April 10, 2025 • 49 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyApril 10th, 2025
Featuring:
1) Patrick Armstrong, CIO at Plurimi Wealth, Tiffany Wilding, Economist: North America at PIMCO, and Greg Boutle, Head of US Equity & Derivative Strategy at BNP Paribas, react to CPI and discuss the outlook for bonds and equities following President Trump's tariff reversal. Strategists have warned investors against buying the dip in equities due to the risks ahead, with some advising caution amid extreme market volatility.
2) Ian Lyngen, Head of US Rates at BMO Capital Markets, joins to discuss signals from the bond market before and after President Trump's tariff reversal and the outlook for US rates amid the current US economic backdrop. Trump's tariff reversal decision was driven in part by the chaos in financial markets, as well as outreach from other countries making concessions, and he is now considering exemptions for companies facing severe consequences from tariffs.
3) Nancy Tengler, CEO & CIO at Laffer Tengler Investments, talks "amateur hour" at The White House and why markets need a better policy rollout to sustain a rally after Trump's tariff pause. After a frenetic meeting with economic aides, President Trump implemented a three-month pause on expanded tariffs on dozens of countries, excluding China, and raised tariffs on the world's second-largest economy. It comes after the president promised that his policies would "never" change.s
4) Jordan Rochester, Head: FICC Macro Strategy at Mizuho, on the bond market signals to President Trump and market risks from here. The dollar weakened to begin Thursday as concern reemerges about potential longer-term damage to the global economy from conflict over trade.
5) Kona Haque, Head of Commodities Research at ED&F Man, on the commodity turnaround on Trump's tariff reversal and how softs will fare as trade deals are renegotiate. It comes as the flow of oil from the world’s biggest producer to its largest importer is set to thin to virtually zero as a trade war between the two powerhouse economies escalates.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
We're up on CPI. I can think of no major
economic report that I've ignored the last number of days
like this important inflation study. Greg Bottle of BMP, Perry
Bob will be with us. Tiffany Wild will really give
us direction her wonderful work at PIMCO. But first, with
his incredible schedule, we had to squeeze in your Patrick Armstrong,
(00:49):
He's plurring me wealth for years with Templeton in Toronto,
which is a magical place for me. Patrick Armstrong in
the United Kingdom, thank you so much for joining us today.
Are we at a point where the foreigners won't buy
American stocks and bonds? Is something radically changed here? I
(01:09):
don't you.
Speaker 3 (01:10):
Say won't, but I do think the winds are pushing
against it, and Trump's tariffs are going to carve out
some economic winds in the short term because Europe isn't
going to respond immediately. To the tariffs that have been
put on them. But they it is a risk for
the United States that you've got global trade xus and
it turns into that kind of thing. And there's going
(01:32):
to be really strong rhetoric from the White House because
they know that's a real risk that they just get
basically disintermediated and their dollar becomes disintermediated. Is the global
reserve currency if you push things to extremes. So I
do think there's risks for this. I'm confident Trump is
going to carve oute some economic wins from this, but
(01:52):
I think the consequences maybe far greater, and it may
be a sort of backhanded win for Europe and the
rest of the world.
Speaker 2 (01:58):
Even let's get out of the front of Tiffany Wilder.
We want to talk to you Patrick. After this inflation report,
the Jobs Economy analysis waits for May or June. Does
this CPI report a current measure of inflation?
Speaker 3 (02:14):
Well, it's last month, and we're in a different world,
and some months go by and nothing happens. Some days
go by, and months and years happen, and that's where
it feels like we are right now. The one thing
the CPAI may be able to do is it may
give Powell an excuse to cut rates. He'll view transitory
inflation as transitory, and he does have inflation probably on
(02:35):
a downward trend with this print, so it may give
him the impetus if he wants to to cut a
little bit more aggressively, where his hands may be tied
later in the year if we do have stagflationary consequences.
Speaker 4 (02:46):
Patrick, where are you on the risk profile here? We've
had just such a volatile number of days, capped by
yesterday's big, big rally, but boy, we had to vix
it close to sixty just a couple of days ago.
Where are you going to risk profile these days?
Speaker 3 (02:59):
So I don't think it's a time to be a hero,
but it was the time to incrementally increase equities. We
decided on Monday, So we had a bad Tuesday when
we added it, but had a really nice bounce yesterday.
And anytime you're buying equities after a twenty percent sell off,
you're skewing the odds to your favor. And what we
looked at the VIX when it was at sixty, we said,
(03:20):
the only two times it's been like that before was
the COVID crash, and the financial crisis and the VIX
at sixty on Monday. This was a man made crisis
and we knew and about turn could be not the
end of the crisis, but really diminished the risks there.
And that's why we felt a little bit confident to
add risk. We actually started shorting a VIX in our
macro fund on Monday with that premise.
Speaker 2 (03:41):
Patrick Armstrong with us here for one more good question, Patrick,
just to cut to the chase. If I see the
shock of a negative statistic ONCPI, is that China exporting
deflation there?
Speaker 3 (03:57):
Actually I hadn't thought about it, but for that one
month there may have been a big jump in Chinese
imports at lower prices. Is China wanted to get them
into the US buyers wanted to get them in the
head of tariffs, and that may have been a bit
of a disinflationary and deflationary impact that's come out of it.
Powell's going to treat it how he wants to treat it.
It may give him the excuse to cut a little
(04:19):
bit more than he would have otherwise. So I think
if you are an equity bull, you'll welcome this news.
Speaker 2 (04:25):
I mean, it's interesting see Patrick, one final question. We
can do this, folks when we're coming to your commercial
free has ede done at Tottenham? I mean Tottenham is
not going to be relegated, but I mean it's pretty ugly.
What do you think.
Speaker 3 (04:37):
I'm a Man United fan and that's the only team
that's doing as poorly as we are, so right, yeah,
I can't throw stones when I live in a glasshouse.
Speaker 2 (04:45):
Comfort is Man United and Tottenham go down in flames
this year. Patrick Armstrong, thank you so much from London.
We'll get him on again for a much longer discussion.
Now to the economics of the moment. Greg Bodill, be
MP Pariba with it, cinemam of a Tiffany wild of
Pimco was a Tiffany month over month? Is that negative statistic?
(05:07):
Simply this crazy tariff driven wall of unit import volume.
Speaker 5 (05:16):
Well, just having a quick look at some of the details,
it actually looked like the services side of the goods basket,
or of the consumer price basket was was what was
weaker in this report. And I think that that just
really speaks to the broader uncertainty that we had, you know,
even before these latest news. This latest news, So travel
services categories hotels, airfares. You know, people are There's been
(05:39):
a lot of anecdotal reports about how you know, folks
that were thinking about traveling to the United States are
canceling those plans.
Speaker 2 (05:46):
Yeah.
Speaker 5 (05:46):
So I think it's it's a little bit of a
calm before the storm, and you had heighther uncertainty that
was reducing demand for services in the US.
Speaker 2 (05:54):
The tape improves. The VIX was up three big figures
now up to thirty five point five to three. The
futures of negative seventy seven, they were a negative one
hundred here a bit agoes, So a little better tape.
Is that because Tiffany this gives talking points or chat
for Jerown Powell to ease rates without the pressure from
the president.
Speaker 5 (06:16):
Yeah, well, I mean we still think there will be
a price level adjustment that will have to happen. On
the good side, you know, there will be some pass
through from this, and I think the question is just
how big will that be?
Speaker 6 (06:30):
You know?
Speaker 5 (06:30):
And then the other question on that is is how
much weakness do you see on the services side of
the economy as a result of these actions, you know
that are impacting the prices of goods and you know,
maybe what this CPI suggests is that you will have
a weakening economy on the services side that will contain
(06:50):
some of this inflationary pressure that obviously will allow the
Fed and make it less awkward for the Fed whenever
they're cutting interest rates.
Speaker 4 (06:58):
Tiffany, have you guys over there go taking down your
GDP forecast for twenty twenty five.
Speaker 5 (07:03):
And if so, why we think there's a fifty to
fifty chance of recession. You know, and even with this
latest reprieve. You know, if you just take a step back,
the effective tariff rate in the United States, just assuming
that imports stay unchanged, has gone back to levels that
we have not seen since the nineteen thirties. And that's
even with this ninety day reprieve. So you have a
(07:24):
very big tear off shock that is impacting the US economy.
And we do think there will be some disruption on that,
you know, over the near term, and that will slow
growth quite dramatically. And again we think there's kind of
a fifty to fifty chance of recession here. We think
growth grinds to a halt later this year.
Speaker 2 (07:40):
One of the great distinction here, folks, and I think
in the chaos that we're living. I need to partition this.
Tiffany Wilding is with specific investment management company PIMCO, and
a responsibility is to a broad asset manager versus a
market economists and frankly, derivatives expert like Greg Boudele. So
(08:01):
we get two different not views, but two different mandates.
Here from BNP Perry Bay with us in a bit,
and right now we stay with Tiffany wild Here we
welcome all of you across the nation. Frankly, futures worsened
out off the joy of twenty of five minutes ago.
I got the vix out two point seven seven figures
thirty six point thirty nine. Tiffany, if you've seen it,
(08:25):
and I don't want you to give away the secrets
of PIMCOH But is it sort of steady as she
goes as they listen to you, the managers, or is
this a time for a radical reset of PIMCO.
Speaker 5 (08:40):
Well, you know what I think that we have. You know,
we have been arguing. I think we've been on the
right side of the recent volatility, you know, because we
were arguing like late last year that the markets just
you know, weren't focused enough on the sort of radical
changes that the Trump administration was taught about, you know,
(09:01):
and I think that they've been actually quite clear about
what they're trying to do. And I think everybody was
just focused on various constraints, whether political, economic, or even
legal constraints that would maybe impin their ability to implement
their policy. But they've just blown through all those constraints
and you are seeing the president basically do what he
(09:21):
said he would do on the campaign trail. You know,
we think the ten percent tariff across the board, you know,
that's that's sticking, higher tariffs on China is sticking. I mean,
we are you know, they are very effectively trying to
decouple the US economy from China. And that's exactly what
they said they would do, you know, And so I think,
you know, take them literally.
Speaker 4 (09:40):
So Tiffany, I mean, we report a lot of stuff
from China and a big tariff there. What does that
mean for inflation for the US?
Speaker 2 (09:47):
Do you think?
Speaker 4 (09:49):
Yeah?
Speaker 5 (09:50):
I mean, we do think there's going to be a
big price level adjustment that happens as a result of this,
you know. Now, I think from the CPI report this morning,
you know, one thing that it does suggest is that
even if you're getting getting goods prices that are being
set higher as some of the cost at least is
passed on to consumers, the services side, you know, might
(10:11):
be weakening at the same time offsetting that. So I
think it's you know, again, how much price level adjustment
we get here? I think is the key question for
the next you know, call it six months and in.
Speaker 2 (10:20):
Folks, unfair question Like if you asked me this question,
you saw me, you know, having a beverage of my choice,
and you said Tom when I'd say, I don't know.
So let's as Tiffany Wilding. When Tiffany Wilding, when does
the slow down of tariffs at Walmart, tariffs at Duke's bookstore?
When we got to we gotta text, somebody said, stop
(10:41):
talking about Duke. We're double in the Duke conversation right
now this morning, Tiffany Wilder, When for the consumer, does
all this agony click in?
Speaker 7 (10:53):
Yeah?
Speaker 5 (10:53):
I mean, you know, I think it's clicking in for
businesses already and they're trying to figure out what to do.
And I think that you will have, you know, you
will have to have businesses that are raising prices at
least somewhat. It will be you know, there will be
margin compression, there will be and there will be price
increases and that will hit the consumer because they will
(11:15):
their real incomes will just go down as a result
of that. So so I think you will see consumers
that are are getting hit from this. You know. The
other thing is just it's creating a lot of uncertainty.
You know, people could be more fearful of their jobs
and things like that, and that could just result in
more of a general pullback and consumption as well.
Speaker 2 (11:35):
Good morning Montreal. Major shout out to Bears and the
team at Bank Credit Analyst. It's like ed your Danny CJ.
Lawrence with Edheiman years ago. B c A is venerable
and Paul they had a chart on labor yesterday yeh
out of BCA that was just shocking the rapid deterioration.
Tiffany Wild, thank you so much. Great to talk to
(11:56):
you on this day of CPI. The tape was a
VIX was up three big figures. We had a little
bit of a Paul would say, quiescent move here. We've
given it back a little bit. The VICS thirty six
point four or five future is now back negative one hundred.
This is standard in Poores futures negative one hundred. John
Farrell tells me the Dow futures negative six oh eight
(12:17):
are worth noting as well. Even bitdog down one thousand,
down twelve hundred points rather eighty one thousand. There's a
little bit of tension here to say the least. We
welcome all of you on YouTube worldwide, including in Paris
Bloomberg Surveillance. It's brought to you by ibk R. Well
the US consumer Sentiment Index. Will it exceed seventy in
(12:41):
April twenty twenty five at IBKR forecast Trader that yes,
was recently at twenty nine percent. Start predicting today at
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(13:01):
I've really anticipated this because Greg Battle takes equity strategy,
folds it into the derivative space, wraps it around a
true international view for the bank Pariba is that like
the French way to say it, They'll come closer.
Speaker 8 (13:16):
My French isn't outstanding.
Speaker 2 (13:17):
If I'm honest, they have the best lunch in Manhattan,
is what I know. Please advise us here how you
prepare for a Monday research note. A completely unfair question.
It could change three times. But how are you framing
the tone of your weekend note?
Speaker 8 (13:32):
Well, I think you have to be prepared to write
to it and then rewrite it three times in between
now and then. So I think the thing that which
one I do is put in context some of the
moves around, some of the flows, and then think about
some of the headline risks. But then ultimately, how does
that translate into what we're going to see over earning season?
Speaker 2 (13:47):
Okay, earning season, it's tomorrow, right, ye, indeed, come out.
We don't have I guess we sort of do on
this earning season, but there'll be no guidance.
Speaker 8 (13:56):
Right, No, So I think like the backwards looking data,
whether it's this we've just seen payrolls from last week
or the earnings prints themselves, hold little value I.
Speaker 2 (14:04):
Think at this point.
Speaker 8 (14:05):
But any qualitative read commentary tone from management is going
to be looked at very closely.
Speaker 4 (14:11):
So what did you see on your trading desk? What
did you hear from your clients over the last I
don't know twenty four to forty eight hours, because yesterday
it was just crazy. The bond market the night before
was just incredible.
Speaker 2 (14:23):
Do you know you can't get hired at BMP Periba
unless you know all the Greek letters Gamma, that's what
I want, the row derivative, sam, the whole thing.
Speaker 8 (14:35):
So we think some of those Greek letters were certainly
responsible for some of the magnitude of the moves yesterday.
So obviously the move itself is triggered by the headline
of the tweet, but the magnitude of that move is
driven by the fact that we do have a short
Gamma complex in the market. What this means is that
there's rehadging needs for when the market moved both lower
and hyer.
Speaker 2 (14:54):
I opened the show this morning on this people got
to go out and rehatch folks. You and I are
not you know, and we're trying to pay the rent.
But in the institutional space, people are protecting themselves and
now it's so expensive to protect yourself you really can't
reheedge Kenya. How you doing that? Well?
Speaker 8 (15:12):
I do you think there are opportunities to use the
optionality complex? We look at the headline levels of the
vics and certainly where it peaked and they got incredibly
elevated but one anecdote that I would give you, Please,
at the close yesterday, you could look at the Nasdaq
and the market options implied probability of it getting back
down to yesterday's lows by the end of next week
was more than a ten to one payout. So I
(15:34):
think there are interesting asymmetries that you can find.
Speaker 4 (15:37):
So where where did you see on your desk yesterday
the buying or where did you see the activity yesterday?
Speaker 8 (15:44):
There were different pockets, so we have an active positioning
indicated the tracks institutional positioning, and it got to absolutely
washed out levels before yesterday, So institutional position is very clean.
But what we have seen is just consistent dip buying
more from the retail complex. So if you look at
net ETF flows in the US yesterday, you saw more
than ten billion of inflows on the day. At the
(16:05):
same time, some of these rebalancing flows that we've talked
about have been a dominant force in the market. So
we think there was more than fifty five billion driven
purely from the short gamma complex yesterday.
Speaker 4 (16:15):
Short gamma. We have seen institutional capitalization in positioning. I've
been trading for forty years. I have no idea what
that means? What does that mean?
Speaker 8 (16:23):
Yeah, So in terms of capitulation in positioning, you know,
we track various metrics. Some of the systematic funds are
easier to track, things like CTAs. We know that those
funds moved to a net short position volatility target that
manage capital based on the levels of volatility have become
extremely de risked. But you can also look at things
like hedge fund positioning. You can use things like the
(16:44):
safetyc Future's data. You can see that there has been
a massive degrossing.
Speaker 2 (16:47):
Okay, there's been a massive build degrossing. Okay, great, But
the answer is where's the blood in the streets? Without
getting it. I don't want to mention names here, that's
not appropriate. But when somebody has the cliche there's blood
in the streets, where do you and B ANDP Bury
boss suggest there's been some real DiMAGE.
Speaker 8 (17:06):
Well, I would say that actually, like when we think
about the US equity market, and particularly the volatility market,
it has been maybe a little bit more orderly than
it seems on the surface. So when we look at
our positioning indicator, it had been trending down a long
way prior to the tariff announcements, and we think about
this announcement. Nobody was expecting the magnitude of the moves,
but this was an unknown in terms of a catalyst
(17:28):
that we do think people will hedged for. So when
you look at the Thursday move, I think that's quite
indicative of actually a calmer options market than you would expect.
We got a big move higher in the VIX Thursday,
but what we do is we look at the size
of the VIX move relative to the size of the
S and P move, And in normal calm markets, what
you see as the VIS go up one and a
half points for every one percent decline in US and
(17:49):
Peer and that's actually what we saw on Thursday. You
compare that to other pockets of risk, and that move
is much more explosive.
Speaker 2 (17:55):
You and folks stay with us here on this. There's
a little bit of jargon we're doing here, but we're
thrilled bole bmp periba with us. You were cautious in
the bull market emotion of the recent year or two
or three, and now we've got the market back to
a Greg Boudle level. H do we now have an
(18:15):
equity value in the market where we're now where you
always thought we'd be, or do you need to see
some catharsis here to really step in long I.
Speaker 8 (18:26):
Think it really depends on ultimately, what do you think
the growth outlook is. So if you believe that this
volatility and this newsflow in terms of tariff isn't going
to derail the growth outlook, then a twenty percent correction,
which is where we got kind of highs to lows,
is it the extreme of what you get without a recession. However,
when we start looking at where do we think earnings
(18:46):
could be this year, if you've got a two to
fifty five number four S ANDP earnings, that's a five
percent year of year growth that's not overly bearish. Put
that on an eighteen times multiple that would get you
around forty five hundred. So I'm not sure that there's
a really obvious value case to make for US equities here.
Speaker 2 (19:01):
Do you have a belief in European equities?
Speaker 8 (19:03):
So I think one of the things we saw at
the start of the year before this episode of volatility
was that there was undoubtedly rotation starting to happen from
US into the rest of the world. Now, clearly what
has happened in terms of trade and tariff has derailed
that in the short term. If we do get back
to a more stable market, then I do think there
is potential for that rotation to continue, but not whilst
(19:25):
we're in a volatility environment such as this.
Speaker 4 (19:27):
All right, Greg, Tom, I if we take the Bloomberg
surveillance show over to London, do we do a day
trip to South End on Sea?
Speaker 8 (19:34):
I think it would be extremely What do we do there?
I think you would take a walk down the seafront.
Maybe you go and try and catch a game, have
a bear a.
Speaker 4 (19:44):
Great south it's on the estuary, Tom, it is on
the Thames yesterday, Thames River.
Speaker 2 (19:48):
It's out past Charles Dickens place.
Speaker 4 (19:50):
I think so. I mean it looks great. I'm look
at it right here and that's where it great's from.
So I figured we'd ask a local here, take a.
Speaker 8 (19:56):
Walk down the pair.
Speaker 2 (19:57):
You ever met to Dickens House? Righteous the one that
you haven't loved? I haven't. It's supposed to be magical.
It's over extent of what Dickens was when he was
there in eighteen sixty, eighteen seventy.
Speaker 4 (20:10):
Okay, have you ever finished the castle park?
Speaker 2 (20:12):
Have you ever finished a full Charles Dickens or did
you use the United Kingdom cliff notes?
Speaker 8 (20:16):
Wow, maybe I listened to the audio book.
Speaker 2 (20:18):
Yeah, Greg, thank you so much really, and congratulations on
the work the derivatives base her folks, the French and
this goes back hundreds of years. There's exquisite mathematical integrity
out of the French banks just gets them into trouble sometimes.
But good morning to the Paris banks for all that
they do, particularly using the Bloomberg and derivative equity measurement
(20:40):
as we did from mister Boutele as well.
Speaker 1 (20:49):
You're listening to the Bloomberg Surveillance Podcast. Catch us live
weekday afternoons from seven to ten am Eastern Listen on
Apple Karplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (21:02):
Our interview of the day on fixed income with our question.
Ian Lingen is with Bemon Capital Market. He writes the densest, tightest,
most in depth. Note Paul and I were talking about it.
You get a paragraph from Ian Lingen and like you're
lucky you get through it at lunch. It's so intelligent.
He's won just in the II surveys, folks. I think
(21:23):
he won eleven consecutive years. It's like Juan Soto and
walks right. I mean, you know, Ian just keeps doing
it with Bemon capital markets. And on the inflation report,
you're brilliant quote this is the lowest in over four years.
Is it a one off pre Trump tariffs or can
this disinflation continue? Well?
Speaker 6 (21:45):
I do think that what we're seeing is that they
FED was reasonably successful in finally getting inflation back to
or at least toward where they would like to see it.
It does set up a good departure point for absorbing
the incoming price increases that we are sure to see. So,
if anything, today's report suggests that we won't retest the
(22:06):
pandemic highs and inflation simply based on the trade war.
Speaker 2 (22:11):
I can't say not, folks about the holistic work of
the Bank of Montreal within your entire team, Ian and
with your leadership here. How many FED rate cuts? What's
the degrees of freedom the chairman Powell has?
Speaker 6 (22:27):
Well, the events of this week I bought him a
little bit more flexibility. I think that we are going
to see two rate cuts this year, one in September
and one in December. The only way that we actually
see something in June or earlier, is if we see
a re escalation of the trade war that pushes equity
prices even lower.
Speaker 4 (22:49):
So I what did you see in the bond market
over the last thirty six hours, because boy, we had
some big moves there, And what did you see in
a treasury market?
Speaker 6 (22:58):
So in the treasury market, we saw a very sharp
re steeping in of the yield curve because there was
a lot of concern that the trade war would lead
to a buyer's strike in the ten year auction. And
the fact that we had such a strong sponsorship for
the ten year auction really bodes well for the treasury
market as an asset class. And I think that that
(23:18):
speaks to why we are stabilizing here with ten year
yields well below four fifty and certainly no concern of
retesting five percent anytime soon.
Speaker 2 (23:28):
We had a dash to the ian ling and lower
yields thee and you've been way out front on a
vector of lower yields with this turmoil in Washington. I
guess when it's over, do we reaffirm your disinflation, lower yield,
higher price environment.
Speaker 6 (23:47):
Yes. I actually think if anything, the turmoil in Washington
increases the chances of a consumer led economic slowdown, and
a recession is disinflationary on a forward basis. Once we
absorb all the tariff increases, I think we'll have a
consumer that is in a much different, much less compelling
(24:08):
place than it was during the pandemic. And so I'm
worried about disinflation in two thousand and twenty six and
beyond recession?
Speaker 4 (24:16):
Is that in your call in?
Speaker 6 (24:19):
It's not our baseline scenario, but the events of the
last two weeks certainly have increased the probability from let's
call it ten percent to thirty five or forty percent.
Speaker 2 (24:29):
You know, you know Belski once told me he reads
every word. I mean, it'll help us out here. I in,
if we get you know, a three percent ten years
three point x percent ten year yield, we get disinflation.
And that is that good for Brian Belski in equities
or not?
Speaker 6 (24:45):
I think that it depends on the departure point for
the equity market at the moment. If we come into
the event with the S and P five hundred at
forty seven hundred, that's going to be a net positive
and stocks would rally into the end of the year,
if we're at the peaks and the market comes to
the realization that we're going to be facing an economic
(25:08):
slowdown of some magnitude, then that will initially be bad
for stocks until the FED gets involved.
Speaker 4 (25:14):
And how do you think the FED kind of looks
at all the news coming out of Washington, DC, all
the tweets, all the the side press conferences, the little
gaggles and things like that, which kind of really really
move the market on an intra day basis. How does
a FED deal with that?
Speaker 2 (25:29):
Do you think?
Speaker 6 (25:30):
Well, it is a pretty challenging environment for the FED,
to be sure, but it's not the first time the
FED has had to absorb and react to social media
posts and announcements, so it isn't as dramatic as it
was during Trump's first presidency. However, I do think that
Powell's stance of wait and see has only been reinforced
(25:53):
by the developments this week, because if we don't know
what the tariffs are ultimately going to look like, it's
very difficult to base any money terry policy decisions on
the what ifs, And that's what Trump or Powell is
struggling with at the moment.
Speaker 2 (26:06):
In its nine o'clock hour, with the market opening here
in twenty minutes. We welcome all of you on your
commute across the nation. We welcome you on YouTube. Thank
you so much in your office at your home, subscribing
to Bloomberg Podcast, your interest growing each and every day.
Good evening on the Pacific RIM and over to India
as well. Just humbled by the South, particularly Southern Asia.
(26:28):
You know, I mean in Japan as well. I've had
some anecdote, but really, thank you so much in the
South Asian India, in Malaysia, Singapore Evening greatly, greatly appreciate
your attendance. Paul Sweeney and Tom Can. We are commercial
free in this hour. Thrilled to bring you. Ian Lincoln
of BEMO Capital Markets.
Speaker 4 (26:47):
Hey, Ian, you know, honestly, I don't pay attention to
these treasury auctions. They're smarter people that do that for
US Ira Jersey, Lisa Bromwitz for me, did what happened
yesterday with these auctions?
Speaker 2 (26:58):
And why were they important?
Speaker 6 (27:01):
So we had a strong takedown of the ten year auction.
The risk was that in retaliation for some of the
higher tariffs, that foreign buyers would step away from the
treasury auction and it would tail dramatically. In fact, we
saw a strong stop through which really reaffirmed the markets
(27:22):
perception that there are going to be buyers of treasuries,
particularly in an environment like this with so much uncertainty.
Speaker 2 (27:29):
Ian Lingan, thank you so much for being my capital markets.
Of course, you can protect the copyright of all of
our guests. Look to his important research note at the
Bank of Montreal.
Speaker 1 (27:39):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Auto
with the Bloomberg Business App. You can also listen live
on Amazon Alexa from our flagship New York station, Just
say Alexa Play Bloomberg eleven thirty.
Speaker 2 (27:55):
Joining us now from Laffert Tangler Investments, Nancy Tangler. I
saw a Professor Laugher writing yesterday. Now maybe it was
a couple of days ago. Join out ed about we're
going to get through this, and we're going to get
through it with a budget responsibility. Nancy, were all exhausted.
Take us away from the politics, and when do we
(28:18):
get back to what we call a few years ago
is normal?
Speaker 9 (28:22):
I know, Tom.
Speaker 10 (28:23):
I went to bed at five point thirty last night,
and I slept all the way through you slept.
Speaker 2 (28:28):
All the way through me. I'm going arethramatic. I had
two hours sleep than four hours sleep, and last night
it was like five and a half hours sleep. So
after your beauty rest, wait to see.
Speaker 10 (28:38):
So I feel like this was an unforced error Ago
red SOX I was told to say how about this?
Speaker 3 (28:45):
Ye with exact about it.
Speaker 10 (28:48):
I think, look, you expected the president to come out
and declare victory. He did, All the proxies are declaring victory.
But really this was one of the sloppiest policy rollouts
I've ever witnessed in my forty plus your career. It
didn't I don't think advance the ball to the extent
that we wanted it to. And the repercussions will be
(29:09):
felt for some time. So if you look at Google
reinforced or restated, Yes, we're going to use our you know,
we're going to implement our CAPEX budget. Microsoft pulled the factory.
These are very long, as you know, time horizons to
build a factory and to get parts. Sixty eight percent
of industrial I'm sorry of manufacturing GDP is imported parts.
(29:34):
You can't fix that overnight. So I think we're going
to continue to see this ripple through the markets, and
I wouldn't jump in quickly. I take my time and
add to names. I do think we come out the
other side.
Speaker 2 (29:45):
Laugh For Tangler is the most interesting. I've been a
defender of Arthur laugh where a lot of critics going
after Emie and I will argue about the calculus of
the laugh For curve and where the tangent is in
the curve. Forget about that. You got Yale and Stanford
economics on your creative writing and psychology. It's a really
interesting mix out there. And when you say you don't
(30:07):
get what they're doing in a white house, that's important.
What's our laughless say? He's got to be as appalled
as you.
Speaker 10 (30:14):
I mean, I can't speak for him, but I can
say he's pretty annoyed.
Speaker 9 (30:19):
So I just spoke.
Speaker 2 (30:20):
Okay, we're missing an action. Where's the Secretary Treasury, Where's
the Secretary of Commerce? Where in God's name is a
Penn PhD. Kevin Hassett to advise them within the prism
of Laffler Tangler economics.
Speaker 10 (30:34):
They have to get through Peter Navarro has been the problem.
Come on, I mean it I mean I do, and
I'm I'm I think it's really interesting how he's been
m I A from the media, and that's a good thing.
And now they just need to get Howard Lutnik off
the air and put out Bessett, put out Hassett, and
have the president speak to his own to his own policy.
(30:55):
But I think it was so poorly rolled down. I
don't think they knew what they were doing until the
day before. And I was told they used chat GPT
to generate that chart, which was ridiculous. All of us
were going, what the no, we.
Speaker 2 (31:08):
Can't say that at radio. You can say that over
on Bloomberg TV and the gakire on radio you go
to jail. So be careful, Paul. Let me get one
more in here, because I think this is just absolutely critical.
What does the president have to do with comfortable conservative economists,
the giant Glenn Hubbard of Columbia University, exquisite Cudlow, it
(31:29):
was a legit.
Speaker 7 (31:30):
Economist over at Fox, all of them. What does the Tangler, Lafler, Coudlow,
Hubbard crew, the great Ed Lazir who we miss every
day at Stanford. What does your cadre have to do
to get past Navarro to the President.
Speaker 10 (31:45):
I think we've sort of done it in the media.
I think there's been a drum beat, and you know,
ten percent isn't as troublesome as these arbitrary slapped on tariffs.
But I actually think that the President believes a lot
of this, and just like he believes the trade deficit
is bad, and those of us who have been around
for a while would say trade deficits are good if
it's driven by prosperity. So ten percent would be more
(32:09):
like a flat tax, and I think that would at
least stop distorting behavior.
Speaker 2 (32:13):
Down negative seven under surveillance. Apology. I'm sorry, Paul, it
took too much time there. I was all wound up
about the moment there, about the bodies at the White House.
Nancy knows them all. That's what Nancy.
Speaker 4 (32:27):
Have you guys changed your risk outlook over the last
several days year, as we've had to deal with a
lot of this tariff volatility.
Speaker 10 (32:35):
We started changing it, Paul, after the market peaked and
we started getting sell off, so we moved a little
bit more defensively. We're still selectively buying tech names, mostly
focused on the software side of things, less focused on
the hardware side. We still believe AI is instrumental. You
saw Spotify headline that said, no more new jobs unless
(32:55):
you can prove it can't be done with AI. So
I think those are important. Walmart came out and re
affirmed the full year guidance they're going to generate fifth
They're our poster child of an old economy company that
is pivoted to the new names. So we've added names
like eccentric, or added two names like accenture in Netflix, Spotify.
These these could be more defensive names if we do
(33:16):
go into recession, but I think we're into economic deceleration
as opposed to a potential recession.
Speaker 4 (33:23):
What do you expect to hear from the c suite
this earning season? I mean, I think a lot of
folks are concerned that there's headwind and there's really earnings
risk out there, that the essens that are out on
the street need to come down, and maybe come down
pretty significantly. Maybe that's already priced in. I don't know,
but are you concerned about the earnings season coming out?
Speaker 10 (33:40):
I don't think we're gonna hear much. I think we're
gonna hear delayed guidance. Why I mean I would do
that if I was in the c suite? Why would
you give guidance? But Walmart was interesting at their investor
day because they did reaffirm the year, they just kind
of gave a wider range on the quarter. So I
think what we heard last earning season around tariffs was
that the CEOs were confident they knew how to navigate.
(34:01):
I don't think they were expecting maybe some of what
we got, but they could be, you know, expecting what
now what we've got now. So but it is a
ninety day pause, and I think we have to be
aware of that.
Speaker 2 (34:12):
I'm focused on the labor economy. It's maybe the greatest
disagreement I've had with the supply side crew. I think
of you know, folks, this is esoteric but real business
economic Carnegie Mail in Freshwater, Charles plots Er, Philadelphia. I've
got some real issues with a job generation. A guy
named Summers who's from the dark side, and Olivier Blanchard
(34:34):
the Giant. We'll talk about hysteresis where just the labor
economy just falls apart. Do we risk a new permanent
higher unemployment rate with all this carnage?
Speaker 10 (34:47):
I think we could Tom I mean so far that
you know we've seen here.
Speaker 2 (34:49):
Now that's a headline for the day. Tangler and Summers
on the same page.
Speaker 3 (34:54):
Continue.
Speaker 10 (34:56):
I found myself agreeing with Elizabeth Warren the other day,
what please on maybe Congress should be a little more
involved in tariff policy. Yeah, but I think we could,
and I think it could be accelerated by AI because
we are seeing, like at our firm, we're using AI
software to listen to the calls for us and then
we can go in the earnings calls that is, and
(35:17):
then we can go in and focus on when we
want to. So that saves hours and hours a quarter,
and I think you'll start to see more of that
more in our firm. It's more thinking, less just analyzing headlines,
and I think that's important. So I think we're hearing
that we're hearing AI. Last quarter we heard the theme
was we're hiring less on the low end or entry level,
(35:40):
and we're hiring less or keeping less middle management people
and that spanned across sectors. So I do think it's
a risk, but I also see in expanding growing economy,
if we get deregulation or once we realize the effects
of deregulation and the tax cuts if we get them.
Speaker 4 (35:58):
What are we doing in the bond market these days?
See come are we taking credit risk? Are we sitting
in the treasury market where we're going?
Speaker 10 (36:04):
So we've done so in our uni portfolios. We've built
callable portfolios and kept the duration below a year, so
we've been getting a little over four percent. As you know,
the muni market melted down a couple of days back,
but it started to come back on credit. We're not
taking credit risk at this particular point. Although the credit
the spreads have expanded, they're still not in danger zone.
(36:26):
So we've been parking in the short end of the
treasury market for clients where we're expecting to extend duration later.
Speaker 2 (36:33):
To finish up here with a broad philosophy, and this
goes back to I remember sitting. I was in the
hanover in in Dartmouth with a guy named Nut Gingrich
and we were talking about that night in nineteen ninety four.
Speaker 10 (36:46):
I'm sitting in the current remember it well.
Speaker 2 (36:47):
Dan rathers talking to me. He was CDs. Nobody's prepared
for this, and all of a sudden, folks, supply side
was run in Congress. Where is your movement Doctor Laffer's
movement in ten or twenty years. I can't figure it out.
Speaker 10 (37:04):
I mean, let's hope that it's not forgotten. I know
he has the Laffer Center and he continues to put
forward his policies through the Laffer Center. Got Young of
Americans or Foundation for Young Americans that focuses on it
and is teaching young college students about the movement. But
I do think at some level it is common sense
(37:25):
and it will continue if we get congressmen who can
stand a position. And I think that's what's been so
disappointing for me, the falling in line on either side
all the time, like we need fresh thinking and supply
side economics worked and it could work again.
Speaker 2 (37:42):
This has been wonderful. Don't be a stranger. Nancy Tangler
folks Iconic with Laffler Tangler.
Speaker 1 (37:53):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay, Android Otto with
the Bloomberg Business app. You can also watch us live
every weekday on YouTube and always on the Bloomberg Terminal to.
Speaker 2 (38:07):
Short visit right now with Jordan Rochester, We're gonna have
the mind for a longer visit here in the coming days.
But we just had to get them in writing with
the Missuo their fic macro strategy Jordan. In the currency
market right now, it appears that China's affecting some form
of depreciation if they do. You want remember depreciation, what
(38:28):
does that mean for the dollar and.
Speaker 9 (38:30):
For America, Typically it would mean a stronger doll It
usually would mean therefore you offset the impact of tarifs.
But the tricky thing is is that we've not really
seen broad dollar strength after tarifs were announced. It actually
breaks most of the textbooks in terms of tariffs usually
mean that the dollar has to appreciate because the terms
(38:50):
of trade of Europe and everybody else's wee can. But
what we've seen is it's just laid. This whole situation
led to a seizing up of the financial markets. Dollar
export received usually in Asia weren't being received as now.
Everyone's been trying to wait out the tariffs and try
and hopefully get a better deal down the line, and
so you've not had the same recycling into US treasuries
(39:11):
and into US equities, so you've seen broad dollar selling.
As a result, you've seen much less dollar buying on
the equities and the fixed income signed from foreign investors
thanks to all of this.
Speaker 4 (39:23):
Jordan, What does it one hundred and twenty five percent
tariff on Chinese goods mean for the US economy? Everything
it seems like we use comes from China at some point.
What does that mean for the economy?
Speaker 9 (39:35):
Do you think it's a level of tariff that I
think is so high that it makes it very difficult
to say that you're going to continue to imput from
China at the same rate. But really what's going to
happen is a lot of rerouting of trade from China
to Vietnam, to Cambodia to Singapore, and it's going to
have the lower tariff rates than one hundred and twenty five.
(39:58):
So the US is still going to import from China,
it's just going to have a bit of a sight
seeing trip along the way. And so for the US economy,
this is still way on growth. It's still a tax
hike on the economy, but it's not as bad as
the sticker price.
Speaker 2 (40:11):
Is that cheating? I mean, what we're going to hear
in the house is China's cheating because they're running the
Jordan Rochester missul merch Yes, through Vietnam. By the way,
is that like that's just to me, that's like normal
decision making a trade. Or do you buy the idea
during Rochester that it's cheating.
Speaker 9 (40:31):
I don't know if the word cheating, it's just what
happens in business. I do you think about oil sanctions
as well, there's lots of you know, the EU still
buys a lot of natural gas and oil from Russia
despite the being sanctioned. So there is lots of these
examples into an international trade where the aim seems right
but the actual outcome is different. I think really the
sort of ten percent flaw that Donald Trump is set
(40:53):
for everybody is a better example of how to avoid
that problem of rerouting. There is no one to reroot
through that is actual zero And I think this applies
to the trade talks with the UK, Japan and everybody else.
I don't know how they go get them below ten percent,
because then you'll just have rerouting through Belfast from Dublin.
That's the sort of thing that will happen if we
go any lower.
Speaker 4 (41:14):
So Jordan, what is the fixed income commodities credit macro
strategy call out on Zuho today after what we learned yesterday.
Speaker 9 (41:23):
Every day is a new day. If you asked me yesterday,
I would have said flattening is the best trade. And
I didn't expect to thirty basis points flattener in just
thirty minutes after I said it in two tens for
the US. So I think what you're likely to see
is you're a dollar is going to be quite range
bound because the ECB is probably going to cut rates
more aggressively than the market prices, and the FED will
not cut rates as aggressively as the market prices. We
(41:45):
have about eighty five basis points priced by the year
end for the Fed. We don't think they're going to
cut at all. So I think that we could see
some dollar strength at some point when the Fed makes
their reaction function more clear. But I think the better
trade if you want to be short the dollar is
short dollar m because I think the the Japanese will
continue to raise rates this year slowly. The market completely
whacked that lower yesterday before the good news, and we
(42:07):
had no hikes at all. Price for Japan. We started
to creep back in for higher rates in Japan. That's
going to continue, I think, and I think the US
will put pressure on the Japanese to raise their rates
as well and to have a stronger currency. So Dolly
end to one forty is another view, and the US
ten year five percent by year end.
Speaker 2 (42:24):
Oh oh okay, Jordan sets us up. We need to
get you out in the next couple of days for
much much longer than you York even a two blocker.
If he's in New York City, we'll steptured Rochester and
studio as well. He is with Maszua.
Speaker 1 (42:37):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Otto
with the Bloomberg Business app. You can also listen live
on Amazon Alexa from our flagship New York station. Just
say Alexa play Bloomberg eleven thirty joining us now, Kona.
Speaker 2 (42:55):
Haiks so happy that she could be with us today,
Kona in this crisis, I should say, with Ed and
f Man iconic in commodities, which soft commodity is of
the greatest study for you this morning.
Speaker 11 (43:11):
Because it seems to be a US China trade war
focus right now, I guess it would have to be
soybeans China imports heavily from the US. Well, it had been.
It managed to divert away from the US market in
Trump's first term during the first trade war. So I
(43:31):
guess it's less reliant on the US as it was before,
but it's still very it's still big imports. Today it
gets a lot more from Brazil. So I think that's
going to be the big trade flow move that we're
going to see as a result of these retaliations.
Speaker 2 (43:45):
For all of you across the Great Midwest of America,
this is the conversation of the day, COONa Haik. How
easy is it for Beijing to say, Donald Trump Sia,
We're going to Brazil for the marginal soybean pretty easily.
Speaker 11 (44:01):
Actually, In fact, right now most of it's coming from Brazil,
and I think that shipment is going to have to
happen in a more rapid force. The seasonality is such
that that's going to happen right now as we speak.
The US season export season doesn't happen until later in
the year, in September, so we have a long time
(44:22):
to go before we actually decide we actually see how
this time spent out, because you know, six months is
a long time in this trade war. Right, things could
create completely different by then. So until now, China is
getting most of it soybeans from Brazil. Brazil stands to
be a massive beneficiary of any trade war arising from
US and China, and they're taking advantage of it. So yeah,
(44:44):
I think that China has managed to diversify our fair
amount already.
Speaker 4 (44:48):
So kind of you know, we're not really sure where
we are with this trade war here. We had a
little bit of a pause yesterday, the presidents stepping back
a little bit on rest of world. Here, what's the
commodities play here in a world where trade tensions are
so high? Where do you go?
Speaker 11 (45:07):
Oh, it's not good. I mean, commodities ultimately is a
risk asset. So whenever you have macro risk of commodities
will be sold off. As we have seen in this
last week which was on presidental volatility, crude oil is tanking,
as it should be because the economic outlook in any
trade war is always so negative. The first thing that
he gets impacted is negative energy demands, So that's impacting
(45:27):
all the energy commodities. Metals, likewise, softs and agricultural commodities
have weather the storm better than the other three. I guess,
particularly because I think that you know, at the end
of the day, inputs will still have to happen. It's
just a question of trade dislocation. The one thing that
tends to win always is gold. It is the classic
safe haven, and it has reached record highs. It probably
(45:50):
will go higher again. So I think, you know, long
gold all the way, but crude oil at some point
it starts getting very cheap. I worry about Donald Trump
plans to for drill, baby drill, because he's you know,
you need, you need, you need seventy dollars all to
get any kind of investment in the US for shale oil.
Speaker 2 (46:09):
Paul's up sixty three dollars, thirty one forty three. Yep,
that's a wow statistic.
Speaker 4 (46:16):
Wow statistics. So Connor, when you think about gold, is
there is there a valuation call here for gold and all?
Is there a way you look at gold and think
about a relative to maybe other commodities, whether it's a
stock market, the bond market. How do you think about
evaluation here or is it just buy it?
Speaker 11 (46:35):
It's you buy it, you buy it. It's one of
your diversification portfolios, alongside other safe havens like the Swiss,
frank and the Japanese. Yeah, traditionally US bonds and the
US dollar would have been in that basket, but today
arguably it's less in favor. So gold still has that
instrinsic value that people like, so I think it definitely
(46:57):
has more upside to go. But you know, at some point,
once we start getting a more of a feel for
where negotiations are going with bilateral negotiations, and eventually, and
I do believe at some point China and the US
will come back to the table. At some point you
start looking at the metals and energy again.
Speaker 2 (47:15):
One final question con ed n f Man. With just
the heritage that you have, if you are in Beijing today,
what's the commodity where China has power or leverage over America.
It's I'm sure it's some odd commodity. I don't know
which is it.
Speaker 11 (47:34):
It's a critical minerals, it's the rarer. It's they have
complete ownership and control over that. And that's that is
one thing that the USA needs badly if they want
to build this whole electrification and transition energy side of things,
which we clearly trun Donald Trump wants, because those minerals
have been actually exempt in these tariff tariffs. So yeah,
(47:57):
I think that's something where China definitely has leverage. And
then the sheer population. China has been a very export
oriented economy. Today China is going to have to shift
into more domestic consumption led economy. So that's been forced
upon them, becoming a bit more like the US GDP.
And once that happens, that doesn't reverse rapidly. So I
(48:19):
think then this is structure and it's going to be
forced upon. We'll have dramatic changes on the way the
world second largest economic power starts behaving with the rest
of the world. I think really interesting times.
Speaker 2 (48:33):
Just brilliant Colin. Thank you so much, particularly on soybeans.
Speaker 6 (48:35):
There.
Speaker 2 (48:36):
Good morning to Brazil. Listening on YouTube. Subscribe to Bloomberg
Podcast in South America, Kona ache Ed and f Man.
Speaker 1 (48:45):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each
weekday seven to ten am Easter and on Bloomberg dot Com,
the iHeartRadio app, and the Bloomberg Business App. You can
also watch us live every weekday on YouTube and always
(49:06):
on the Bloomberg terminal
Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
We're up on CPI. I can think of no major
economic report that I've ignored the last number of days
like this important inflation study. Greg Bottle of BMP, Perry
Bob will be with us. Tiffany Wild will really give
us direction her wonderful work at PIMCO. But first, with
his incredible schedule, we had to squeeze in your Patrick Armstrong,
(00:49):
He's plurring me wealth for years with Templeton in Toronto,
which is a magical place for me. Patrick Armstrong in
the United Kingdom, thank you so much for joining us today.
Are we at a point where the foreigners won't buy
American stocks and bonds? Is something radically changed here? I
(01:09):
don't you.
Speaker 3 (01:10):
Say won't, but I do think the winds are pushing
against it, and Trump's tariffs are going to carve out
some economic winds in the short term because Europe isn't
going to respond immediately. To the tariffs that have been
put on them. But they it is a risk for
the United States that you've got global trade xus and
it turns into that kind of thing. And there's going
(01:32):
to be really strong rhetoric from the White House because
they know that's a real risk that they just get
basically disintermediated and their dollar becomes disintermediated. Is the global
reserve currency if you push things to extremes. So I
do think there's risks for this. I'm confident Trump is
going to carve oute some economic wins from this, but
(01:52):
I think the consequences maybe far greater, and it may
be a sort of backhanded win for Europe and the
rest of the world.
Speaker 2 (01:58):
Even let's get out of the front of Tiffany Wilder.
We want to talk to you Patrick. After this inflation report,
the Jobs Economy analysis waits for May or June. Does
this CPI report a current measure of inflation?
Speaker 3 (02:14):
Well, it's last month, and we're in a different world,
and some months go by and nothing happens. Some days
go by, and months and years happen, and that's where
it feels like we are right now. The one thing
the CPAI may be able to do is it may
give Powell an excuse to cut rates. He'll view transitory
inflation as transitory, and he does have inflation probably on
(02:35):
a downward trend with this print, so it may give
him the impetus if he wants to to cut a
little bit more aggressively, where his hands may be tied
later in the year if we do have stagflationary consequences.
Speaker 4 (02:46):
Patrick, where are you on the risk profile here? We've
had just such a volatile number of days, capped by
yesterday's big, big rally, but boy, we had to vix
it close to sixty just a couple of days ago.
Where are you going to risk profile these days?
Speaker 3 (02:59):
So I don't think it's a time to be a hero,
but it was the time to incrementally increase equities. We
decided on Monday, So we had a bad Tuesday when
we added it, but had a really nice bounce yesterday.
And anytime you're buying equities after a twenty percent sell off,
you're skewing the odds to your favor. And what we
looked at the VIX when it was at sixty, we said,
(03:20):
the only two times it's been like that before was
the COVID crash, and the financial crisis and the VIX
at sixty on Monday. This was a man made crisis
and we knew and about turn could be not the
end of the crisis, but really diminished the risks there.
And that's why we felt a little bit confident to
add risk. We actually started shorting a VIX in our
macro fund on Monday with that premise.
Speaker 2 (03:41):
Patrick Armstrong with us here for one more good question, Patrick,
just to cut to the chase. If I see the
shock of a negative statistic ONCPI, is that China exporting
deflation there?
Speaker 3 (03:57):
Actually I hadn't thought about it, but for that one
month there may have been a big jump in Chinese
imports at lower prices. Is China wanted to get them
into the US buyers wanted to get them in the
head of tariffs, and that may have been a bit
of a disinflationary and deflationary impact that's come out of it.
Powell's going to treat it how he wants to treat it.
It may give him the excuse to cut a little
(04:19):
bit more than he would have otherwise. So I think
if you are an equity bull, you'll welcome this news.
Speaker 2 (04:25):
I mean, it's interesting see Patrick, one final question. We
can do this, folks when we're coming to your commercial
free has ede done at Tottenham? I mean Tottenham is
not going to be relegated, but I mean it's pretty ugly.
What do you think.
Speaker 3 (04:37):
I'm a Man United fan and that's the only team
that's doing as poorly as we are, so right, yeah,
I can't throw stones when I live in a glasshouse.
Speaker 2 (04:45):
Comfort is Man United and Tottenham go down in flames
this year. Patrick Armstrong, thank you so much from London.
We'll get him on again for a much longer discussion.
Now to the economics of the moment. Greg Bodill, be
MP Pariba with it, cinemam of a Tiffany wild of
Pimco was a Tiffany month over month? Is that negative statistic?
(05:07):
Simply this crazy tariff driven wall of unit import volume.
Speaker 5 (05:16):
Well, just having a quick look at some of the details,
it actually looked like the services side of the goods basket,
or of the consumer price basket was was what was
weaker in this report. And I think that that just
really speaks to the broader uncertainty that we had, you know,
even before these latest news. This latest news, So travel
services categories hotels, airfares. You know, people are There's been
(05:39):
a lot of anecdotal reports about how you know, folks
that were thinking about traveling to the United States are
canceling those plans.
Speaker 2 (05:46):
Yeah.
Speaker 5 (05:46):
So I think it's it's a little bit of a
calm before the storm, and you had heighther uncertainty that
was reducing demand for services in the US.
Speaker 2 (05:54):
The tape improves. The VIX was up three big figures
now up to thirty five point five to three. The
futures of negative seventy seven, they were a negative one
hundred here a bit agoes, So a little better tape.
Is that because Tiffany this gives talking points or chat
for Jerown Powell to ease rates without the pressure from
the president.
Speaker 5 (06:16):
Yeah, well, I mean we still think there will be
a price level adjustment that will have to happen. On
the good side, you know, there will be some pass
through from this, and I think the question is just
how big will that be?
Speaker 6 (06:30):
You know?
Speaker 5 (06:30):
And then the other question on that is is how
much weakness do you see on the services side of
the economy as a result of these actions, you know
that are impacting the prices of goods and you know,
maybe what this CPI suggests is that you will have
a weakening economy on the services side that will contain
(06:50):
some of this inflationary pressure that obviously will allow the
Fed and make it less awkward for the Fed whenever
they're cutting interest rates.
Speaker 4 (06:58):
Tiffany, have you guys over there go taking down your
GDP forecast for twenty twenty five.
Speaker 5 (07:03):
And if so, why we think there's a fifty to
fifty chance of recession. You know, and even with this
latest reprieve. You know, if you just take a step back,
the effective tariff rate in the United States, just assuming
that imports stay unchanged, has gone back to levels that
we have not seen since the nineteen thirties. And that's
even with this ninety day reprieve. So you have a
(07:24):
very big tear off shock that is impacting the US economy.
And we do think there will be some disruption on that,
you know, over the near term, and that will slow
growth quite dramatically. And again we think there's kind of
a fifty to fifty chance of recession here. We think
growth grinds to a halt later this year.
Speaker 2 (07:40):
One of the great distinction here, folks, and I think
in the chaos that we're living. I need to partition this.
Tiffany Wilding is with specific investment management company PIMCO, and
a responsibility is to a broad asset manager versus a
market economists and frankly, derivatives expert like Greg Boudele. So
(08:01):
we get two different not views, but two different mandates.
Here from BNP Perry Bay with us in a bit,
and right now we stay with Tiffany wild Here we
welcome all of you across the nation. Frankly, futures worsened
out off the joy of twenty of five minutes ago.
I got the vix out two point seven seven figures
thirty six point thirty nine. Tiffany, if you've seen it,
(08:25):
and I don't want you to give away the secrets
of PIMCOH But is it sort of steady as she
goes as they listen to you, the managers, or is
this a time for a radical reset of PIMCO.
Speaker 5 (08:40):
Well, you know what I think that we have. You know,
we have been arguing. I think we've been on the
right side of the recent volatility, you know, because we
were arguing like late last year that the markets just
you know, weren't focused enough on the sort of radical
changes that the Trump administration was taught about, you know,
(09:01):
and I think that they've been actually quite clear about
what they're trying to do. And I think everybody was
just focused on various constraints, whether political, economic, or even
legal constraints that would maybe impin their ability to implement
their policy. But they've just blown through all those constraints
and you are seeing the president basically do what he
(09:21):
said he would do on the campaign trail. You know,
we think the ten percent tariff across the board, you know,
that's that's sticking, higher tariffs on China is sticking. I mean,
we are you know, they are very effectively trying to
decouple the US economy from China. And that's exactly what
they said they would do, you know, And so I think,
you know, take them literally.
Speaker 4 (09:40):
So Tiffany, I mean, we report a lot of stuff
from China and a big tariff there. What does that
mean for inflation for the US?
Speaker 2 (09:47):
Do you think?
Speaker 4 (09:49):
Yeah?
Speaker 5 (09:50):
I mean, we do think there's going to be a
big price level adjustment that happens as a result of this,
you know. Now, I think from the CPI report this morning,
you know, one thing that it does suggest is that
even if you're getting getting goods prices that are being
set higher as some of the cost at least is
passed on to consumers, the services side, you know, might
(10:11):
be weakening at the same time offsetting that. So I
think it's you know, again, how much price level adjustment
we get here? I think is the key question for
the next you know, call it six months and in.
Speaker 2 (10:20):
Folks, unfair question Like if you asked me this question,
you saw me, you know, having a beverage of my choice,
and you said Tom when I'd say, I don't know.
So let's as Tiffany Wilding. When Tiffany Wilding, when does
the slow down of tariffs at Walmart, tariffs at Duke's bookstore?
When we got to we gotta text, somebody said, stop
(10:41):
talking about Duke. We're double in the Duke conversation right
now this morning, Tiffany Wilder, When for the consumer, does
all this agony click in?
Speaker 7 (10:53):
Yeah?
Speaker 5 (10:53):
I mean, you know, I think it's clicking in for
businesses already and they're trying to figure out what to do.
And I think that you will have, you know, you
will have to have businesses that are raising prices at
least somewhat. It will be you know, there will be
margin compression, there will be and there will be price
increases and that will hit the consumer because they will
(11:15):
their real incomes will just go down as a result
of that. So so I think you will see consumers
that are are getting hit from this. You know. The
other thing is just it's creating a lot of uncertainty.
You know, people could be more fearful of their jobs
and things like that, and that could just result in
more of a general pullback and consumption as well.
Speaker 2 (11:35):
Good morning Montreal. Major shout out to Bears and the
team at Bank Credit Analyst. It's like ed your Danny CJ.
Lawrence with Edheiman years ago. B c A is venerable
and Paul they had a chart on labor yesterday yeh
out of BCA that was just shocking the rapid deterioration.
Tiffany Wild, thank you so much. Great to talk to
(11:56):
you on this day of CPI. The tape was a
VIX was up three big figures. We had a little
bit of a Paul would say, quiescent move here. We've
given it back a little bit. The VICS thirty six
point four or five future is now back negative one hundred.
This is standard in Poores futures negative one hundred. John
Farrell tells me the Dow futures negative six oh eight
(12:17):
are worth noting as well. Even bitdog down one thousand,
down twelve hundred points rather eighty one thousand. There's a
little bit of tension here to say the least. We
welcome all of you on YouTube worldwide, including in Paris
Bloomberg Surveillance. It's brought to you by ibk R. Well
the US consumer Sentiment Index. Will it exceed seventy in
(12:41):
April twenty twenty five at IBKR forecast Trader that yes,
was recently at twenty nine percent. Start predicting today at
ibkr dot com slash forecast. Last trading day for this
contract May thirteen. Thank you IBKR for your support this.
(13:01):
I've really anticipated this because Greg Battle takes equity strategy,
folds it into the derivative space, wraps it around a
true international view for the bank Pariba is that like
the French way to say it, They'll come closer.
Speaker 8 (13:16):
My French isn't outstanding.
Speaker 2 (13:17):
If I'm honest, they have the best lunch in Manhattan,
is what I know. Please advise us here how you
prepare for a Monday research note. A completely unfair question.
It could change three times. But how are you framing
the tone of your weekend note?
Speaker 8 (13:32):
Well, I think you have to be prepared to write
to it and then rewrite it three times in between
now and then. So I think the thing that which
one I do is put in context some of the
moves around, some of the flows, and then think about
some of the headline risks. But then ultimately, how does
that translate into what we're going to see over earning season?
Speaker 2 (13:47):
Okay, earning season, it's tomorrow, right, ye, indeed, come out.
We don't have I guess we sort of do on
this earning season, but there'll be no guidance.
Speaker 8 (13:56):
Right, No, So I think like the backwards looking data,
whether it's this we've just seen payrolls from last week
or the earnings prints themselves, hold little value I.
Speaker 2 (14:04):
Think at this point.
Speaker 8 (14:05):
But any qualitative read commentary tone from management is going
to be looked at very closely.
Speaker 4 (14:11):
So what did you see on your trading desk? What
did you hear from your clients over the last I
don't know twenty four to forty eight hours, because yesterday
it was just crazy. The bond market the night before
was just incredible.
Speaker 2 (14:23):
Do you know you can't get hired at BMP Periba
unless you know all the Greek letters Gamma, that's what
I want, the row derivative, sam, the whole thing.
Speaker 8 (14:35):
So we think some of those Greek letters were certainly
responsible for some of the magnitude of the moves yesterday.
So obviously the move itself is triggered by the headline
of the tweet, but the magnitude of that move is
driven by the fact that we do have a short
Gamma complex in the market. What this means is that
there's rehadging needs for when the market moved both lower
and hyer.
Speaker 2 (14:54):
I opened the show this morning on this people got
to go out and rehatch folks. You and I are
not you know, and we're trying to pay the rent.
But in the institutional space, people are protecting themselves and
now it's so expensive to protect yourself you really can't
reheedge Kenya. How you doing that? Well?
Speaker 8 (15:12):
I do you think there are opportunities to use the
optionality complex? We look at the headline levels of the
vics and certainly where it peaked and they got incredibly
elevated but one anecdote that I would give you, Please,
at the close yesterday, you could look at the Nasdaq
and the market options implied probability of it getting back
down to yesterday's lows by the end of next week
was more than a ten to one payout. So I
(15:34):
think there are interesting asymmetries that you can find.
Speaker 4 (15:37):
So where where did you see on your desk yesterday
the buying or where did you see the activity yesterday?
Speaker 8 (15:44):
There were different pockets, so we have an active positioning
indicated the tracks institutional positioning, and it got to absolutely
washed out levels before yesterday, So institutional position is very clean.
But what we have seen is just consistent dip buying
more from the retail complex. So if you look at
net ETF flows in the US yesterday, you saw more
than ten billion of inflows on the day. At the
(16:05):
same time, some of these rebalancing flows that we've talked
about have been a dominant force in the market. So
we think there was more than fifty five billion driven
purely from the short gamma complex yesterday.
Speaker 4 (16:15):
Short gamma. We have seen institutional capitalization in positioning. I've
been trading for forty years. I have no idea what
that means? What does that mean?
Speaker 8 (16:23):
Yeah, So in terms of capitulation in positioning, you know,
we track various metrics. Some of the systematic funds are
easier to track, things like CTAs. We know that those
funds moved to a net short position volatility target that
manage capital based on the levels of volatility have become
extremely de risked. But you can also look at things
like hedge fund positioning. You can use things like the
(16:44):
safetyc Future's data. You can see that there has been
a massive degrossing.
Speaker 2 (16:47):
Okay, there's been a massive build degrossing. Okay, great, But
the answer is where's the blood in the streets? Without
getting it. I don't want to mention names here, that's
not appropriate. But when somebody has the cliche there's blood
in the streets, where do you and B ANDP Bury
boss suggest there's been some real DiMAGE.
Speaker 8 (17:06):
Well, I would say that actually, like when we think
about the US equity market, and particularly the volatility market,
it has been maybe a little bit more orderly than
it seems on the surface. So when we look at
our positioning indicator, it had been trending down a long
way prior to the tariff announcements, and we think about
this announcement. Nobody was expecting the magnitude of the moves,
but this was an unknown in terms of a catalyst
(17:28):
that we do think people will hedged for. So when
you look at the Thursday move, I think that's quite
indicative of actually a calmer options market than you would expect.
We got a big move higher in the VIX Thursday,
but what we do is we look at the size
of the VIX move relative to the size of the
S and P move, And in normal calm markets, what
you see as the VIS go up one and a
half points for every one percent decline in US and
(17:49):
Peer and that's actually what we saw on Thursday. You
compare that to other pockets of risk, and that move
is much more explosive.
Speaker 2 (17:55):
You and folks stay with us here on this. There's
a little bit of jargon we're doing here, but we're
thrilled bole bmp periba with us. You were cautious in
the bull market emotion of the recent year or two
or three, and now we've got the market back to
a Greg Boudle level. H do we now have an
(18:15):
equity value in the market where we're now where you
always thought we'd be, or do you need to see
some catharsis here to really step in long I.
Speaker 8 (18:26):
Think it really depends on ultimately, what do you think
the growth outlook is. So if you believe that this
volatility and this newsflow in terms of tariff isn't going
to derail the growth outlook, then a twenty percent correction,
which is where we got kind of highs to lows,
is it the extreme of what you get without a recession. However,
when we start looking at where do we think earnings
(18:46):
could be this year, if you've got a two to
fifty five number four S ANDP earnings, that's a five
percent year of year growth that's not overly bearish. Put
that on an eighteen times multiple that would get you
around forty five hundred. So I'm not sure that there's
a really obvious value case to make for US equities here.
Speaker 2 (19:01):
Do you have a belief in European equities?
Speaker 8 (19:03):
So I think one of the things we saw at
the start of the year before this episode of volatility
was that there was undoubtedly rotation starting to happen from
US into the rest of the world. Now, clearly what
has happened in terms of trade and tariff has derailed
that in the short term. If we do get back
to a more stable market, then I do think there
is potential for that rotation to continue, but not whilst
(19:25):
we're in a volatility environment such as this.
Speaker 4 (19:27):
All right, Greg, Tom, I if we take the Bloomberg
surveillance show over to London, do we do a day
trip to South End on Sea?
Speaker 8 (19:34):
I think it would be extremely What do we do there?
I think you would take a walk down the seafront.
Maybe you go and try and catch a game, have
a bear a.
Speaker 4 (19:44):
Great south it's on the estuary, Tom, it is on
the Thames yesterday, Thames River.
Speaker 2 (19:48):
It's out past Charles Dickens place.
Speaker 4 (19:50):
I think so. I mean it looks great. I'm look
at it right here and that's where it great's from.
So I figured we'd ask a local here, take a.
Speaker 8 (19:56):
Walk down the pair.
Speaker 2 (19:57):
You ever met to Dickens House? Righteous the one that
you haven't loved? I haven't. It's supposed to be magical.
It's over extent of what Dickens was when he was
there in eighteen sixty, eighteen seventy.
Speaker 4 (20:10):
Okay, have you ever finished the castle park?
Speaker 2 (20:12):
Have you ever finished a full Charles Dickens or did
you use the United Kingdom cliff notes?
Speaker 8 (20:16):
Wow, maybe I listened to the audio book.
Speaker 2 (20:18):
Yeah, Greg, thank you so much really, and congratulations on
the work the derivatives base her folks, the French and
this goes back hundreds of years. There's exquisite mathematical integrity
out of the French banks just gets them into trouble sometimes.
But good morning to the Paris banks for all that
they do, particularly using the Bloomberg and derivative equity measurement
(20:40):
as we did from mister Boutele as well.
Speaker 1 (20:49):
You're listening to the Bloomberg Surveillance Podcast. Catch us live
weekday afternoons from seven to ten am Eastern Listen on
Apple Karplay and Android Otto with the Bloomberg Business app,
or watch us live on YouTube.
Speaker 2 (21:02):
Our interview of the day on fixed income with our question.
Ian Lingen is with Bemon Capital Market. He writes the densest, tightest,
most in depth. Note Paul and I were talking about it.
You get a paragraph from Ian Lingen and like you're
lucky you get through it at lunch. It's so intelligent.
He's won just in the II surveys, folks. I think
(21:23):
he won eleven consecutive years. It's like Juan Soto and
walks right. I mean, you know, Ian just keeps doing
it with Bemon capital markets. And on the inflation report,
you're brilliant quote this is the lowest in over four years.
Is it a one off pre Trump tariffs or can
this disinflation continue? Well?
Speaker 6 (21:45):
I do think that what we're seeing is that they
FED was reasonably successful in finally getting inflation back to
or at least toward where they would like to see it.
It does set up a good departure point for absorbing
the incoming price increases that we are sure to see. So,
if anything, today's report suggests that we won't retest the
(22:06):
pandemic highs and inflation simply based on the trade war.
Speaker 2 (22:11):
I can't say not, folks about the holistic work of
the Bank of Montreal within your entire team, Ian and
with your leadership here. How many FED rate cuts? What's
the degrees of freedom the chairman Powell has?
Speaker 6 (22:27):
Well, the events of this week I bought him a
little bit more flexibility. I think that we are going
to see two rate cuts this year, one in September
and one in December. The only way that we actually
see something in June or earlier, is if we see
a re escalation of the trade war that pushes equity
prices even lower.
Speaker 4 (22:49):
So I what did you see in the bond market
over the last thirty six hours, because boy, we had
some big moves there, And what did you see in
a treasury market?
Speaker 6 (22:58):
So in the treasury market, we saw a very sharp
re steeping in of the yield curve because there was
a lot of concern that the trade war would lead
to a buyer's strike in the ten year auction. And
the fact that we had such a strong sponsorship for
the ten year auction really bodes well for the treasury
market as an asset class. And I think that that
(23:18):
speaks to why we are stabilizing here with ten year
yields well below four fifty and certainly no concern of
retesting five percent anytime soon.
Speaker 2 (23:28):
We had a dash to the ian ling and lower
yields thee and you've been way out front on a
vector of lower yields with this turmoil in Washington. I
guess when it's over, do we reaffirm your disinflation, lower yield,
higher price environment.
Speaker 6 (23:47):
Yes. I actually think if anything, the turmoil in Washington
increases the chances of a consumer led economic slowdown, and
a recession is disinflationary on a forward basis. Once we
absorb all the tariff increases, I think we'll have a
consumer that is in a much different, much less compelling
(24:08):
place than it was during the pandemic. And so I'm
worried about disinflation in two thousand and twenty six and
beyond recession?
Speaker 4 (24:16):
Is that in your call in?
Speaker 6 (24:19):
It's not our baseline scenario, but the events of the
last two weeks certainly have increased the probability from let's
call it ten percent to thirty five or forty percent.
Speaker 2 (24:29):
You know, you know Belski once told me he reads
every word. I mean, it'll help us out here. I in,
if we get you know, a three percent ten years
three point x percent ten year yield, we get disinflation.
And that is that good for Brian Belski in equities
or not?
Speaker 6 (24:45):
I think that it depends on the departure point for
the equity market at the moment. If we come into
the event with the S and P five hundred at
forty seven hundred, that's going to be a net positive
and stocks would rally into the end of the year,
if we're at the peaks and the market comes to
the realization that we're going to be facing an economic
(25:08):
slowdown of some magnitude, then that will initially be bad
for stocks until the FED gets involved.
Speaker 4 (25:14):
And how do you think the FED kind of looks
at all the news coming out of Washington, DC, all
the tweets, all the the side press conferences, the little
gaggles and things like that, which kind of really really
move the market on an intra day basis. How does
a FED deal with that?
Speaker 2 (25:29):
Do you think?
Speaker 6 (25:30):
Well, it is a pretty challenging environment for the FED,
to be sure, but it's not the first time the
FED has had to absorb and react to social media
posts and announcements, so it isn't as dramatic as it
was during Trump's first presidency. However, I do think that
Powell's stance of wait and see has only been reinforced
(25:53):
by the developments this week, because if we don't know
what the tariffs are ultimately going to look like, it's
very difficult to base any money terry policy decisions on
the what ifs, And that's what Trump or Powell is
struggling with at the moment.
Speaker 2 (26:06):
In its nine o'clock hour, with the market opening here
in twenty minutes. We welcome all of you on your
commute across the nation. We welcome you on YouTube. Thank
you so much in your office at your home, subscribing
to Bloomberg Podcast, your interest growing each and every day.
Good evening on the Pacific RIM and over to India
as well. Just humbled by the South, particularly Southern Asia.
(26:28):
You know, I mean in Japan as well. I've had
some anecdote, but really, thank you so much in the
South Asian India, in Malaysia, Singapore Evening greatly, greatly appreciate
your attendance. Paul Sweeney and Tom Can. We are commercial
free in this hour. Thrilled to bring you. Ian Lincoln
of BEMO Capital Markets.
Speaker 4 (26:47):
Hey, Ian, you know, honestly, I don't pay attention to
these treasury auctions. They're smarter people that do that for
US Ira Jersey, Lisa Bromwitz for me, did what happened
yesterday with these auctions?
Speaker 2 (26:58):
And why were they important?
Speaker 6 (27:01):
So we had a strong takedown of the ten year auction.
The risk was that in retaliation for some of the
higher tariffs, that foreign buyers would step away from the
treasury auction and it would tail dramatically. In fact, we
saw a strong stop through which really reaffirmed the markets
(27:22):
perception that there are going to be buyers of treasuries,
particularly in an environment like this with so much uncertainty.
Speaker 2 (27:29):
Ian Lingan, thank you so much for being my capital markets.
Of course, you can protect the copyright of all of
our guests. Look to his important research note at the
Bank of Montreal.
Speaker 1 (27:39):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Auto
with the Bloomberg Business App. You can also listen live
on Amazon Alexa from our flagship New York station, Just
say Alexa Play Bloomberg eleven thirty.
Speaker 2 (27:55):
Joining us now from Laffert Tangler Investments, Nancy Tangler. I
saw a Professor Laugher writing yesterday. Now maybe it was
a couple of days ago. Join out ed about we're
going to get through this, and we're going to get
through it with a budget responsibility. Nancy, were all exhausted.
Take us away from the politics, and when do we
(28:18):
get back to what we call a few years ago
is normal?
Speaker 9 (28:22):
I know, Tom.
Speaker 10 (28:23):
I went to bed at five point thirty last night,
and I slept all the way through you slept.
Speaker 2 (28:28):
All the way through me. I'm going arethramatic. I had
two hours sleep than four hours sleep, and last night
it was like five and a half hours sleep. So
after your beauty rest, wait to see.
Speaker 10 (28:38):
So I feel like this was an unforced error Ago
red SOX I was told to say how about this?
Speaker 3 (28:45):
Ye with exact about it.
Speaker 10 (28:48):
I think, look, you expected the president to come out
and declare victory. He did, All the proxies are declaring victory.
But really this was one of the sloppiest policy rollouts
I've ever witnessed in my forty plus your career. It
didn't I don't think advance the ball to the extent
that we wanted it to. And the repercussions will be
(29:09):
felt for some time. So if you look at Google
reinforced or restated, Yes, we're going to use our you know,
we're going to implement our CAPEX budget. Microsoft pulled the factory.
These are very long, as you know, time horizons to
build a factory and to get parts. Sixty eight percent
of industrial I'm sorry of manufacturing GDP is imported parts.
(29:34):
You can't fix that overnight. So I think we're going
to continue to see this ripple through the markets, and
I wouldn't jump in quickly. I take my time and
add to names. I do think we come out the
other side.
Speaker 2 (29:45):
Laugh For Tangler is the most interesting. I've been a
defender of Arthur laugh where a lot of critics going
after Emie and I will argue about the calculus of
the laugh For curve and where the tangent is in
the curve. Forget about that. You got Yale and Stanford
economics on your creative writing and psychology. It's a really
interesting mix out there. And when you say you don't
(30:07):
get what they're doing in a white house, that's important.
What's our laughless say? He's got to be as appalled
as you.
Speaker 10 (30:14):
I mean, I can't speak for him, but I can
say he's pretty annoyed.
Speaker 9 (30:19):
So I just spoke.
Speaker 2 (30:20):
Okay, we're missing an action. Where's the Secretary Treasury, Where's
the Secretary of Commerce? Where in God's name is a
Penn PhD. Kevin Hassett to advise them within the prism
of Laffler Tangler economics.
Speaker 10 (30:34):
They have to get through Peter Navarro has been the problem.
Come on, I mean it I mean I do, and
I'm I'm I think it's really interesting how he's been
m I A from the media, and that's a good thing.
And now they just need to get Howard Lutnik off
the air and put out Bessett, put out Hassett, and
have the president speak to his own to his own policy.
(30:55):
But I think it was so poorly rolled down. I
don't think they knew what they were doing until the
day before. And I was told they used chat GPT
to generate that chart, which was ridiculous. All of us
were going, what the no, we.
Speaker 2 (31:08):
Can't say that at radio. You can say that over
on Bloomberg TV and the gakire on radio you go
to jail. So be careful, Paul. Let me get one
more in here, because I think this is just absolutely critical.
What does the president have to do with comfortable conservative economists,
the giant Glenn Hubbard of Columbia University, exquisite Cudlow, it
(31:29):
was a legit.
Speaker 7 (31:30):
Economist over at Fox, all of them. What does the Tangler, Lafler, Coudlow,
Hubbard crew, the great Ed Lazir who we miss every
day at Stanford. What does your cadre have to do
to get past Navarro to the President.
Speaker 10 (31:45):
I think we've sort of done it in the media.
I think there's been a drum beat, and you know,
ten percent isn't as troublesome as these arbitrary slapped on tariffs.
But I actually think that the President believes a lot
of this, and just like he believes the trade deficit
is bad, and those of us who have been around
for a while would say trade deficits are good if
it's driven by prosperity. So ten percent would be more
(32:09):
like a flat tax, and I think that would at
least stop distorting behavior.
Speaker 2 (32:13):
Down negative seven under surveillance. Apology. I'm sorry, Paul, it
took too much time there. I was all wound up
about the moment there, about the bodies at the White House.
Nancy knows them all. That's what Nancy.
Speaker 4 (32:27):
Have you guys changed your risk outlook over the last
several days year, as we've had to deal with a
lot of this tariff volatility.
Speaker 10 (32:35):
We started changing it, Paul, after the market peaked and
we started getting sell off, so we moved a little
bit more defensively. We're still selectively buying tech names, mostly
focused on the software side of things, less focused on
the hardware side. We still believe AI is instrumental. You
saw Spotify headline that said, no more new jobs unless
(32:55):
you can prove it can't be done with AI. So
I think those are important. Walmart came out and re
affirmed the full year guidance they're going to generate fifth
They're our poster child of an old economy company that
is pivoted to the new names. So we've added names
like eccentric, or added two names like accenture in Netflix, Spotify.
These these could be more defensive names if we do
(33:16):
go into recession, but I think we're into economic deceleration
as opposed to a potential recession.
Speaker 4 (33:23):
What do you expect to hear from the c suite
this earning season? I mean, I think a lot of
folks are concerned that there's headwind and there's really earnings
risk out there, that the essens that are out on
the street need to come down, and maybe come down
pretty significantly. Maybe that's already priced in. I don't know,
but are you concerned about the earnings season coming out?
Speaker 10 (33:40):
I don't think we're gonna hear much. I think we're
gonna hear delayed guidance. Why I mean I would do
that if I was in the c suite? Why would
you give guidance? But Walmart was interesting at their investor
day because they did reaffirm the year, they just kind
of gave a wider range on the quarter. So I
think what we heard last earning season around tariffs was
that the CEOs were confident they knew how to navigate.
(34:01):
I don't think they were expecting maybe some of what
we got, but they could be, you know, expecting what
now what we've got now. So but it is a
ninety day pause, and I think we have to be
aware of that.
Speaker 2 (34:12):
I'm focused on the labor economy. It's maybe the greatest
disagreement I've had with the supply side crew. I think
of you know, folks, this is esoteric but real business
economic Carnegie Mail in Freshwater, Charles plots Er, Philadelphia. I've
got some real issues with a job generation. A guy
named Summers who's from the dark side, and Olivier Blanchard
(34:34):
the Giant. We'll talk about hysteresis where just the labor
economy just falls apart. Do we risk a new permanent
higher unemployment rate with all this carnage?
Speaker 10 (34:47):
I think we could Tom I mean so far that
you know we've seen here.
Speaker 2 (34:49):
Now that's a headline for the day. Tangler and Summers
on the same page.
Speaker 3 (34:54):
Continue.
Speaker 10 (34:56):
I found myself agreeing with Elizabeth Warren the other day,
what please on maybe Congress should be a little more
involved in tariff policy. Yeah, but I think we could,
and I think it could be accelerated by AI because
we are seeing, like at our firm, we're using AI
software to listen to the calls for us and then
we can go in the earnings calls that is, and
(35:17):
then we can go in and focus on when we
want to. So that saves hours and hours a quarter,
and I think you'll start to see more of that
more in our firm. It's more thinking, less just analyzing headlines,
and I think that's important. So I think we're hearing
that we're hearing AI. Last quarter we heard the theme
was we're hiring less on the low end or entry level,
(35:40):
and we're hiring less or keeping less middle management people
and that spanned across sectors. So I do think it's
a risk, but I also see in expanding growing economy,
if we get deregulation or once we realize the effects
of deregulation and the tax cuts if we get them.
Speaker 4 (35:58):
What are we doing in the bond market these days?
See come are we taking credit risk? Are we sitting
in the treasury market where we're going?
Speaker 10 (36:04):
So we've done so in our uni portfolios. We've built
callable portfolios and kept the duration below a year, so
we've been getting a little over four percent. As you know,
the muni market melted down a couple of days back,
but it started to come back on credit. We're not
taking credit risk at this particular point. Although the credit
the spreads have expanded, they're still not in danger zone.
(36:26):
So we've been parking in the short end of the
treasury market for clients where we're expecting to extend duration later.
Speaker 2 (36:33):
To finish up here with a broad philosophy, and this
goes back to I remember sitting. I was in the
hanover in in Dartmouth with a guy named Nut Gingrich
and we were talking about that night in nineteen ninety four.
Speaker 10 (36:46):
I'm sitting in the current remember it well.
Speaker 2 (36:47):
Dan rathers talking to me. He was CDs. Nobody's prepared
for this, and all of a sudden, folks, supply side
was run in Congress. Where is your movement Doctor Laffer's
movement in ten or twenty years. I can't figure it out.
Speaker 10 (37:04):
I mean, let's hope that it's not forgotten. I know
he has the Laffer Center and he continues to put
forward his policies through the Laffer Center. Got Young of
Americans or Foundation for Young Americans that focuses on it
and is teaching young college students about the movement. But
I do think at some level it is common sense
(37:25):
and it will continue if we get congressmen who can
stand a position. And I think that's what's been so
disappointing for me, the falling in line on either side
all the time, like we need fresh thinking and supply
side economics worked and it could work again.
Speaker 2 (37:42):
This has been wonderful. Don't be a stranger. Nancy Tangler
folks Iconic with Laffler Tangler.
Speaker 1 (37:53):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay, Android Otto with
the Bloomberg Business app. You can also watch us live
every weekday on YouTube and always on the Bloomberg Terminal to.
Speaker 2 (38:07):
Short visit right now with Jordan Rochester, We're gonna have
the mind for a longer visit here in the coming days.
But we just had to get them in writing with
the Missuo their fic macro strategy Jordan. In the currency
market right now, it appears that China's affecting some form
of depreciation if they do. You want remember depreciation, what
(38:28):
does that mean for the dollar and.
Speaker 9 (38:30):
For America, Typically it would mean a stronger doll It
usually would mean therefore you offset the impact of tarifs.
But the tricky thing is is that we've not really
seen broad dollar strength after tarifs were announced. It actually
breaks most of the textbooks in terms of tariffs usually
mean that the dollar has to appreciate because the terms
(38:50):
of trade of Europe and everybody else's wee can. But
what we've seen is it's just laid. This whole situation
led to a seizing up of the financial markets. Dollar
export received usually in Asia weren't being received as now.
Everyone's been trying to wait out the tariffs and try
and hopefully get a better deal down the line, and
so you've not had the same recycling into US treasuries
(39:11):
and into US equities, so you've seen broad dollar selling.
As a result, you've seen much less dollar buying on
the equities and the fixed income signed from foreign investors
thanks to all of this.
Speaker 4 (39:23):
Jordan, What does it one hundred and twenty five percent
tariff on Chinese goods mean for the US economy? Everything
it seems like we use comes from China at some point.
What does that mean for the economy?
Speaker 9 (39:35):
Do you think it's a level of tariff that I
think is so high that it makes it very difficult
to say that you're going to continue to imput from
China at the same rate. But really what's going to
happen is a lot of rerouting of trade from China
to Vietnam, to Cambodia to Singapore, and it's going to
have the lower tariff rates than one hundred and twenty five.
(39:58):
So the US is still going to import from China,
it's just going to have a bit of a sight
seeing trip along the way. And so for the US economy,
this is still way on growth. It's still a tax
hike on the economy, but it's not as bad as
the sticker price.
Speaker 2 (40:11):
Is that cheating? I mean, what we're going to hear
in the house is China's cheating because they're running the
Jordan Rochester missul merch Yes, through Vietnam. By the way,
is that like that's just to me, that's like normal
decision making a trade. Or do you buy the idea
during Rochester that it's cheating.
Speaker 9 (40:31):
I don't know if the word cheating, it's just what
happens in business. I do you think about oil sanctions
as well, there's lots of you know, the EU still
buys a lot of natural gas and oil from Russia
despite the being sanctioned. So there is lots of these
examples into an international trade where the aim seems right
but the actual outcome is different. I think really the
sort of ten percent flaw that Donald Trump is set
(40:53):
for everybody is a better example of how to avoid
that problem of rerouting. There is no one to reroot
through that is actual zero And I think this applies
to the trade talks with the UK, Japan and everybody else.
I don't know how they go get them below ten percent,
because then you'll just have rerouting through Belfast from Dublin.
That's the sort of thing that will happen if we
go any lower.
Speaker 4 (41:14):
So Jordan, what is the fixed income commodities credit macro
strategy call out on Zuho today after what we learned yesterday.
Speaker 9 (41:23):
Every day is a new day. If you asked me yesterday,
I would have said flattening is the best trade. And
I didn't expect to thirty basis points flattener in just
thirty minutes after I said it in two tens for
the US. So I think what you're likely to see
is you're a dollar is going to be quite range
bound because the ECB is probably going to cut rates
more aggressively than the market prices, and the FED will
not cut rates as aggressively as the market prices. We
(41:45):
have about eighty five basis points priced by the year
end for the Fed. We don't think they're going to
cut at all. So I think that we could see
some dollar strength at some point when the Fed makes
their reaction function more clear. But I think the better
trade if you want to be short the dollar is
short dollar m because I think the the Japanese will
continue to raise rates this year slowly. The market completely
whacked that lower yesterday before the good news, and we
(42:07):
had no hikes at all. Price for Japan. We started
to creep back in for higher rates in Japan. That's
going to continue, I think, and I think the US
will put pressure on the Japanese to raise their rates
as well and to have a stronger currency. So Dolly
end to one forty is another view, and the US
ten year five percent by year end.
Speaker 2 (42:24):
Oh oh okay, Jordan sets us up. We need to
get you out in the next couple of days for
much much longer than you York even a two blocker.
If he's in New York City, we'll steptured Rochester and
studio as well. He is with Maszua.
Speaker 1 (42:37):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Otto
with the Bloomberg Business app. You can also listen live
on Amazon Alexa from our flagship New York station. Just
say Alexa play Bloomberg eleven thirty joining us now, Kona.
Speaker 2 (42:55):
Haiks so happy that she could be with us today,
Kona in this crisis, I should say, with Ed and
f Man iconic in commodities, which soft commodity is of
the greatest study for you this morning.
Speaker 11 (43:11):
Because it seems to be a US China trade war
focus right now, I guess it would have to be
soybeans China imports heavily from the US. Well, it had been.
It managed to divert away from the US market in
Trump's first term during the first trade war. So I
(43:31):
guess it's less reliant on the US as it was before,
but it's still very it's still big imports. Today it
gets a lot more from Brazil. So I think that's
going to be the big trade flow move that we're
going to see as a result of these retaliations.
Speaker 2 (43:45):
For all of you across the Great Midwest of America,
this is the conversation of the day, COONa Haik. How
easy is it for Beijing to say, Donald Trump Sia,
We're going to Brazil for the marginal soybean pretty easily.
Speaker 11 (44:01):
Actually, In fact, right now most of it's coming from Brazil,
and I think that shipment is going to have to
happen in a more rapid force. The seasonality is such
that that's going to happen right now as we speak.
The US season export season doesn't happen until later in
the year, in September, so we have a long time
(44:22):
to go before we actually decide we actually see how
this time spent out, because you know, six months is
a long time in this trade war. Right, things could
create completely different by then. So until now, China is
getting most of it soybeans from Brazil. Brazil stands to
be a massive beneficiary of any trade war arising from
US and China, and they're taking advantage of it. So yeah,
(44:44):
I think that China has managed to diversify our fair
amount already.
Speaker 4 (44:48):
So kind of you know, we're not really sure where
we are with this trade war here. We had a
little bit of a pause yesterday, the presidents stepping back
a little bit on rest of world. Here, what's the
commodities play here in a world where trade tensions are
so high? Where do you go?
Speaker 11 (45:07):
Oh, it's not good. I mean, commodities ultimately is a
risk asset. So whenever you have macro risk of commodities
will be sold off. As we have seen in this
last week which was on presidental volatility, crude oil is tanking,
as it should be because the economic outlook in any
trade war is always so negative. The first thing that
he gets impacted is negative energy demands, So that's impacting
(45:27):
all the energy commodities. Metals, likewise, softs and agricultural commodities
have weather the storm better than the other three. I guess,
particularly because I think that you know, at the end
of the day, inputs will still have to happen. It's
just a question of trade dislocation. The one thing that
tends to win always is gold. It is the classic
safe haven, and it has reached record highs. It probably
(45:50):
will go higher again. So I think, you know, long
gold all the way, but crude oil at some point
it starts getting very cheap. I worry about Donald Trump
plans to for drill, baby drill, because he's you know,
you need, you need, you need seventy dollars all to
get any kind of investment in the US for shale oil.
Speaker 2 (46:09):
Paul's up sixty three dollars, thirty one forty three. Yep,
that's a wow statistic.
Speaker 4 (46:16):
Wow statistics. So Connor, when you think about gold, is
there is there a valuation call here for gold and all?
Is there a way you look at gold and think
about a relative to maybe other commodities, whether it's a
stock market, the bond market. How do you think about
evaluation here or is it just buy it?
Speaker 11 (46:35):
It's you buy it, you buy it. It's one of
your diversification portfolios, alongside other safe havens like the Swiss,
frank and the Japanese. Yeah, traditionally US bonds and the
US dollar would have been in that basket, but today
arguably it's less in favor. So gold still has that
instrinsic value that people like, so I think it definitely
(46:57):
has more upside to go. But you know, at some point,
once we start getting a more of a feel for
where negotiations are going with bilateral negotiations, and eventually, and
I do believe at some point China and the US
will come back to the table. At some point you
start looking at the metals and energy again.
Speaker 2 (47:15):
One final question con ed n f Man. With just
the heritage that you have, if you are in Beijing today,
what's the commodity where China has power or leverage over America.
It's I'm sure it's some odd commodity. I don't know
which is it.
Speaker 11 (47:34):
It's a critical minerals, it's the rarer. It's they have
complete ownership and control over that. And that's that is
one thing that the USA needs badly if they want
to build this whole electrification and transition energy side of things,
which we clearly trun Donald Trump wants, because those minerals
have been actually exempt in these tariff tariffs. So yeah,
(47:57):
I think that's something where China definitely has leverage. And
then the sheer population. China has been a very export
oriented economy. Today China is going to have to shift
into more domestic consumption led economy. So that's been forced
upon them, becoming a bit more like the US GDP.
And once that happens, that doesn't reverse rapidly. So I
(48:19):
think then this is structure and it's going to be
forced upon. We'll have dramatic changes on the way the
world second largest economic power starts behaving with the rest
of the world. I think really interesting times.
Speaker 2 (48:33):
Just brilliant Colin. Thank you so much, particularly on soybeans.
Speaker 6 (48:35):
There.
Speaker 2 (48:36):
Good morning to Brazil. Listening on YouTube. Subscribe to Bloomberg
Podcast in South America, Kona ache Ed and f Man.
Speaker 1 (48:45):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each
weekday seven to ten am Easter and on Bloomberg dot Com,
the iHeartRadio app, and the Bloomberg Business App. You can
also watch us live every weekday on YouTube and always
(49:06):
on the Bloomberg terminal
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