April 17, 2025 • 9 mins
The near-daily shifts in US trade policy have plunged markets into turmoil, and made businesses and consumers nervous about spending. What sort of damage does uncertainty do to the economy? And will we eventually get used to it? Co-host of Bloomberg's Odd Lots podcast, Joe Weisenthal, joins Stephen Carroll to discuss.
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Episode Transcript
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Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. I'm Stephen Carroll, and
this is Here's Why, where we take one new story
and explain it in just a few minutes with our experts.
Here at Bloomberg.
Speaker 2 (00:20):
People getting really a bit tired. They don't know even
if something's announced, whether two days later it's not changed again.
So you really see some fatigue of decision makers.
Speaker 1 (00:31):
That's the CEO of Logistics Giant DHL, Tobias Meyer. For
executives like him navigating the near daily shifts in US
economic policy, it's like driving through fog with no headlights.
When the rules are changing so quickly, it's not just
hard to keep up, it's almost impossible to make decisions.
Should a company build a new factory, order more supplies,
hor or more workers, and where to do any of this?
(00:54):
And when you don't know what's coming, you hit the brakes.
Speaker 2 (00:56):
But we haven't I don't think spent enough time talking
about just the un certainty out there.
Speaker 3 (01:01):
Operating in this highly uncertain environment means go slow.
Speaker 2 (01:05):
The higher uncertainty and greater risk of recession, the.
Speaker 4 (01:08):
Fear that on a daily basis, you wake up in
the morning and not wondering whether which sectors again to
have twenty five percent towers, which country's tariffs again to
be at one hundred percent. That's where the damage is caused.
Speaker 1 (01:19):
So here's why uncertainty is an economic killer. Joe Wisenthal,
host of Bloomberg's Odd Lots podcaster, is with me in London. Joe,
great to see you, Thank.
Speaker 3 (01:28):
You for having me. Thrilled to be here.
Speaker 1 (01:30):
Tell me, with your brain and knowledge these matters, how
can we define uncertainty in this moment in twenty twenty five.
Speaker 3 (01:40):
Yeah, I mean it's a great question, and I think
there are sort of two different elements, which is, one is, Okay,
we know there's going to be a change in the
trading environment between the rest of the world in the US, right,
Like that's obviously a done deal, and nobody knows like
what type of arrange will be profitable in those environments
(02:03):
and so forth. So that's a form of uncertainty. But
that there's another, you know, the more deeper form of
uncertainty is, yes, we know there's going to be a change,
but we don't know to what right. And part of
that is I don't think you know, the White House
has clearly articulated what it wants the new environment to be.
There's a message uncertainty because various people speak for the
(02:27):
White House on behalf of the White House, and there's
a lot of ambiguity about the degree to which anything
they say actually reflects the thinking of the administration. And
when I say the administration, I only mean the President
because you know, typically one would think there is a
coherent message, but I don't think there is. There's you know,
there's rivals within the White House that have different priorities,
(02:50):
and I think that even the President himself, well, he
has some intuitions that you know, he believes that tariffs
are a tool that can be used to revive the
manufacturing sector. The degree to which that policy is cemented
seems still very up in the air.
Speaker 1 (03:05):
Can we say that it's more uncertain now that it
has been in years?
Speaker 4 (03:10):
Yeah?
Speaker 2 (03:11):
Sure.
Speaker 1 (03:11):
How do we sort of measure uncertainty? I mean you
can look at the mats for one example.
Speaker 3 (03:15):
Well, look, I think you know, in the two big
recent crises that we had, there were clear goals. During COVID,
the goal was to stop the spread of the disease
and then from an economic side, to sort of replaced
all the lost money, you know, all the lost economic
activity for those months during lockdown in two thousand and
(03:37):
eight and two thousand and nine. The goal was to
stop a bank run, and there was a lot that
they didn't know at the time, and they certainly, you know,
may have misjudged the speed and scale through which the
financial system was deteriorating in two thousand and eight and
two thousand and nine, But the goal was to stop
a bank run. In this case, you know, as they say,
(03:57):
the call is coming from inside the house, so you
don't really know what the goal is. Is the goal
to improve our ability to manufacture high tech things that
are important for national security?
Speaker 4 (04:12):
Maybe?
Speaker 3 (04:13):
Is the goal to fundamentally restructure the economy such that
everyone or a lot more people are in what we
call production work. Is the goal to stop the flow
of fentanyl? Is the goal to slow international migration. So
whereas in the last two crises, there is certainly a
lot of uncertainty, and there's a lot of debate about, well,
(04:34):
what's it going to take and how long will it
take to stop the spread of a pandemic or a
bank run, et cetera. I don't think we actually even
know what the goal is here, and so in some sense,
I would say, again, there are various attempts to measure
uncertainty that our market based measures, our sentiment based measures.
But I would say there is a degree of uncertainty
now that is in a way incomparable to any recent crisis.
Speaker 1 (04:58):
What's the macro picture when we have this level of uncertainty,
given that, as you say, it doesn't really have a
parallel something we've looked at before.
Speaker 3 (05:05):
Well, look, at a minimum, it's very hard to imagine
any company in the world committing to like serious investment
right now. And what I mean by investment obviously is
opening up new locations, opening up new production facilities, expanding headcount,
et cetera. Why would anyone do that in this environment?
And that's at a minimum. Furthermore, there has been this
(05:28):
hit to financial markets of financial tightening, as they say,
and so stock prices have gone down, yields on government
debt have gone up, credit spreads have gotten wider. So
there is just an increased cost of doing business already
on the financial side, and then you layer in the
actual literal increased cost of doing business because the goods
(05:50):
that a company imports, whether they're for resale or whether
their inputs to production have also gone up. So you
layer in the inherent policy uncertain and the fact that
until there's some policy stability, no one is going to
do anything new, on top of the fact that the
existing costs we're on day to day operations for both
financial and goods have gone up. And this is why
(06:13):
many people believe we're either going into a recession in
the US or that we're already in one.
Speaker 1 (06:20):
At what points do businesses, consumers, markets simply got used
to things being so uncertain. Is there a point at
which that we all just sort of shrug and move on.
Speaker 3 (06:31):
It's hard to imagine that you can ever fully shrug
and move on. But the answer to that persistent uncertainty
is to take fewer risks, to shore up your balance sheet,
to cut everything that you can theoretically cut. You know,
it's interesting, like in twenty twenty two, when there was
significant inflation, there were a lot of concerns. Then you know,
(06:52):
the Federal Reserve was jacking up interest rates and so
there was a lot of a concern. Then I was like, oh,
we're going to go into a recession. But one of
the overriding dynamics of that period was this visceral fear
of companies to be short of labor, because twenty twenty,
twenty twenty one, twenty twenty two, twenty twenty three, it
was probably the first time in recent corporate history where
(07:14):
companies realized that there is not an endless supply of
workers out there. I'd say, you had restaurants like, oh,
we literally can't operate right because we can't find the
workers in this environment. And so what that means is
that there was this real reluctance to fire anyone because
you might think, well, you know, things are uncertain, but
I can't fire anyone because the last thing I want
(07:36):
to do is to be caught short labor. Again, I
just had this very visceral experience of being short. We're
in a very different environment right now.
Speaker 4 (07:43):
You know.
Speaker 3 (07:44):
Arguably, even going into middle of February, which is when
the turbulence really began, there were signs of economics slow
down a little bit that may had nothing to do
with Trump. Maybe you know, it's time for like the
fit A Reserve to cut rates. Signs of the housing market,
which is very important stalling out. So even then there
was probably already this sort of negative growth impulse emerging
(08:06):
in the US economy, and so I think this time
around right now, I suspect that inside many companies, the
conversations are about what can we cut. We want to
preserve capital, we want to preserve cash, we want to
preserve operational flexibility, just to survive to the next month
or the next half of the next quarter.
Speaker 1 (08:26):
Where do we look for signs that things are calming down,
that things are becoming more certain.
Speaker 3 (08:32):
I mean, look, I'm a big fan of the stock
market as an indicator. The stock market is not as
volatile as it was. The policy environment, I guess, you know,
is less fluid that it seemed like a week ago,
right change, It could change, you know, but like the
pace of new news that's come out is slowed down
(08:53):
a little bit. You know, there's only so far you
can really go with that. So like at the margins,
things are more certain than they were a week ago,
but we're just talking marginal changes and.
Speaker 1 (09:07):
We'll have to watch them to see more things go next. Joe,
great to have you here, Thanks for having me. Joe Wisenthal,
host was brilliant to Odd Lots podcast and author of
its newsletter. Thank you. For more explanations like this from
our team of three thousand journalists and analysts around the world,
go to Bloomberg dot com slash explainers. I'm Stephen Carol.
This is here's why. I'll be back next week with more.
Thanks for listening.
Bloomberg Audio Studios, podcasts, radio news. I'm Stephen Carroll, and
this is Here's Why, where we take one new story
and explain it in just a few minutes with our experts.
Here at Bloomberg.
Speaker 2 (00:20):
People getting really a bit tired. They don't know even
if something's announced, whether two days later it's not changed again.
So you really see some fatigue of decision makers.
Speaker 1 (00:31):
That's the CEO of Logistics Giant DHL, Tobias Meyer. For
executives like him navigating the near daily shifts in US
economic policy, it's like driving through fog with no headlights.
When the rules are changing so quickly, it's not just
hard to keep up, it's almost impossible to make decisions.
Should a company build a new factory, order more supplies,
hor or more workers, and where to do any of this?
(00:54):
And when you don't know what's coming, you hit the brakes.
Speaker 2 (00:56):
But we haven't I don't think spent enough time talking
about just the un certainty out there.
Speaker 3 (01:01):
Operating in this highly uncertain environment means go slow.
Speaker 2 (01:05):
The higher uncertainty and greater risk of recession, the.
Speaker 4 (01:08):
Fear that on a daily basis, you wake up in
the morning and not wondering whether which sectors again to
have twenty five percent towers, which country's tariffs again to
be at one hundred percent. That's where the damage is caused.
Speaker 1 (01:19):
So here's why uncertainty is an economic killer. Joe Wisenthal,
host of Bloomberg's Odd Lots podcaster, is with me in London. Joe,
great to see you, Thank.
Speaker 3 (01:28):
You for having me. Thrilled to be here.
Speaker 1 (01:30):
Tell me, with your brain and knowledge these matters, how
can we define uncertainty in this moment in twenty twenty five.
Speaker 3 (01:40):
Yeah, I mean it's a great question, and I think
there are sort of two different elements, which is, one is, Okay,
we know there's going to be a change in the
trading environment between the rest of the world in the US, right,
Like that's obviously a done deal, and nobody knows like
what type of arrange will be profitable in those environments
(02:03):
and so forth. So that's a form of uncertainty. But
that there's another, you know, the more deeper form of
uncertainty is, yes, we know there's going to be a change,
but we don't know to what right. And part of
that is I don't think you know, the White House
has clearly articulated what it wants the new environment to be.
There's a message uncertainty because various people speak for the
(02:27):
White House on behalf of the White House, and there's
a lot of ambiguity about the degree to which anything
they say actually reflects the thinking of the administration. And
when I say the administration, I only mean the President
because you know, typically one would think there is a
coherent message, but I don't think there is. There's you know,
there's rivals within the White House that have different priorities,
(02:50):
and I think that even the President himself, well, he
has some intuitions that you know, he believes that tariffs
are a tool that can be used to revive the
manufacturing sector. The degree to which that policy is cemented
seems still very up in the air.
Speaker 1 (03:05):
Can we say that it's more uncertain now that it
has been in years?
Speaker 4 (03:10):
Yeah?
Speaker 2 (03:11):
Sure.
Speaker 1 (03:11):
How do we sort of measure uncertainty? I mean you
can look at the mats for one example.
Speaker 3 (03:15):
Well, look, I think you know, in the two big
recent crises that we had, there were clear goals. During COVID,
the goal was to stop the spread of the disease
and then from an economic side, to sort of replaced
all the lost money, you know, all the lost economic
activity for those months during lockdown in two thousand and
(03:37):
eight and two thousand and nine. The goal was to
stop a bank run, and there was a lot that
they didn't know at the time, and they certainly, you know,
may have misjudged the speed and scale through which the
financial system was deteriorating in two thousand and eight and
two thousand and nine, But the goal was to stop
a bank run. In this case, you know, as they say,
(03:57):
the call is coming from inside the house, so you
don't really know what the goal is. Is the goal
to improve our ability to manufacture high tech things that
are important for national security?
Speaker 4 (04:12):
Maybe?
Speaker 3 (04:13):
Is the goal to fundamentally restructure the economy such that
everyone or a lot more people are in what we
call production work. Is the goal to stop the flow
of fentanyl? Is the goal to slow international migration. So
whereas in the last two crises, there is certainly a
lot of uncertainty, and there's a lot of debate about, well,
(04:34):
what's it going to take and how long will it
take to stop the spread of a pandemic or a
bank run, et cetera. I don't think we actually even
know what the goal is here, and so in some sense,
I would say, again, there are various attempts to measure
uncertainty that our market based measures, our sentiment based measures.
But I would say there is a degree of uncertainty
now that is in a way incomparable to any recent crisis.
Speaker 1 (04:58):
What's the macro picture when we have this level of uncertainty,
given that, as you say, it doesn't really have a
parallel something we've looked at before.
Speaker 3 (05:05):
Well, look, at a minimum, it's very hard to imagine
any company in the world committing to like serious investment
right now. And what I mean by investment obviously is
opening up new locations, opening up new production facilities, expanding headcount,
et cetera. Why would anyone do that in this environment?
And that's at a minimum. Furthermore, there has been this
(05:28):
hit to financial markets of financial tightening, as they say,
and so stock prices have gone down, yields on government
debt have gone up, credit spreads have gotten wider. So
there is just an increased cost of doing business already
on the financial side, and then you layer in the
actual literal increased cost of doing business because the goods
(05:50):
that a company imports, whether they're for resale or whether
their inputs to production have also gone up. So you
layer in the inherent policy uncertain and the fact that
until there's some policy stability, no one is going to
do anything new, on top of the fact that the
existing costs we're on day to day operations for both
financial and goods have gone up. And this is why
(06:13):
many people believe we're either going into a recession in
the US or that we're already in one.
Speaker 1 (06:20):
At what points do businesses, consumers, markets simply got used
to things being so uncertain. Is there a point at
which that we all just sort of shrug and move on.
Speaker 3 (06:31):
It's hard to imagine that you can ever fully shrug
and move on. But the answer to that persistent uncertainty
is to take fewer risks, to shore up your balance sheet,
to cut everything that you can theoretically cut. You know,
it's interesting, like in twenty twenty two, when there was
significant inflation, there were a lot of concerns. Then you know,
(06:52):
the Federal Reserve was jacking up interest rates and so
there was a lot of a concern. Then I was like, oh,
we're going to go into a recession. But one of
the overriding dynamics of that period was this visceral fear
of companies to be short of labor, because twenty twenty,
twenty twenty one, twenty twenty two, twenty twenty three, it
was probably the first time in recent corporate history where
(07:14):
companies realized that there is not an endless supply of
workers out there. I'd say, you had restaurants like, oh,
we literally can't operate right because we can't find the
workers in this environment. And so what that means is
that there was this real reluctance to fire anyone because
you might think, well, you know, things are uncertain, but
I can't fire anyone because the last thing I want
(07:36):
to do is to be caught short labor. Again, I
just had this very visceral experience of being short. We're
in a very different environment right now.
Speaker 4 (07:43):
You know.
Speaker 3 (07:44):
Arguably, even going into middle of February, which is when
the turbulence really began, there were signs of economics slow
down a little bit that may had nothing to do
with Trump. Maybe you know, it's time for like the
fit A Reserve to cut rates. Signs of the housing market,
which is very important stalling out. So even then there
was probably already this sort of negative growth impulse emerging
(08:06):
in the US economy, and so I think this time
around right now, I suspect that inside many companies, the
conversations are about what can we cut. We want to
preserve capital, we want to preserve cash, we want to
preserve operational flexibility, just to survive to the next month
or the next half of the next quarter.
Speaker 1 (08:26):
Where do we look for signs that things are calming down,
that things are becoming more certain.
Speaker 3 (08:32):
I mean, look, I'm a big fan of the stock
market as an indicator. The stock market is not as
volatile as it was. The policy environment, I guess, you know,
is less fluid that it seemed like a week ago,
right change, It could change, you know, but like the
pace of new news that's come out is slowed down
(08:53):
a little bit. You know, there's only so far you
can really go with that. So like at the margins,
things are more certain than they were a week ago,
but we're just talking marginal changes and.
Speaker 1 (09:07):
We'll have to watch them to see more things go next. Joe,
great to have you here, Thanks for having me. Joe Wisenthal,
host was brilliant to Odd Lots podcast and author of
its newsletter. Thank you. For more explanations like this from
our team of three thousand journalists and analysts around the world,
go to Bloomberg dot com slash explainers. I'm Stephen Carol.
This is here's why. I'll be back next week with more.
Thanks for listening.
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