker 7: either in China or in the US a little bit that.
Speaker 5: People will still buy your good.
Speaker 7: You're not going to sell anything with these kinds of tariffs,
Speaker 7: so I think you guys have the right language.
Speaker 5: This is like a trade embargo.
Speaker 7: That's very serious and can't go on for very long,
Speaker 7: so that's something we're certainly watching. I was looking at
Speaker 7: some charts this morning about number of ships coming and
Speaker 7: piling up in Long Beach and so on, so.
Speaker 5: That's definitely something to watch.
Speaker 7: I do think that these management teams of big companies,
Speaker 7: especially again smaller ones as well, really.
Speaker 5: Are very sophisticated. They've been through a trade war before.
Speaker 7: They've got some strategies about how to handle this, so
Speaker 7: in some ways there's some insurance there, there's some mitigation,
Speaker 7: but you can't go on too long at this level
Speaker 7: of tariffs, and that's why I think many of these
Speaker 7: countries will see the light and come to the table.
Speaker 2: Hi Jim, I appreciate the update. As always, Jimble out
Speaker 2: that the fullmas and Lewis FED President from McLachlan. Then
Speaker 2: at the conference board rights the following the focus needs
Speaker 2: to be on getting a China trade deal. The current
Speaker 2: tariff level is unsustainable. Eron joined us now for more.
Speaker 2: Eric and Mornic, good morning on the good news. The
Speaker 2: administration agrees with you, Yes, unsustainable. Does that may the
Speaker 2: tariff's are coming down then in the next few weeks,
Speaker 2: you know.
Speaker 8: I think it'll be really interesting. I think what we're
Speaker 8: going to see is that there are going to be
Speaker 8: deals struck potentially with the other Asian economies while we
Speaker 8: sort of wait for China. You know, we keep hearing
Speaker 8: that there is discussions with China, then we hear that
Speaker 8: maybe there isn't. So my sort of my thinking is
Speaker 8: that we're going to see deals with the other Asian
Speaker 8: countries ahead of time.
Speaker 2: Before we get the bigger deals. How distort it will
Speaker 2: this economic type a big through the summer?
Speaker 1: Well, and that's.
Speaker 8: Really what we're waiting for is the data, Just like
Speaker 8: the FED is one data point which is you know,
Speaker 8: not directly about consumer spending that we look at is
Speaker 8: our own consumer confidence index and the expectations part of
Speaker 8: that index which continues to be at you know, more
Speaker 8: than a decade low. It's in sort of that recessionary territory.
Speaker 8: We're also looking at port numbers, including the fact that
Speaker 8: the Port of la is taking in about a third
Speaker 8: less cargo right now than it usually does in this
Speaker 8: time of year.
Speaker 4: What it looks at the expectations of consumers. What does
Speaker 4: this environment remind you of? What other point in time
Speaker 4: have you seen some of this survey data look like
Speaker 4: we have today.
Speaker 8: It looks like the Great Recession or the years after
Speaker 8: the Great Recession, which took a lot of time, you know,
Speaker 8: to come out of that moment. It doesn't necessarily look
Speaker 8: like the pandemic because the pandemic obviously was something that
Speaker 8: sort of gumming up of supply chains was caused by
Speaker 8: an external factor. This is obviously something that is policy
Speaker 8: related and something that could change, can change potentially.
Speaker 4: We know that consumers are nervous been inflation and prices
Speaker 4: going higher because of the terriffs. But what you're also
Speaker 4: seeing is employment deterioration. This idea that prospects for getting
Speaker 4: a job is also challenging.
Speaker 8: Yes, and that makes consumers more nervous than anything, you know,
Speaker 8: having a job. And we've seen in our history of
Speaker 8: looking at this, when consumers have a job, they're going
Speaker 8: to spend. But when they don't have a job, or
Speaker 8: they really think that their job, you know, is at risk,
Speaker 8: then they will sort of pull back spending and just
Speaker 8: concentrate on sort of the necessities.
Speaker 2: And they won't be asking for pyros. What does that
Speaker 2: time you the attitude towards the labor market right now?
Speaker 2: What does that tell you about the risk the safe
Speaker 2: risk of second round effects from the tariffs and what
Speaker 2: it could make the prices?
Speaker 8: I think it means that well on the company side,
Speaker 8: you know, the conference board, our members are companies, so
Speaker 8: many of them are right now trying to figure out
Speaker 8: how to best communicate and analyze how to pass on
Speaker 8: prices or how not to and really how to message
Speaker 8: with their concer zumers. And I think for consumers themselves,
Speaker 8: it's really a matter of sort of pulling back and
Speaker 8: wait and see. But that's sort of that continual uncertainty
Speaker 8: that sort of you know, makes it increasingly risky.
Speaker 2: It's sort of particular dying on the calendar that you're
Speaker 2: worried about an air pocket in the data. Is it
Speaker 2: weeks away, months away.
Speaker 8: I think it is somewhere between weeks and months. I
Speaker 8: think it is six to eight weeks away, which is
Speaker 8: you know, at the conference board, similar to Goldman Sachs,
Speaker 8: we are thinking that July may be the first meeting
Speaker 8: where the Fed, you know, takes another look at industry.
Speaker 4: The Polar CEO last week said that they're implementing a
Speaker 4: recession playbook. Do you see other companies having to do
Speaker 4: that now? And how self fulfilling is that?
Speaker 8: That's a great question. It can be self fulfilling from
Speaker 8: a consumer side. Obviously we're still in a consumer based economy.
Speaker 8: I think it's very interesting that companies are having, you know,
Speaker 8: as we've seen with some of the earnings reports, they
Speaker 8: almost have two scenarios, the scenario A, scenario B. But
Speaker 8: no matter what, four companies to plan to onshore production
Speaker 8: if that really is the goal. Here is something that
Speaker 8: takes years, if not up to a decade, depending on
Speaker 8: what you produce. So it's very very hard to have
Speaker 8: a long term playbook if you really don't know how
Speaker 8: long these trade and tariffs are going to be in place.
Speaker 4: Right you just wait on the sideline. So you think
Speaker 4: we're going to see this hard data in July, but
Speaker 4: companies are already saying they're doing things like a recession playbook.
Speaker 4: Do you just feel like the FED then is bound
Speaker 4: to be late.
Speaker 8: It's hard to tell because obviously the employment numbers are
Speaker 8: still strong, inflation is still pretty flat or coming down.
Speaker 8: So what is there?
Speaker 1: What is there?
Speaker 8: They have to have a reason, a data point in
Speaker 8: order to make an adjustment.
Speaker 2: We'll get more DAYTA later on this morning, ten am
Speaker 2: Eastern Time, you'll get the ISM Services print. And it's
Speaker 2: good to say thank you Aeron McLoughlin there at the
Speaker 2: conference board. This is the Bloomberg Sevenans podcast, bringing you
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Speaker 7: M