1 00:00:02,480 --> 00:00:07,960 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. What do you think 2 00:00:08,480 --> 00:00:09,200 Speaker 1: or recession? 3 00:00:10,440 --> 00:00:13,840 Speaker 2: I mean, you had a really good piece thank you 4 00:00:14,040 --> 00:00:17,320 Speaker 2: out this week in the newsletter where you made the 5 00:00:17,360 --> 00:00:20,560 Speaker 2: point and I had made a similar point the day earlier. 6 00:00:20,760 --> 00:00:23,400 Speaker 2: So maybe I'm not being so nice, but like, how 7 00:00:23,480 --> 00:00:26,880 Speaker 2: much of all the market action, all the economic action, 8 00:00:27,040 --> 00:00:31,000 Speaker 2: I guess, was actually dependent on just one guy, Donald Trump, 9 00:00:31,120 --> 00:00:33,600 Speaker 2: and that you know, if he came out and said something, 10 00:00:33,680 --> 00:00:36,720 Speaker 2: he could end the chaos at any moment in time. 11 00:00:36,840 --> 00:00:39,240 Speaker 3: And then on Wednesday he actually came out. 12 00:00:39,360 --> 00:00:43,600 Speaker 2: And did that, and then kind of kind of well, 13 00:00:44,159 --> 00:00:47,479 Speaker 2: your point was, if he does that, we can all 14 00:00:47,520 --> 00:00:50,519 Speaker 2: go back to worrying about like a slowdown in the 15 00:00:50,600 --> 00:00:55,400 Speaker 2: labor market or deep seek threatening AI, which so much 16 00:00:55,440 --> 00:00:57,920 Speaker 2: capital investment in the US actually depends on. 17 00:00:58,000 --> 00:01:02,240 Speaker 1: There's a lot. I did a deadlist. 18 00:01:02,360 --> 00:01:05,880 Speaker 2: I'm both the most popular trader and most successful trader 19 00:01:06,080 --> 00:01:08,000 Speaker 2: at Citadel. That is going viral. 20 00:01:08,240 --> 00:01:09,040 Speaker 3: Uh barges. 21 00:01:09,200 --> 00:01:11,360 Speaker 1: This isn't after school special, except. 22 00:01:10,959 --> 00:01:13,520 Speaker 2: I've decided I'm going to base my entire personality going 23 00:01:13,520 --> 00:01:16,760 Speaker 2: forward on campaigning for a strategic pork reserve in the US. 24 00:01:17,000 --> 00:01:19,280 Speaker 1: Black goals. These are the important question. 25 00:01:19,400 --> 00:01:20,760 Speaker 2: Is it robots taking over the world. 26 00:01:20,920 --> 00:01:23,759 Speaker 1: No, I think that like in a couple of years, 27 00:01:23,920 --> 00:01:26,160 Speaker 1: the AI will do a really good job of making 28 00:01:26,240 --> 00:01:29,240 Speaker 1: the Odd Lots podcast. One day that person will have 29 00:01:29,280 --> 00:01:30,280 Speaker 1: the mandate of Heaven. 30 00:01:30,480 --> 00:01:32,760 Speaker 2: How do I get more popular and successful? 31 00:01:33,000 --> 00:01:37,560 Speaker 1: We do have the Welcome to lots More, where we 32 00:01:37,600 --> 00:01:39,480 Speaker 1: catch up with friends about what's going. 33 00:01:39,240 --> 00:01:42,200 Speaker 2: On right now, because even when Odd Lots is over, 34 00:01:42,600 --> 00:01:44,000 Speaker 2: there's always lots More. 35 00:01:44,640 --> 00:01:50,120 Speaker 1: And we really do have the perfect guest you know 36 00:01:50,160 --> 00:01:52,800 Speaker 1: who had a really good contribution to the Odd Lots 37 00:01:52,880 --> 00:01:58,360 Speaker 1: newsletter February twenty twenty fourth. Basically the market top Neil 38 00:01:58,400 --> 00:02:01,760 Speaker 1: Dunnas's rising risks to the Lake market calling recession risks 39 00:02:02,040 --> 00:02:03,880 Speaker 1: right there and essentially at the market top. We got 40 00:02:03,880 --> 00:02:06,680 Speaker 1: it back on Neil yesterday after Trump walked it back. 41 00:02:07,000 --> 00:02:09,200 Speaker 1: By the way, we're talking to Neildutta of Renaissance Macro. 42 00:02:09,520 --> 00:02:12,600 Speaker 1: Trump walked back some of the tariffs. Goldman pulled it 43 00:02:12,600 --> 00:02:14,680 Speaker 1: to recession call you. We sent out an email right 44 00:02:14,720 --> 00:02:17,560 Speaker 1: away you said, I'm sticking with my recession call. Why 45 00:02:17,600 --> 00:02:20,600 Speaker 1: do you see recession in the cards in twenty twenty five? 46 00:02:20,600 --> 00:02:24,000 Speaker 4: Still, so remember that, you know, for me, it's it's 47 00:02:24,040 --> 00:02:29,040 Speaker 4: not really about an Nber defined recession like that, to 48 00:02:29,160 --> 00:02:31,000 Speaker 4: me is not the name of the game. The name 49 00:02:31,040 --> 00:02:33,440 Speaker 4: of the game is trying to translate an economic view 50 00:02:33,480 --> 00:02:37,760 Speaker 4: into a market call. And even if it's not technically 51 00:02:37,840 --> 00:02:42,640 Speaker 4: a recession, it might as well be because the underlying 52 00:02:43,280 --> 00:02:48,480 Speaker 4: problem for the market is not going away. And that's 53 00:02:48,520 --> 00:02:50,760 Speaker 4: the issue. You know, all the things I mentioned in 54 00:02:50,800 --> 00:02:54,560 Speaker 4: that newsletter, you highlight it in February, that's all here. 55 00:02:54,680 --> 00:02:57,280 Speaker 4: That's still here, right. We still have a situation where 56 00:02:57,680 --> 00:03:00,880 Speaker 4: labor incomes are slowing and the Fed's not budget. We 57 00:03:00,960 --> 00:03:03,600 Speaker 4: still have a situation where mortgage rates are high and 58 00:03:03,639 --> 00:03:07,480 Speaker 4: the housing market is weak, and we still have state 59 00:03:07,520 --> 00:03:12,800 Speaker 4: in local governments cutting back, and we still have a 60 00:03:12,919 --> 00:03:16,399 Speaker 4: pretty high volume on trade. I mean, in terms of tensions. 61 00:03:17,040 --> 00:03:21,519 Speaker 4: Just because we dialed it back a little bit yesterday 62 00:03:21,800 --> 00:03:24,440 Speaker 4: doesn't mean that the tensions are not still high. And 63 00:03:24,520 --> 00:03:28,200 Speaker 4: I think it's what we've basically done is traded. You know, 64 00:03:28,240 --> 00:03:31,160 Speaker 4: you basically spread the distribution of costs. I guess I 65 00:03:31,160 --> 00:03:33,600 Speaker 4: mean away from everyone, just towards China. But that's still 66 00:03:33,639 --> 00:03:36,040 Speaker 4: pretty bad in and of itself. I don't think it 67 00:03:36,040 --> 00:03:38,120 Speaker 4: takes a rocket science to figure it out. You I mean, 68 00:03:38,160 --> 00:03:41,400 Speaker 4: if you're basically trying to break up the relationship with 69 00:03:41,560 --> 00:03:44,240 Speaker 4: US and our third major trading partner. There's no scenario 70 00:03:44,320 --> 00:03:47,960 Speaker 4: or that doesn't create some issues for the marketplace. 71 00:03:48,440 --> 00:03:52,480 Speaker 2: It is true we've ratcheted down tariffs for countries ex China, 72 00:03:52,680 --> 00:03:55,160 Speaker 2: but as you say, we've basically gone back to what 73 00:03:55,200 --> 00:03:58,720 Speaker 2: we were worried about before, right And the funny thing 74 00:03:58,760 --> 00:04:00,720 Speaker 2: I got to say about that gold a note, and 75 00:04:00,760 --> 00:04:03,640 Speaker 2: it just underscores how quickly things are changing in the 76 00:04:03,680 --> 00:04:07,320 Speaker 2: current environment. You know, they publish that, they published the 77 00:04:07,360 --> 00:04:11,120 Speaker 2: recession call basically an hour before Oh Trump did his 78 00:04:11,200 --> 00:04:14,080 Speaker 2: big Wednesday announcement, and then right after that, like we 79 00:04:14,160 --> 00:04:16,520 Speaker 2: didn't realize that within sixty minutes, they had to come 80 00:04:16,560 --> 00:04:18,839 Speaker 2: out and say, actually, we're rescinding it. 81 00:04:19,000 --> 00:04:22,919 Speaker 1: As Lenin said, there are hours where nothing happens, in 82 00:04:23,040 --> 00:04:26,520 Speaker 1: minutes where days happen, and we've had two minutes you now, 83 00:04:26,760 --> 00:04:28,239 Speaker 1: we're seeing a lot of that right now. 84 00:04:28,640 --> 00:04:30,960 Speaker 2: Do you have like a little book of Lenin quotes 85 00:04:31,000 --> 00:04:33,280 Speaker 2: that you keep with you? Where are you getting those from? 86 00:04:33,680 --> 00:04:36,120 Speaker 1: I also might be mangling the quote a little bit. 87 00:04:36,279 --> 00:04:38,400 Speaker 1: I mean you you should trade tensions are high, but 88 00:04:38,560 --> 00:04:41,080 Speaker 1: tariffs are really high right now. I mean, that's really 89 00:04:41,120 --> 00:04:43,240 Speaker 1: like the core thing. Well, that's the other thing, right, job, 90 00:04:43,320 --> 00:04:45,560 Speaker 1: I mean, it's just tensions, it's reality. 91 00:04:45,279 --> 00:04:48,400 Speaker 4: One hundred percent, and I kind of sympathize with it, right, 92 00:04:48,480 --> 00:04:51,240 Speaker 4: Like it's the uncertainty that he's creating. No, no, No, it's 93 00:04:51,240 --> 00:04:55,680 Speaker 4: also what he's actually doing, and that is going to 94 00:04:55,720 --> 00:04:58,680 Speaker 4: weigh on investment by itself, right, because if you introduce 95 00:04:58,800 --> 00:05:03,240 Speaker 4: tariffs and actually follow through with the tariffs, the uncertainty 96 00:05:03,240 --> 00:05:05,680 Speaker 4: around what you're doing is going down. The reality of 97 00:05:05,720 --> 00:05:08,800 Speaker 4: what you're doing is what businesses will respond to through 98 00:05:08,839 --> 00:05:12,160 Speaker 4: growth expectations, and they'll pull back, right, Because ultimately what 99 00:05:12,279 --> 00:05:15,880 Speaker 4: drives investment is what's happening with growth. If real growth 100 00:05:16,440 --> 00:05:20,279 Speaker 4: is slowing, then it's inevitable that investment spending will follow 101 00:05:20,320 --> 00:05:23,840 Speaker 4: suit because largely what investment responds to is sort of 102 00:05:23,880 --> 00:05:26,680 Speaker 4: an accelerated effect. Right, That's basically the idea that is 103 00:05:27,080 --> 00:05:29,440 Speaker 4: growth picks up, investment tends to rise. More so the 104 00:05:29,480 --> 00:05:32,600 Speaker 4: fact that growth is slowing and expectations around growth are 105 00:05:32,600 --> 00:05:35,760 Speaker 4: coming down, that's ultimately what's going to pull down investment. 106 00:05:35,920 --> 00:05:38,600 Speaker 4: So it's not so much the uncertainty, although that that's 107 00:05:38,600 --> 00:05:41,320 Speaker 4: probably not good. It's also what he's actually doing. 108 00:05:41,480 --> 00:05:44,280 Speaker 2: Wait, just on that note, so you sent an email 109 00:05:44,320 --> 00:05:46,960 Speaker 2: earlier this week where you said the SMP five hundred 110 00:05:46,960 --> 00:05:50,200 Speaker 2: trading like fart coin is probably not a good thing. 111 00:05:50,400 --> 00:05:53,280 Speaker 2: There's a sentence I never thought I would necessarily read 112 00:05:53,440 --> 00:05:55,960 Speaker 2: out loud, But the S and P five hundred trading 113 00:05:56,080 --> 00:06:00,920 Speaker 2: like that? Is that mostly a reflection of the uncertainty 114 00:06:01,120 --> 00:06:04,279 Speaker 2: aspect of all of this or are you implying that 115 00:06:04,600 --> 00:06:07,480 Speaker 2: it's going to feed into things like funding costs and 116 00:06:07,520 --> 00:06:10,479 Speaker 2: the capital investment environment and I guess the wealth effect 117 00:06:10,560 --> 00:06:11,920 Speaker 2: for the US economy as well. 118 00:06:12,680 --> 00:06:14,680 Speaker 4: Yeah, I think so. I mean, I think the stock 119 00:06:14,720 --> 00:06:17,839 Speaker 4: market going down is usually bad, and I think that 120 00:06:17,839 --> 00:06:21,680 Speaker 4: that'll have effects on household psychology for sure. And remember, 121 00:06:21,839 --> 00:06:25,000 Speaker 4: like a lot of the reason why consumer spending ran 122 00:06:25,400 --> 00:06:28,120 Speaker 4: so much more rapidly than real income growth last year 123 00:06:28,320 --> 00:06:31,640 Speaker 4: was because the savings rate was going down. And one 124 00:06:31,640 --> 00:06:33,640 Speaker 4: of the reasons why the savings rate was going down 125 00:06:33,720 --> 00:06:36,120 Speaker 4: was probably because stock prices were going up and that 126 00:06:36,240 --> 00:06:39,360 Speaker 4: was juicing you know, enthusiasm for the high end consumer. 127 00:06:39,560 --> 00:06:42,880 Speaker 2: Yeah, and this is really important. Like, if you think 128 00:06:42,920 --> 00:06:46,960 Speaker 2: that consumer spending was driving a lot of the surprising 129 00:06:47,040 --> 00:06:49,960 Speaker 2: growth in some respects that we've seen recently, then you 130 00:06:50,000 --> 00:06:54,320 Speaker 2: should really focus on what the higher end consumer was doing. 131 00:06:54,320 --> 00:06:57,800 Speaker 2: And most of those higher end consumers have stock portfolios. 132 00:06:58,520 --> 00:07:00,360 Speaker 4: Yeah, I think that's right. And I guess the other 133 00:07:00,360 --> 00:07:01,960 Speaker 4: thing I would say is, you know, there's a whole 134 00:07:02,000 --> 00:07:04,839 Speaker 4: literature I think about, you know, the stock market as 135 00:07:04,960 --> 00:07:09,440 Speaker 4: a passive informant or an active informant. Right, so, is 136 00:07:09,440 --> 00:07:11,960 Speaker 4: there anything about the share price of a company that 137 00:07:12,080 --> 00:07:15,200 Speaker 4: tells the CEO of that company something about their firm 138 00:07:15,240 --> 00:07:19,280 Speaker 4: they don't already know? Usually it's probably not. But if 139 00:07:19,320 --> 00:07:24,200 Speaker 4: you get this sort of macro type environment, which is 140 00:07:24,320 --> 00:07:26,559 Speaker 4: kind of where we are right now, then the stock 141 00:07:26,640 --> 00:07:29,080 Speaker 4: market takes more, takes on more of a role of 142 00:07:29,120 --> 00:07:32,520 Speaker 4: an active informant, and you know, then you kind of 143 00:07:32,800 --> 00:07:35,240 Speaker 4: have business the business community kind of looking for the 144 00:07:35,240 --> 00:07:39,560 Speaker 4: stock market as a aggregator of macro risk. And right now, 145 00:07:39,760 --> 00:07:41,800 Speaker 4: you know, the fact is that stock prices are down 146 00:07:41,880 --> 00:07:46,480 Speaker 4: quite a bit from their February highs, and that's probably 147 00:07:46,520 --> 00:07:49,600 Speaker 4: creating a cautionary mood for most of corporate America. 148 00:07:49,800 --> 00:07:52,480 Speaker 1: I'm a big fan of the stocks matter, a hypothesis 149 00:07:52,560 --> 00:07:55,400 Speaker 1: I've been bringing the drum. Stocks matter, don't, don't just 150 00:07:55,520 --> 00:07:58,080 Speaker 1: dismiss the stock market is this thing that US Wall 151 00:07:58,120 --> 00:08:01,560 Speaker 1: Street elites which we are are obsessed with, they actually 152 00:08:01,680 --> 00:08:04,200 Speaker 1: matter in this family. I do not believe in Wall 153 00:08:04,200 --> 00:08:07,520 Speaker 1: Street versus Main Street. I only believe in one constant, 154 00:08:08,040 --> 00:08:11,520 Speaker 1: contiguous street that connects all roads in America. 155 00:08:11,680 --> 00:08:15,240 Speaker 2: Neil. Wait, Wait, isn't that Neil's saying that? You know, 156 00:08:15,440 --> 00:08:18,400 Speaker 2: people say that the stock market it's not the economy, 157 00:08:18,560 --> 00:08:19,840 Speaker 2: but it's not not. 158 00:08:19,880 --> 00:08:22,000 Speaker 1: The Where did you get that, Neil? Where'd you get that? 159 00:08:22,240 --> 00:08:23,880 Speaker 2: Oh, we're going to settle this, Neil. 160 00:08:24,160 --> 00:08:25,360 Speaker 4: I got it from Joe Wisenthal. 161 00:08:25,480 --> 00:08:26,520 Speaker 3: Yeah, right, Okay. 162 00:08:27,400 --> 00:08:30,280 Speaker 1: Most painful thing is Tracy has to acknowledge I get 163 00:08:30,320 --> 00:08:31,400 Speaker 1: some credit for something. 164 00:08:31,520 --> 00:08:32,360 Speaker 3: It's a good quote. 165 00:08:32,400 --> 00:08:32,840 Speaker 1: Thank you. 166 00:08:32,920 --> 00:08:45,439 Speaker 3: That's why I thought Neil had it. 167 00:08:49,840 --> 00:08:53,599 Speaker 1: Outside of elder care, do you do you feel confident 168 00:08:54,080 --> 00:08:56,319 Speaker 1: that there is a single major sector of the US 169 00:08:56,400 --> 00:09:01,800 Speaker 1: economy right now that's adding headcount in elder care and healthcare? 170 00:09:02,520 --> 00:09:05,000 Speaker 4: Not really, No, I mean most of the growth in 171 00:09:05,040 --> 00:09:07,840 Speaker 4: employment has been in sort of what what you would 172 00:09:07,880 --> 00:09:13,520 Speaker 4: call like acyclical industries like private education and healthcare. You know, 173 00:09:13,520 --> 00:09:17,319 Speaker 4: when you look at the more cyclically sensitive areas of 174 00:09:17,360 --> 00:09:20,480 Speaker 4: the job market. I mean that's clearly slowing down. You 175 00:09:20,520 --> 00:09:25,360 Speaker 4: look at residential construction employment, I mean that's actually down 176 00:09:25,440 --> 00:09:28,520 Speaker 4: against last year, you know, I mean service sector. 177 00:09:28,640 --> 00:09:28,920 Speaker 2: I mean. 178 00:09:29,120 --> 00:09:30,600 Speaker 4: The other thing, of course, is that if the tar 179 00:09:31,000 --> 00:09:33,280 Speaker 4: as the tariffs come on, that's likely to push up 180 00:09:33,320 --> 00:09:37,240 Speaker 4: goods prices. Right, given the fact that the labor markets 181 00:09:37,320 --> 00:09:41,160 Speaker 4: are slowing down to the extent that people have to 182 00:09:41,200 --> 00:09:45,640 Speaker 4: allocate more of their household budgets towards goods, that'll leave 183 00:09:45,920 --> 00:09:48,800 Speaker 4: less left over for everything else, which means they'll ultimately 184 00:09:48,840 --> 00:09:52,000 Speaker 4: have to start cutting back on services consumption, and that'll 185 00:09:52,080 --> 00:09:55,320 Speaker 4: drive down the prices for services. So that to me 186 00:09:55,440 --> 00:09:59,080 Speaker 4: is a bigger concern because obviously service sector employment is 187 00:09:59,160 --> 00:10:01,440 Speaker 4: huge in the US. Yes, that's where most of the 188 00:10:01,480 --> 00:10:04,360 Speaker 4: meat is, so you know, leader in hospitality, you know, 189 00:10:04,480 --> 00:10:06,480 Speaker 4: things like that. I mean that's going to come under pressure. 190 00:10:06,480 --> 00:10:09,520 Speaker 4: I would think, yea as the quarters go on. 191 00:10:10,040 --> 00:10:13,720 Speaker 2: We are recording this on Thursday, April tenth, and we 192 00:10:13,760 --> 00:10:17,439 Speaker 2: did just see CPI actually come in lower than expected. 193 00:10:17,800 --> 00:10:22,600 Speaker 2: But everyone's talking about imminent tariffs impact. And I guess 194 00:10:22,600 --> 00:10:25,320 Speaker 2: my question on inflation is like a lot of people 195 00:10:25,360 --> 00:10:28,679 Speaker 2: seem to be debating between well, most people agree the 196 00:10:28,760 --> 00:10:32,679 Speaker 2: teriffs will immediately push up prices. The big question is 197 00:10:32,880 --> 00:10:37,520 Speaker 2: at what point will enough demand destruction actually kick in 198 00:10:37,880 --> 00:10:41,960 Speaker 2: to reduce demand for consumer goods and potentially lower prices. 199 00:10:42,320 --> 00:10:45,240 Speaker 2: But it's really interesting that you're saying that, you know, 200 00:10:45,360 --> 00:10:48,000 Speaker 2: we could have the impact feed into services, and then 201 00:10:48,040 --> 00:10:52,360 Speaker 2: if you get higher unemployment that would certainly add to 202 00:10:52,679 --> 00:10:54,480 Speaker 2: the demand destruction dynamic. 203 00:10:55,480 --> 00:10:57,960 Speaker 4: The Fed's policy at the moment is to be behind 204 00:10:58,000 --> 00:11:01,240 Speaker 4: the curve proceed accordingly. That's all I can tell you. 205 00:11:01,320 --> 00:11:03,600 Speaker 4: I mean, they're basically telling you that they're waiting for 206 00:11:04,520 --> 00:11:08,760 Speaker 4: growth conditions to deteriorate before they cut. That's all that 207 00:11:08,800 --> 00:11:11,280 Speaker 4: really matters. They're not changing the nomenal anchor just yet. 208 00:11:11,320 --> 00:11:14,520 Speaker 4: I mean, so that basically tells you that their solution 209 00:11:15,160 --> 00:11:20,640 Speaker 4: to the inflationary consequences of tariffs is disinflation. 210 00:11:21,320 --> 00:11:25,720 Speaker 1: As of right now, naszak down six percent. There's that 211 00:11:25,840 --> 00:11:30,120 Speaker 1: big green candle we got yesterday rapidly melting s and 212 00:11:30,120 --> 00:11:33,800 Speaker 1: P five hundred down five point two four percent. US 213 00:11:33,800 --> 00:11:36,160 Speaker 1: tenure yields up on the date. Not a cocktail. You 214 00:11:36,160 --> 00:11:37,120 Speaker 1: want to see what if? 215 00:11:38,679 --> 00:11:42,080 Speaker 2: What if this just keeps going for the next four years. 216 00:11:41,760 --> 00:11:42,319 Speaker 1: It might be. 217 00:11:46,960 --> 00:11:50,040 Speaker 2: Lots more is produced by Carmen Rodriguez and Dashel Bennett, 218 00:11:50,080 --> 00:11:52,400 Speaker 2: with help from Moses Ondom and kel Brooks. 219 00:11:52,760 --> 00:11:55,800 Speaker 1: Our sound engineer is Blake Maples. Sage Buman is the 220 00:11:55,800 --> 00:11:57,199 Speaker 1: head of Bloomberg Podcasts. 221 00:11:57,440 --> 00:12:00,559 Speaker 2: Please rate, review, and subscribe to Odd, Lots and Lots 222 00:12:00,600 --> 00:12:03,520 Speaker 2: More on your favorite podcast platforms. 223 00:12:03,320 --> 00:12:05,920 Speaker 1: And remember that Bloomberg subscribers can listen to all of 224 00:12:05,960 --> 00:12:09,840 Speaker 1: our podcasts add free by connecting through Apple Podcasts. Thanks 225 00:12:09,880 --> 00:12:10,360 Speaker 1: for listening.