Speaker 1: Bloomberg Audio Studios, podcasts, radio news. What do you think
Speaker 1: or recession?
Speaker 2: I mean, you had a really good piece thank you
Speaker 2: out this week in the newsletter where you made the
Speaker 2: point and I had made a similar point the day earlier.
Speaker 2: So maybe I'm not being so nice, but like, how
Speaker 2: much of all the market action, all the economic action,
Speaker 2: I guess, was actually dependent on just one guy, Donald Trump,
Speaker 2: and that you know, if he came out and said something,
Speaker 2: he could end the chaos at any moment in time.
Speaker 3: And then on Wednesday he actually came out.
Speaker 2: And did that, and then kind of kind of well,
Speaker 2: your point was, if he does that, we can all
Speaker 2: go back to worrying about like a slowdown in the
Speaker 2: labor market or deep seek threatening AI, which so much
Speaker 2: capital investment in the US actually depends on.
Speaker 1: There's a lot. I did a deadlist.
Speaker 2: I'm both the most popular trader and most successful trader
Speaker 2: at Citadel. That is going viral.
Speaker 3: Uh barges.
Speaker 1: This isn't after school special, except.
Speaker 2: I've decided I'm going to base my entire personality going
Speaker 2: forward on campaigning for a strategic pork reserve in the US.
Speaker 1: Black goals. These are the important question.
Speaker 2: Is it robots taking over the world.
Speaker 1: No, I think that like in a couple of years,
Speaker 1: the AI will do a really good job of making
Speaker 1: the Odd Lots podcast. One day that person will have
Speaker 1: the mandate of Heaven.
Speaker 2: How do I get more popular and successful?
Speaker 1: We do have the Welcome to lots More, where we
Speaker 1: catch up with friends about what's going.
Speaker 2: On right now, because even when Odd Lots is over,
Speaker 2: there's always lots More.
Speaker 1: And we really do have the perfect guest you know
Speaker 1: who had a really good contribution to the Odd Lots
Speaker 1: newsletter February twenty twenty fourth. Basically the market top Neil
Speaker 1: Dunnas's rising risks to the Lake market calling recession risks
Speaker 1: right there and essentially at the market top. We got
Speaker 1: it back on Neil yesterday after Trump walked it back.
Speaker 1: By the way, we're talking to Neildutta of Renaissance Macro.
Speaker 1: Trump walked back some of the tariffs. Goldman pulled it
Speaker 1: to recession call you. We sent out an email right
Speaker 1: away you said, I'm sticking with my recession call. Why
Speaker 1: do you see recession in the cards in twenty twenty five?
Speaker 4: Still, so remember that, you know, for me, it's it's
Speaker 4: not really about an Nber defined recession like that, to
Speaker 4: me is not the name of the game. The name
Speaker 4: of the game is trying to translate an economic view
Speaker 4: into a market call. And even if it's not technically
Speaker 4: a recession, it might as well be because the underlying
Speaker 4: problem for the market is not going away. And that's
Speaker 4: the issue. You know, all the things I mentioned in
Speaker 4: that newsletter, you highlight it in February, that's all here.
Speaker 4: That's still here, right. We still have a situation where
Speaker 4: labor incomes are slowing and the Fed's not budget. We
Speaker 4: still have a situation where mortgage rates are high and
Speaker 4: the housing market is weak, and we still have state
Speaker 4: in local governments cutting back, and we still have a
Speaker 4: pretty high volume on trade. I mean, in terms of tensions.
Speaker 4: Just because we dialed it back a little bit yesterday
Speaker 4: doesn't mean that the tensions are not still high. And
Speaker 4: I think it's what we've basically done is traded. You know,
Speaker 4: you basically spread the distribution of costs. I guess I
Speaker 4: mean away from everyone, just towards China. But that's still
Speaker 4: pretty bad in and of itself. I don't think it
Speaker 4: takes a rocket science to figure it out. You I mean,
Speaker 4: if you're basically trying to break up the relationship with
Speaker 4: US and our third major trading partner. There's no scenario
Speaker 4: or that doesn't create some issues for the marketplace.
Speaker 2: It is true we've ratcheted down tariffs for countries ex China,
Speaker 2: but as you say, we've basically gone back to what
Speaker 2: we were worried about before, right And the funny thing
Speaker 2: I got to say about that gold a note, and
Speaker 2: it just underscores how quickly things are changing in the
Speaker 2: current environment. You know, they publish that, they published the
Speaker 2: recession call basically an hour before Oh Trump did his
Speaker 2: big Wednesday announcement, and then right after that, like we
Speaker 2: didn't realize that within sixty minutes, they had to come
Speaker 2: out and say, actually, we're rescinding it.
Speaker 1: As Lenin said, there are hours where nothing happens, in
Speaker 1: minutes where days happen, and we've had two minutes you now,
Speaker 1: we're seeing a lot of that right now.
Speaker 2: Do you have like a little book of Lenin quotes
Speaker 2: that you keep with you? Where are you getting those from?
Speaker 1: I also might be mangling the quote a little bit.
Speaker 1: I mean you you should trade tensions are high, but
Speaker 1: tariffs are really high right now. I mean, that's really
Speaker 1: like the core thing. Well, that's the other thing, right, job,
Speaker 1: I mean, it's just tensions, it's reality.
Speaker 4: One hundred percent, and I kind of sympathize with it, right,
Speaker 4: Like it's the uncertainty that he's creating. No, no, No, it's
Speaker 4: also what he's actually doing, and that is going to
Speaker 4: weigh on investment by itself, right, because if you introduce
Speaker 4: tariffs and actually follow through with the tariffs, the uncertainty
Speaker 4: around what you're doing is going down. The reality of
Speaker 4: what you're doing is what businesses will respond to through
Speaker 4: growth expectations, and they'll pull back, right, Because ultimately what
Speaker 4: drives investment is what's happening with growth. If real growth
Speaker 4: is slowing, then it's inevitable that investment spending will follow
Speaker 4: suit because largely what investment responds to is sort of
Speaker 4: an accelerated effect. Right, That's basically the idea that is
Speaker 4: growth picks up, investment tends to rise. More so the
Speaker 4: fact that growth is slowing and expectations around growth are
Speaker 4: coming down, that's ultimately what's going to pull down investment.
Speaker 4: So it's not so much the uncertainty, although that that's
Speaker 4: probably not good. It's also what he's actually doing.
Speaker 2: Wait, just on that note, so you sent an email
Speaker 2: earlier this week where you said the SMP five hundred
Speaker 2: trading like fart coin is probably not a good thing.
Speaker 2: There's a sentence I never thought I would necessarily read
Speaker 2: out loud, But the S and P five hundred trading
Speaker 2: like that? Is that mostly a reflection of the uncertainty
Speaker 2: aspect of all of this or are you implying that
Speaker 2: it's going to feed into things like funding costs and
Speaker 2: the capital investment environment and I guess the wealth effect
Speaker 2: for the US economy as well.
Speaker 4: Yeah, I think so. I mean, I think the stock
Speaker 4: market going down is usually bad, and I think that
Speaker 4: that'll have effects on household psychology for sure. And remember,
Speaker 4: like a lot of the reason why consumer spending ran
Speaker 4: so much more rapidly than real income growth last year
Speaker 4: was because the savings rate was going down. And one
Speaker 4: of the reasons why the savings rate was going down
Speaker 4: was probably because stock prices were going up and that
Speaker 4: was juicing you know, enthusiasm for the high end consumer.
Speaker 2: Yeah, and this is really important. Like, if you think
Speaker 2: that consumer spending was driving a lot of the surprising
Speaker 2: growth in some respects that we've seen recently, then you
Speaker 2: should really focus on what the higher end consumer was doing.
Speaker 2: And most of those higher end consumers have stock portfolios.
Speaker 4: Yeah, I think that's right. And I guess the other
Speaker 4: thing I would say is, you know, there's a whole
Speaker 4: literature I think about, you know, the stock market as
Speaker 4: a passive informant or an active informant. Right, so, is
Speaker 4: there anything about the share price of a company that
Speaker 4: tells the CEO of that company something about their firm
Speaker 4: they don't already know? Usually it's probably not. But if
Speaker 4: you get this sort of macro type environment, which is
Speaker 4: kind of where we are right now, then the stock
Speaker 4: market takes more, takes on more of a role of
Speaker 4: an active informant, and you know, then you kind of
Speaker 4: have business the business community kind of looking for the
Speaker 4: stock market as a aggregator of macro risk. And right now,
Speaker 4: you know, the fact is that stock prices are down
Speaker 4: quite a bit from their February highs, and that's probably
Speaker 4: creating a cautionary mood for most of corporate America.
Speaker 1: I'm a big fan of the stocks matter, a hypothesis
Speaker 1: I've been bringing the drum. Stocks matter, don't, don't just
Speaker 1: dismiss the stock market is this thing that US Wall
Speaker 1: Street elites which we are are obsessed with, they actually
Speaker 1: matter in this family. I do not believe in Wall
Speaker 1: Street versus Main Street. I only believe in one constant,
Speaker 1: contiguous street that connects all roads in America.
Speaker 2: Neil. Wait, Wait, isn't that Neil's saying that? You know,
Speaker 2: people say that the stock market it's not the economy,
Speaker 2: but it's not not.
Speaker 1: The Where did you get that, Neil? Where'd you get that?
Speaker 2: Oh, we're going to settle this, Neil.
Speaker 4: I got it from Joe Wisenthal.
Speaker 3: Yeah, right, Okay.
Speaker 1: Most painful thing is Tracy has to acknowledge I get
Speaker 1: some credit for something.
Speaker 3: It's a good quote.
Speaker 1: Thank you.
Speaker 3: That's why I thought Neil had it.
Speaker 1: Outside of elder care, do you do you feel confident
Speaker 1: that there is a single major sector of the US
Speaker 1: economy right now that's adding headcount in elder care and healthcare?
Speaker 4: Not really, No, I mean most of the growth in
Speaker 4: employment has been in sort of what what you would
Speaker 4: call like acyclical industries like private education and healthcare. You know,
Speaker 4: when you look at the more cyclically sensitive areas of
Speaker 4: the job market. I mean that's clearly slowing down. You
Speaker 4: look at residential construction employment, I mean that's actually down
Speaker 4: against last year, you know, I mean service sector.
Speaker 2: I mean.
Speaker 4: The other thing, of course, is that if the tar
Speaker 4: as the tariffs come on, that's likely to push up
Speaker 4: goods prices. Right, given the fact that the labor markets
Speaker 4: are slowing down to the extent that people have to
Speaker 4: allocate more of their household budgets towards goods, that'll leave
Speaker 4: less left over for everything else, which means they'll ultimately
Speaker 4: have to start cutting back on services consumption, and that'll
Speaker 4: drive down the prices for services. So that to me
Speaker 4: is a bigger concern because obviously service sector employment is
Speaker 4: huge in the US. Yes, that's where most of the
Speaker 4: meat is, so you know, leader in hospitality, you know,
Speaker 4: things like that. I mean that's going to come under pressure.
Speaker 4: I would think, yea as the quarters go on.
Speaker 2: We are recording this on Thursday, April tenth, and we
Speaker 2: did just see CPI actually come in lower than expected.
Speaker 2: But everyone's talking about imminent tariffs impact. And I guess
Speaker 2: my question on inflation is like a lot of people
Speaker 2: seem to be debating between well, most people agree the
Speaker 2: teriffs will immediately push up prices. The big question is
Speaker 2: at what point will enough demand destruction actually kick in
Speaker 2: to reduce demand for consumer goods and potentially lower prices.
Speaker 2: But it's really interesting that you're saying that, you know,
Speaker 2: we could have the impact feed into services, and then
Speaker 2: if you get higher unemployment that would certainly add to
Speaker 2: the demand destruction dynamic.
Speaker 4: The Fed's policy at the moment is to be behind
Speaker 4: the curve proceed accordingly. That's all I can tell you.
Speaker 4: I mean, they're basically telling you that they're waiting for
Speaker 4: growth conditions to deteriorate before they cut. That's all that
Speaker 4: really matters. They're not changing the nomenal anchor just yet.
Speaker 4: I mean, so that basically tells you that their solution
Speaker 4: to the inflationary consequences of tariffs is disinflation.
Speaker 1: As of right now, naszak down six percent. There's that
Speaker 1: big green candle we got yesterday rapidly melting s and
Speaker 1: P five hundred down five point two four percent. US
Speaker 1: tenure yields up on the date. Not a cocktail. You
Speaker 1: want to see what if?
Speaker 2: What if this just keeps going for the next four years.
Speaker 1: It might be.
Speaker 2: Lots more is produced by Carmen Rodriguez and Dashel Bennett,
Speaker 2: with help from Moses Ondom and kel Brooks.
Speaker 1: Our sound engineer is Blake Maples. Sage Buman is the
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