April 28, 2025 • 36 mins
Angela Stent, Senior Fellow at the Brookings Institution, breaks down the latest with President Trump's policy toward Russia and Putin’s Brief Ukraine Truce. Nathan Dean, Bloomberg Intelligence Senior Policy Analyst, joins to discuss tax-plan stakes and what comes next for reconciliation. Esha Dey, Bloomberg News Equity Markets Reporter, explains her story on Trump's first 100 days and the worst stock slump since that of President Ford in 1974. And we Drive to the Close with Carol Schleif, Chief Market Strategist at BMO Private Wealth.
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Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news.
Speaker 2 (00:08):
This is Bloomberg business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business, finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3 (00:32):
All right, so there's a pretty interesting story on the
Bloomberg terminal and at Bloomberg dot Com. Basically, Bloomberg News
used a large language model to scan more than three
hundred of President Trump's public comments between August of twenty
twenty four mid March, as well as more than three
thousand social media posts from the president members of his
administration since the start of twenty twenty five. Basically, this
(00:53):
technique allows for comparing meaning across large volumes of text,
even if the specific wording differs. Now the results they
were reviewed by our reporters, and what they showed was
a correlation between Trump administration contacts with Vladimir Putin and
subsequent comments that echoed the Russian leader's own positions on
(01:13):
subjects including the occupation Kiev's goal of joining NATO and
Ukrainian President Voldemir Zelenski's political legitimacy now the netnet. President
Trump's views on the war in Ukraine teim increasingly aligned
with the Kremlin, and.
Speaker 4 (01:26):
That despite most recently President Trump seeming to be more
critical of Russia and Putin. For some thoughts on this
and where the war goes next, back with us is
doctor Angelos stan She's senior fellow at the Brookings Institution,
also a former National Intelligence officer for Russia and Your
Age at the National Intelligence Council. She also served in
the Office of Policy Planning at the US Department of State.
(01:47):
She's the author of the book came out in twenty nineteen,
Putin's World, Russia Against the West and with the Rest.
She joins us from Washington, DC. Doctor send, good to
have you along with us. It's been a little bit
since we talked to you. How would you characterize the
way that the President has been speaking and acting with
regard to Russia's invasion of Ukraine? Would you agree with
(02:08):
the LM analysis that has found that there is a
correlation between Trump administration contacts with Putin and subsequent comments
that echoed Putin's own positions on subject related to the war.
Speaker 5 (02:21):
Yeah, I would definitely agree with that. I think that
was true even before he was elected president a second time. Certainly,
Steve Witkoff, every time that he the chief negotiator, every
time he's met with Putin, has come out and essentially
repeated the Russian version of all events, and President Trump
has most of the time too. You occasionally get instances
(02:44):
like on Saturday after he met with President Zelenski when
he was critical of Russia for its continued bombing and
killing of Ukrainian civilians, particularly since these negotiations have begun.
But I think his view of the world, his view
of the conflict echoes Putin well. Blaming NATO, he of
course also blames Presidents Obama and Biden, and then essentially
(03:07):
saying that Crimea has always been Russian, which of course
is not true. And then you know, repeating that the
Ukrainians will have to recognize the areas that Russia has
now occupied since the twenty two war began as belonging
to Russia.
Speaker 3 (03:26):
All right, so we've heard from the Secretary of State too.
I think about the President having to make or expected
maybe to kind of come to some conclusion this week
when it comes to I guess US involvement in the
Russia Ukraine War. I don't know what are you expecting
to come next here, Angela.
Speaker 5 (03:46):
Yeah, it's interesting. The Financial Times just have a story
saying that Europeans are now increasingly worried that in fact,
President Trump will say, you know, this is too difficult,
I've tried, it's over, and he'll turn his attention to
something else. I think it's possible. The messages that we've heard,
both from President Trump himself and from Secretary Rubio do
(04:07):
indicate that some kind of decision is going to be
made this week. I don't know whether it's tied to
the first hundred days, but I think we just have
to keep remembering that there are two sets of negotiations
going on, and that even if President Trump says he's
not interested anymore in trying to end the war and
negotiate it's too hard, the restoration and improvement of US
(04:28):
Russian relations will probably go ahead, And of course that's
what Putin really wants.
Speaker 4 (04:33):
Well, explain that how is he leveraging Russia's invasion of
Ukraine to improve relations between the US and Russia.
Speaker 5 (04:43):
Well, I think that from the beginning, as soon as
President Trump was inaugurated the second time, he indicated that
he wanted to restore relations with Russia, that he wanted
to end the sanctions, that he wanted to work on
maybe another strategic nuclear arms agreement with President Putin. So
I think those things have always been separate in President
(05:04):
Trump's mind, and they've certainly been separate in President Putin's
mind and the people around him. Because even though Putin
has now announced, you know, a three day cease fire
from March eighth to March eleventh, I believe it is
we have no idea whether that will happen. But the
very next day, his foreign minister, in an interview with CBS,
(05:28):
repeated all the maximalist Russian demands, including international recognition of
the annexation of these four territories that Russia doesn't fully control.
So I think in both president's minds, these negotiations have
been separated, and it's quite possible that the US and
Russia can continue to improve ties, you know, restore the
(05:50):
personality embassy and things like that, maybe lift sanctions, go
into big business deals with Russia. Maybe, but that the
walk still go on and the message to the Europeans
from the US will be you have to take care
of this.
Speaker 3 (06:06):
Any outcome where President Putin gets to hold on to
the territory that he has taken over and is more
favorable to him, does that only embolden him going forward?
Speaker 5 (06:21):
Well, of course it does, because right now, as we
believe the negotiations stand, the Trump administration is willing to
say that Russia should only one should only recognize that
part of those four territories that Russia actually occupies, and
that the unoccupied parts of these four territories would still
be Ukrainian. And so you know that would certainly be
(06:47):
a mild gain for Ukraine.
Speaker 3 (06:48):
And what does embolded mean? Does it mean we've talked
with you about this before? Like, does it just mean
I don't know, in a year, two years, five years,
six months, he goes after some thing else. Potentially.
Speaker 6 (07:01):
Yeah.
Speaker 5 (07:02):
So let's say there's a ceasefire and it's more than
thirty days. I mean, the initial ceasefire that Zelensky has
agreed to would be for thirty days. Russia hasn't agreed
to that yet. But if there were a ceasefire for
thirty days, then we would have to see would Russia
then immediately start bombing again, or would the thirty day
(07:22):
cease fire lead to a more permanent cease fire, in
which case Russia might wait some time to attack again.
But the way that the Russians are talking at the
moment is that they still want to achieve their maximum goals,
which they can do right now. I mean when President
Trump said, well, it's already a concession that Russia hasn't
(07:44):
taken over all of Ukraine, That's exactly what they tried
to do in February of twenty twenty two when they couldn't.
So they might try that again later.
Speaker 4 (07:52):
On, doctor Sten before we let you go just thirty seconds.
You know, I ask you this every time and past
you repeatedly over the last three years as you've joined us.
Given what we know now, how do you see this
war ending?
Speaker 7 (08:05):
So?
Speaker 5 (08:05):
I think at the moment it still looks as if
it would end with some kind of territorial I mean
recognition by Ukraine that at least temporarily the territory that
Russia now occupies in Ukraine will remain with Russia. I
think you could have a cease fire again. Going back
to the North Korean South Korean example, but you would
(08:29):
have to have that very heavily policed with some forces,
and then you know it would be over for a while.
But I don't see at the moment this ending in
any way that one could be really sure that Russia
wouldn't attack again unless Ukraine joins NATO.
Speaker 3 (08:47):
Doctor Angelas stant Thinks Always Always, Senior fellow at the
Brookings Institution, former National Intelligence Officer for Russia and Eurasia
at the National Intelligence Council, author of the book Putins World.
Speaker 2 (09:00):
As you were listening to the Bloomberg Business Week podcast,
catch US Live weekday afternoons from two to five pm Eastern.
Listen on Apple CarPlay and the Android Auto with the
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Speaker 3 (09:16):
All Right, you know this already. We've been talking about it.
This week, marking the first one hundred days of President
trump second term, we covered it. Question is we want
to dig a little bit more into tim what comes next?
Speaker 4 (09:25):
The US Treasury Secretary Scott Besson and congressional Republicans will
meet to sketch out the plan for passing a multi
trillion dollar tax cut in the coming weeks. As polling
shows that voters largely disapprove of the White House's handling
of the economy. President Trump leighing in on taxes yesterday
as he was traveling back to Washington, DC.
Speaker 8 (09:43):
We're going to be taking in a tremendous amount of money.
Speaker 4 (09:47):
And we're going to make a lot of money, and we're.
Speaker 7 (09:48):
Going to cut.
Speaker 4 (09:49):
Taxes for the people of this cutting this possible.
Speaker 9 (09:52):
We'll do a complete tax cut, because I think the
daris will be enough to cut all of the income.
Speaker 4 (09:57):
Tax, enough to cut all of the income tax.
Speaker 3 (10:00):
I don't have to pay income tax anymore.
Speaker 4 (10:02):
I think Congress will have something to do with that.
Let's ask Nathan Dane.
Speaker 3 (10:06):
All right, let's bring him in. He's Bloomberg Intelligence senior
policy analyst, typically based in DC. Likely for us to
be here at Bloomberg headquarters in New York City all
income tax.
Speaker 9 (10:15):
No, I don't think it's going to happen, but you
are going to get There are going to be some
tax cuts in this bill.
Speaker 8 (10:20):
I mean, so what they're.
Speaker 9 (10:21):
Talking about is a five point three trillion dollar reconciliation bill.
There's about one point five trillion earmarked in therefore tax cuts. Primarily,
what we're thinking is no taxes on tips, no taxes
on overtime, and for you know, no taxes on Social Security.
Those are like the three main priorities. But there has
been this push by President Trump to try and lower
you know, other taxes for individuals that make less than
(10:42):
two hundred thousand dollars.
Speaker 8 (10:44):
That's what they're thinking. The idea here is that tariffs
are going to pay for it.
Speaker 9 (10:47):
And you know, all the analysis that we've done, all
the analysis that we've seen for other people do is
it's not exactly sure that money is ever going to
be there.
Speaker 8 (10:54):
So, you know, we.
Speaker 5 (10:56):
From Paris for the Tax correct and.
Speaker 9 (10:58):
So what we're telling our clients is that we've i
think as of right now, with specifics likely to come
out over the next couple of weeks, the more likely
scenario is you are going to see Congress pretty much
kick the can on a lot of these cuts. We
don't think there's going to be material cuts to snap Medicaid,
the Inflation Reduction Act, but what you are going to
see is most likely a very large deficit inducing bill
at the end of this which could be multiple trillion dollars.
(11:20):
Because it's much easier from the policy perspective to kick
the can of the issue down the road than it
is to take a bill or a vote that's going
to actually pull back benefits within the near time.
Speaker 3 (11:30):
Can I just say we've kicked the cans how far
the Cans and mars right at this point? I mean,
we just keep doing this and doing this well.
Speaker 9 (11:36):
And again that's the problem is is that you know,
for a lot of in both sides of the aisle,
it's both Democrats and Republicans. For them to actually take
a vote that actually claused back some provisions or entitlements
and so forth, it's extremely difficult. In fact, it was
reporting over the weekend that from some of the tax provisions,
let's talk about Medicaid and snap benefits. Rather than implementing
(11:57):
those cuts immediately, the thought now is that you would
implement it after the election, whether it's the midterm election
or even four years, and now implement.
Speaker 8 (12:04):
It after the Trump administration.
Speaker 9 (12:05):
So they understand, they being the Republicans, understand that this
is not a popular vote. We've seen Senator Josh Holly
from Missouri come out and say don't touch Medicaid. We've
seen the Chairman of the House Ad Committee, Glenn Thompson,
come out and say, look, we can't really touch snap
benefits outside of maybe just trying to combat waste and fraud.
So there's a lot of ideas out there, but at
the end of the day, it's much easier to kick
(12:26):
the can on the deficit than to do anything else.
Speaker 4 (12:28):
So do you think that indeed we will see tax
on tips taken away? So no tax in this next bill,
no taxes on tips, no taxes on social security, and
no taxes on overtime. Do you think that'll pass?
Speaker 9 (12:39):
I think that's like the idea. So what we're waiting
for is markups. So this week we have a couple
of markups from the Bloomberg client perspective, not the most.
If you're in the defense industry, you'll care, but for
the macro investor, not all that important. The big one
you're looking for is the House Ways and Means Committee,
probably going to be around in mid March, I'm sorry,
mid May, and that is the one that's going to
have a lot of these ideas in there.
Speaker 4 (13:00):
And what's the total there that would add up to?
What are some rough estimates on how much revenue the
government would lose out on as a result of not
taxing those things.
Speaker 8 (13:08):
So here's the interesting thing.
Speaker 9 (13:09):
So the Senate resolution and the House resolution had two
different They were the same at the top number, five
point three trillion dollar bill, but where it differs is
how are you going to cut in order to pay
for this one point five trillion.
Speaker 8 (13:21):
What the Senate did is they said, well.
Speaker 9 (13:23):
We're going to just as a floor cut four billions,
so with a B the House that we're going to
cut one point five trillion, so we'll have like for like.
But it's much easier to say that you're just going
to kick the can than it is to cut. So
that one point five trillion will most likely include some
form of no taxes on tips, no form on overtime.
We'll have to see what the estimates actually come out
to be. And for the New Yorkers in Connecticut and
(13:43):
New Jersey folks, the salt deduction most likely, we think
we'll go from around ten thousand dollars to the general
dealing in Washington right now is around twenty five to
thirty thousand.
Speaker 3 (13:51):
What do you think, Carol Better? Okay Better? Is this governing?
Is this governing for the people or is this just
governing to make sure I keep my job? So by
members of Congress.
Speaker 9 (14:03):
This is governing to avoid the filibuster and to do
something without the opposition party. And so this is how
President Obama got Obamacare through. This is how President Biden
got the Inflation Net Reduction Act through, and this is
how President Trump got Trump one point zero tax cuts through.
But using reconciliation, you have a majority vote in the House,
a majority vote in the Senate, you bypass the filibuster.
But the Cavia idea is that you should only be
(14:24):
able to do things that impact the budget. What the
Senate did is they said, you know what, the current
cost of these Trump era tax cuts of extending it
is effectively zero because it's current policy, that's something that
hasn't really worked in the past. They just said we're
going to do at this time and as a result,
the deficit now may go up significantly as a result
of this.
Speaker 8 (14:43):
But you know, we're also to.
Speaker 9 (14:44):
Our clients that there are a lot of deficit hawks
out there that wouldn't be going for this. But we
think President Trump ultimately would use his political capital to
get those Republicans on.
Speaker 4 (14:52):
Board, meaning sign this, go with me, or you're getting primary.
Speaker 9 (14:56):
Exactly and you march down to Capitol Hill, look them
in the eye and say, are you're going to do
real my plan?
Speaker 1 (15:01):
Yeah?
Speaker 4 (15:01):
And look, Jordan Favian was talking about this earlier, Carol.
He only has so much political capital at this point,
especially with some of the poll numbers coming in that
we've seen.
Speaker 3 (15:10):
Is that exactly Is that good enough, Nathan to keep
the Republicans come the mid terms?
Speaker 9 (15:14):
Well, I would just say here, what's the ultimate goal
for the Republicans in this package, and that is to
ensure that individual taxes don't go up.
Speaker 8 (15:21):
At the end of the year. Right now, they're trying
for a permanent.
Speaker 9 (15:23):
Text cut, but nothing says that. If they can't come
up with a deal that maybe they say, you know,
instead of ten years or permanent, let's just do this
four years so that taxes would go up and under
the next administration, that brings the price tag lower and
then would make it much easier to pass a bill.
Speaker 3 (15:37):
Is it ever permanent?
Speaker 8 (15:38):
Well, it is for the corporate tax right, That's what
they did in the first one.
Speaker 5 (15:41):
Permanent.
Speaker 3 (15:42):
No other administration can come in or no other Congress
can come in and change it.
Speaker 9 (15:46):
Well, you can obviously change it if it's but it's
permanent and from the standpoint that there's no sunset provision.
Speaker 3 (15:50):
Okay, got it, got it, got it, got it. I
mean it's going to take legislative action to change it.
Speaker 4 (15:55):
When you have the pencil sharpened, when you have Excel open,
and you're going through these calculations, how do you think
about potentially the burden being eased on lower income Americans
with some of these provisions, but then potentially the inflationary
aspects of tariffs if those indeed remain in place. Because
the President says, hey, this is a revenue raiser for us.
(16:16):
We saw a lot of reports over the weekend about
companies starting to add a specific line item as a
result of an import tax and import duty. Does that
then hit those Americans who this would likely benefit?
Speaker 9 (16:27):
Yeah, you know, I just saw our restaurant analyst, Michael
Halen's downstairs, and you know, I was talking with a
bunch of our consumer.
Speaker 8 (16:32):
Analysts a few minutes ago.
Speaker 9 (16:33):
And the questions that we have from this package is
Commerce Secretary Howard likes to say that it's stimulating, but
if you're spending the bulk of this extending current policy,
where's the stimulus. So when it comes to retail in particular.
You know, there's a lot of our analysts are looking
at this and they're just saying, look, you know, you
know spending is still somewhat strong from now, but what
(16:55):
happens if we get supply chains and a few supply
chain shortages in a few weeks. There's a lot of
different questions here, but ultimately the question is can the
consumer to continue to spend as they're spending today And
a lot of our analysts aren't exactly sure that can happen.
Speaker 3 (17:08):
What do you hear from the investor base and you know,
various corporate base. You are a policy expert analyst in
terms of trying to figure out what the next I
don't know one hundred days or next six months are
for a Trump White House.
Speaker 9 (17:24):
So the first question is obviously on the tariffs. The
number one question we get is when are these exceptions
or when is President Trump going to quote unquote back
down on tariffs? And what we tell our clients is
is that, like, look, within the next three to four
weeks president Trump. Bloomberg News reported this over the weekend
that President Trump is going to announce deals within quote
three to four weeks, but Treasury Secretary Scott Bessont.
Speaker 8 (17:43):
Isn't going to wait that long.
Speaker 9 (17:44):
He's feeling the pressure, and so you are going to
see I think later this week or beginning of next
week quote unquote understandings or memor amums. I think essentially,
I think it's like three to four page bullet points
rather than an actual deal.
Speaker 8 (17:57):
So obviously that's goin too well.
Speaker 9 (17:59):
I don't know if I China, but you know, they're
negotiating with seventy countries, and the idea from the Treasury
Department that we've learned is that this isn't so much
of a US China negotiation, but rather you know, they've
been saying India potentially could be a first one in
South Korea Japan. So you have this tariff argument that's
going or this tariff debate that's taking place with I
don't want to say the ultimate answer, but at least
(18:20):
some more clarity. But then the Republicans on the House
are trying to get this tax extension bill. They want
to get it done by Memorial Day. We don't think
that can happen. I think it's going to happen during
my vacation in late July, but more likely than not
because the debt ceiling is included. I think they will
get it done before the mid July.
Speaker 4 (18:36):
I hope for your sake it doesn't happen on your vacation, Nick,
and I want to go back to something that you
said about stimulative effects or potential stimulative effects of this bill.
There's this narrative that has emerged in recent weeks, given
the challenges that the that analysts are saying the economy
faces as a result of this tariff policy, that there
needs to be some sort of stimulus to the economy,
(18:56):
and they're saying it's all about the tax bill. They're
using this as a way to say, Okay, we got
to get this tax bill through because that is what's
going to push the economy. You just spoke to the
folks on the retail side. Is that indeed the case?
Can it be stimulative in its current iteration?
Speaker 9 (19:10):
Well, I mean when you're essentially extending current policy, you know,
I think the stimulation from yesterday's taxes to tomorrow's taxes sorry,
tariffs and taxes. You know you're not going to see
much change in the current way of current taxes. Then
you're going to see this no taxes on tip, no
taxes and overtime. Potentially this like tax cut the President
Trump's talking about.
Speaker 8 (19:30):
Is that enough that really gets the market going?
Speaker 9 (19:33):
We're not exactly sure that's the case, but I will
say is is that, you know, Republicans, there's no other
option here if they don't pass this, they you know,
there's really no other bills out there that people are
talking about between now and the midterm elections that are
going to try and address this, even bills to try
and claw back authority from President Trump on tariffs. Just
the White House just this morning put out a veto
(19:54):
threat on a resolution that's going to come in the
Senate later this week.
Speaker 8 (19:56):
So this is it, Democrats. The Democrats are messaging for
twenty twenty six.
Speaker 9 (20:03):
Mean, they don't have the power at the moment, and
when you're the party in minority, you know you essentially
have to prepare for tomorrow.
Speaker 3 (20:09):
Unbelievable interesting times, no doubt about it. Nathan, so much,
so great to have you here in studio. Thank you,
thank you, do you appreciate it. Bloomberg Intelligence Senior policy
analyst Nathan Dean joining us.
Speaker 2 (20:21):
This is the Bloomberg Business Week Podcast. Listen live each
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Speaker 4 (20:39):
President Trump promised Americans a quote boom like no other
if they elected in president, But based on the stock
market's performance during his first one hundred days in office,
it depends on what you mean by boom. Esha Day
writes about Trump's first one hundred days and the worst
stock slump in the first one hundred days in more
than fifty years. Asha's US Equities deputy team leader senior
(21:00):
reporter for Bloombergner. She joins us from New York. Give
us the numbers here, Kasha, what did you What does
boom mean in this case?
Speaker 7 (21:11):
And thanks for having me? So? Yeah, I mean the
boom was also a lot of volatility, which I guess
none of us who are watching markets day to day
can't really forget about. We're still kind of in the
midst of it. But let's look at the numbers, of course.
So SMP five hundred as of today's close, which was
ten minutes back, is down about eight percent, just shy
(21:32):
of eight percent since Jan. Twenty eighth, which was an
inauguration day for Donald Trump. Now, Trump's one hundred day
would be April twenty ninth, So by April thirtieth, which
is like the end of this month, he would have
completed like one hundred days of his administration. So we
have like one or two more sessions to go to
(21:53):
kind of see where this record lands. But right now,
this is the worst decline for the SIMP five hundred
in a precedent's first hundred day since Gerald Ford was
president in nineteen seventy four. So yeah, I mean, we
all remember what a tumultuous time that was for American
politics at that point.
Speaker 5 (22:14):
This is ti.
Speaker 7 (22:14):
Multious too, so you know, it's a long time and
also not a very good comparison to look at.
Speaker 5 (22:20):
So there's that when.
Speaker 3 (22:22):
You look at and you drill down into sectors and
so on, Right, what else do you see and how
broad based all the selling was.
Speaker 7 (22:31):
Selling was very broad based, But the biggest declines that
came since Jan. Twenty eight came from the two most
expensively valued sectors as well, and also the two sectors
that house most of the megacap like the top seven names,
the ones we call the magnificent seven, right, So that's
(22:52):
the technology sector within the sent five hundred and the
consumer discretionary sectors. These had the biggest declines as sectors
over these almost one hundred days. And then when we
look into stocks, we really kind of see a lot
of these stocks that took like the biggest beatings are
the ones that will be in the forefront of this
(23:13):
kind of higher tariff regimes. And if the tariffs that
have been proposed by these administration they stick around, we
would be seeing the highest tariffs on these trading partners
since over the past hundred years. So that that's a
big hit, and that kind of explains why these names
are taking such a head. So for example, you know
Deckers Outdoors, this is a footwear maker, is one of
(23:35):
the biggest stickliners Bugs.
Speaker 4 (23:38):
Those are the companies that they have.
Speaker 7 (23:40):
That's correct, That's correct. I mean it's almost a household name, right,
like we all know these brands. Then there are chip makers.
Chip makers you know, show up very widely. These of
course are not household names. So these are again and
almost like the front line of this stariff war. Chip making,
the semi conductor sector really is a globally spread supply chain,
(24:02):
just as autos, and these are going to be hit
very badly, and we have seen the shares kind of
starting to tell that story. Another group that did pretty
badly is the travel group. And that makes sense, right, like,
if there's concern about the economy, if there's concerns about
economy growth, people are unsure about spending. That's kind of
the discretionary spending that gets hit travel and leisure. So
(24:25):
all the big airline names, the legacy airline names, the
United Deltas, and the American airlines of the world. They
have come out, they're reported results already for the first quarter,
and the outlooks have been very money to say the least.
Or the other big group within the travel sector that
took a big hits are the cruise liners. Again a
really classic example of that kind of discretionary spending that
(24:48):
can be really impacted when consumers are feeling unsure.
Speaker 4 (24:52):
And unsteady interested in sort of how you're thinking about
what companies have said thus far, at least about the outlook.
Carol mentioned this note from Gina mar n Adam's a
little earlier today, Esha, you know there are those out
there who say this is short term pain for a
stronger America longer term. That's what the administration would say
(25:12):
if a member of the administration we're sitting here right now,
is is that what you're hearing from companies that this
could be a minor speed bump or is this something
they're worried about something bigger.
Speaker 7 (25:24):
It's a great question, I think right now. The lack
of clarity is such that what we're hearing over and
over again from these companies is that we just have
no clue about what's coming next. And that was kind
of I would say. There is the outlook from United Airlines,
which reported early on in the first quarter reporting season,
(25:45):
where it came out with essentially two sets of outlook
for two different scenarios. So in case there's a recession,
this is what we expect to happen, and in case
there's no recession, this is how much we expect to earn.
That is something everybody's kind of pointing out too. And
seeing that that tells you that, oh, like they're completely
flying in the dark at this point.
Speaker 3 (26:06):
Hey, one thing I want to ask you, and this
is something like we were trying to get to with
Eric Wiener, who also follows the markets for us here
at Bloomberg. But I am just curious about positioning within
the market that whether it's equity positioning or fixing positioning,
like what it tells us about the psyche of investors
at this point, which might determine whether or not, you know,
(26:27):
they're ready to kind of change if the sentiment or
the narrative changes quickly.
Speaker 7 (26:35):
Yeah. No, that's a great question. So when we look
at positioning data, especially from the big banks who are
kind of sharing those numbers, what we are seeing, and
a doatcha bank every week puts out really good set
of stats on this, and they're still seeing that equity
positioning is really near the bottom of its range, which
is kind of typical for times of great uncertainties. At
(26:57):
the same time, you know, when we talk about positioning,
we really have to talk about all these kind of
sentiment surveys that are coming out and showing us over
and over again how investor sentiment has really turned extremely
bullish at this point and given this really low positioning
once some kind of certainty, and this is something when
I talk to my sources comes up over and over again.
Once there's some kind of certainty the bounce back in
(27:20):
the markets. There's enough clue from positioning to tell us
that the bounce back from the markets could be strong enough,
especially since both these things. Positioning is towards the bottom
and sentiment is just really kind of near rock bottom almost.
But then, what people really need, it's something solid, something
concrete to latch onto. This more kind of vague promises,
(27:44):
our ideas of agreements deals that is not going to
cut it at this point because money managers, institutional investors,
they've just seen it a lot, and they're absolutely not
willing to kind of buite the bullet at this point.
Speaker 3 (27:57):
Interesting, interesting, right, gets to kind of the center to
me and psyche out there. Esha, thanks so much, Esha Day.
She's US Equity's deputy team leader, senior reporter at Bloomberg News,
joining us right here in New York City. Now about
you let me drive?
Speaker 9 (28:12):
Oh no, no, no, no, this is not a toy.
Speaker 5 (28:17):
Please gravel ecuse I want to drive. It's a good question.
Speaker 1 (28:28):
This is the drive to the clothes punks a thing
well on Bloomberg Radio.
Speaker 4 (28:34):
What a trade today?
Speaker 3 (28:36):
I know?
Speaker 5 (28:37):
Are you feeling bored?
Speaker 4 (28:38):
I would never say I'm bored, Carol. What I will
say with the whiplash of the last three weeks. Yeah,
it's like this feels a little weird to me.
Speaker 3 (28:45):
It feels a little it feels like a calm before
the storm.
Speaker 5 (28:47):
Perhaps.
Speaker 3 (28:48):
Yeah, I don't know that that's going to be the case.
You doing a lot coming right now? Yeah, I mean,
super super interesting. Let's see what our drive to the
closed guest has to say. Great to have back with us,
Carol Schleife. She's investment strategist at BMO Family Office, joining
us from minneappleist Carol, Good to have you here. It
does feel a little quiet and subdued today, considering what
(29:09):
we've seen over the last month. What's you read here?
Speaker 6 (29:13):
It does feel no one really wants to take too
strong a stance coming into We've got big earnings, we've
got big data. It's sort of like peak week for
a lot of a lot of information, and it's nerve wracking,
I think for anyone to want to get a too
bold in front of that.
Speaker 4 (29:32):
I mean, I'm having a hard time understanding the next
catalyst here because we thought we'd get it with alphabet
last week. We got the jobs report coming up on Friday,
We've got earnings of slew of earnings. We got Microsoft,
we got Amazon, we got Apple coming in the next
couple of days. What do you see as the biggest catalyst, hopefully.
Speaker 6 (29:55):
Of a narrative change if we can get Congress really
focusing on and some of the more pro growth business
aspects of things and get movement there. It's going to
be difficult because investors are hanging on a lot of
these earnings reports hoping to get guidance from companies on
what they're doing relative to tariffs. But it's honestly, we're
(30:15):
not going to get that kind of clarity probably until
the next quarter of the following quarter, when we figure
out what they're doing. Because if you're a retailer right now,
you're trying to decide do I take the goods do
I take the chance that there might be big tariffs
on those goods coming in for the fall and Christmas,
because we're moving into those months where they have to
make those decisions, and so as investors, we're not necessarily
(30:38):
going to get clarity on that. Although I do think
it's positive that you're seeing a lot of companies either
suspend guns bring it down. It smells a lot like
it did in March of twenty twenty, when companies set
the bar very low. Then things stabilized and we were
able to move.
Speaker 5 (30:54):
Off of that.
Speaker 6 (30:54):
So I think the only sort of catalysts we're going
to get for markets in the very short term is
a narrative catalyst change. If Congress can can be back
in talking about you know, accelerated depreciation being reinstated, and
perhaps some credits for manufacturing construction, that if we can
(31:15):
get the narrative focused on that, that will help.
Speaker 3 (31:20):
But Carol's safe to say that it's hard to make
that investment bet on stable markets right until we get
more clarity. And so does that mean for investors are
putting not committing new money, taking existing money and putting
in in safer plays like what's going on? And I
understand investors invest for the long term, but it's got
(31:42):
to be a little startling to see what's happened over
the last month.
Speaker 6 (31:45):
I think the piece of it is is we've been
trying for years to get people to invest in globally
diversified portfolios, and so I think part of it is
refocusing on that. Let's look outside the United States and
poke around at some of the other areas, and fixed
income actually is held in Okay. There's been a lot
of nervousness about the tenure and extending extending out, but
(32:08):
it's actually most of the capital markets have behaved very
reasonably in here despite the volatility we've seen, and so
looking at those portfolios, rounding up where we might be underweight,
because you know, for years the only trade was to
invest in the US, and now while you're waiting for
some clarity there, maybe picking away at other things on
(32:29):
the fringes makes some sense.
Speaker 4 (32:31):
Like when you say fringes, what do.
Speaker 6 (32:32):
You mean, I just mean broader in terms of looking
at some of the you know, we've actually had play
participation in China, Japan for some China, I know is
very controversial, but you look at them as an investment opportunity.
You look at some of the non US markets where
(32:53):
a little we're more underweight than we would want to
be in Europe right now, but there's some places to
look there too, and so global funds as well, because
you know, the one thing you've seen is that if
you look at the All Country World Index, the US
used to be fifty five percent of it. For decades,
and then over the last number of years it's grown
(33:14):
to percent. You're back to rebalancing the world. So looking
at your portfolio and seeing if it's more aligned with
what global GDP is would be one way to take it.
Speaker 3 (33:27):
Do you think about longer term two in terms of
the US being more disconnected from the global economy, or
do you just think this is a moment of chaos
and that things will settle down and be more normal
quote unquote in terms of the US relationship to the world.
Speaker 6 (33:45):
I think this is where my long term optimist keeps
raising its head up. Having watched this for a very
long period of time, I have to, in my heart
of hearts, believe that in the long run, maybe that
the shine is off the US exceptionalism crown. I'm not
giving up on the US. It's a place to invest
because I do believe we've got the innovation. We'll figure
(34:05):
out a way to do things. And the interesting thing is,
is this near term cast for companies. It doesn't mean
they're standing still behind the scenes. They're monking a bunch
of different things, and once it gets some sort of clarity,
they're going to be quick off those starting blocks to
figure out how to participate in this because companies have
to grow. It's part and parcel of what we are.
They either have to grow for their shareholders, they have
(34:28):
to grow for their owners, or they have to grow
for their bankers. So, you know, one way, shape or form,
they have to figure this out. And we still have
a lot of innovation going on here. And if we
can get this figured out, where we pick key industries
we want to invest in and we start investing in them,
that's a pretty great long cicture too.
Speaker 4 (34:47):
You know, we've been taught, Carolyn. I've been talking a
lot about the US's place in the world, and just
in the last forty five seconds that we have with you,
when it comes to innovation, is there do you see
a risk, given what's happening in trade, that the US
sort of loses the mantle as this most innovative place.
Speaker 6 (35:06):
I do see a risk in that, and I see
a risk in what we're doing to hire ed and
interest in some of that. If we want to own
those industries, we need a whole infrastructure and ecosystem that
goes with those industries. So we have to be very
careful to make sure that we're not discouraging great young
people from coming here to innovate, and the government needs
(35:26):
to fund some of that, like they have all along,
or we wouldn't have iPhones, who wouldn't have GPS, We
wouldn't have all of what we had if it hadn't
been for the public private partnership. And there is a
risk there if we're not very careful.
Speaker 3 (35:38):
Interesting, Carol, Thank you so much. Carrol's Life, chief investment
strategist at BMO Family Office, joining us from Minneapolis, Minnesota.
Speaker 2 (35:49):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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(36:09):
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Speaker 2 (00:08):
This is Bloomberg business Week Daily reporting from the magazine
that helps global leaders stay ahead with insight on the people, companies,
and trends shaping today's complex economy. Plus global business, finance
and tech news as it happens. The Bloomberg Business Weekdaily
Podcast with Carol Masser and Tim Steneveek on Bloomberg Radio.
Speaker 3 (00:32):
All right, so there's a pretty interesting story on the
Bloomberg terminal and at Bloomberg dot Com. Basically, Bloomberg News
used a large language model to scan more than three
hundred of President Trump's public comments between August of twenty
twenty four mid March, as well as more than three
thousand social media posts from the president members of his
administration since the start of twenty twenty five. Basically, this
(00:53):
technique allows for comparing meaning across large volumes of text,
even if the specific wording differs. Now the results they
were reviewed by our reporters, and what they showed was
a correlation between Trump administration contacts with Vladimir Putin and
subsequent comments that echoed the Russian leader's own positions on
(01:13):
subjects including the occupation Kiev's goal of joining NATO and
Ukrainian President Voldemir Zelenski's political legitimacy now the netnet. President
Trump's views on the war in Ukraine teim increasingly aligned
with the Kremlin, and.
Speaker 4 (01:26):
That despite most recently President Trump seeming to be more
critical of Russia and Putin. For some thoughts on this
and where the war goes next, back with us is
doctor Angelos stan She's senior fellow at the Brookings Institution,
also a former National Intelligence officer for Russia and Your
Age at the National Intelligence Council. She also served in
the Office of Policy Planning at the US Department of State.
(01:47):
She's the author of the book came out in twenty nineteen,
Putin's World, Russia Against the West and with the Rest.
She joins us from Washington, DC. Doctor send, good to
have you along with us. It's been a little bit
since we talked to you. How would you characterize the
way that the President has been speaking and acting with
regard to Russia's invasion of Ukraine? Would you agree with
(02:08):
the LM analysis that has found that there is a
correlation between Trump administration contacts with Putin and subsequent comments
that echoed Putin's own positions on subject related to the war.
Speaker 5 (02:21):
Yeah, I would definitely agree with that. I think that
was true even before he was elected president a second time. Certainly,
Steve Witkoff, every time that he the chief negotiator, every
time he's met with Putin, has come out and essentially
repeated the Russian version of all events, and President Trump
has most of the time too. You occasionally get instances
(02:44):
like on Saturday after he met with President Zelenski when
he was critical of Russia for its continued bombing and
killing of Ukrainian civilians, particularly since these negotiations have begun.
But I think his view of the world, his view
of the conflict echoes Putin well. Blaming NATO, he of
course also blames Presidents Obama and Biden, and then essentially
(03:07):
saying that Crimea has always been Russian, which of course
is not true. And then you know, repeating that the
Ukrainians will have to recognize the areas that Russia has
now occupied since the twenty two war began as belonging
to Russia.
Speaker 3 (03:26):
All right, so we've heard from the Secretary of State too.
I think about the President having to make or expected
maybe to kind of come to some conclusion this week
when it comes to I guess US involvement in the
Russia Ukraine War. I don't know what are you expecting
to come next here, Angela.
Speaker 5 (03:46):
Yeah, it's interesting. The Financial Times just have a story
saying that Europeans are now increasingly worried that in fact,
President Trump will say, you know, this is too difficult,
I've tried, it's over, and he'll turn his attention to
something else. I think it's possible. The messages that we've heard,
both from President Trump himself and from Secretary Rubio do
(04:07):
indicate that some kind of decision is going to be
made this week. I don't know whether it's tied to
the first hundred days, but I think we just have
to keep remembering that there are two sets of negotiations
going on, and that even if President Trump says he's
not interested anymore in trying to end the war and
negotiate it's too hard, the restoration and improvement of US
(04:28):
Russian relations will probably go ahead, And of course that's
what Putin really wants.
Speaker 4 (04:33):
Well, explain that how is he leveraging Russia's invasion of
Ukraine to improve relations between the US and Russia.
Speaker 5 (04:43):
Well, I think that from the beginning, as soon as
President Trump was inaugurated the second time, he indicated that
he wanted to restore relations with Russia, that he wanted
to end the sanctions, that he wanted to work on
maybe another strategic nuclear arms agreement with President Putin. So
I think those things have always been separate in President
(05:04):
Trump's mind, and they've certainly been separate in President Putin's
mind and the people around him. Because even though Putin
has now announced, you know, a three day cease fire
from March eighth to March eleventh, I believe it is
we have no idea whether that will happen. But the
very next day, his foreign minister, in an interview with CBS,
(05:28):
repeated all the maximalist Russian demands, including international recognition of
the annexation of these four territories that Russia doesn't fully control.
So I think in both president's minds, these negotiations have
been separated, and it's quite possible that the US and
Russia can continue to improve ties, you know, restore the
(05:50):
personality embassy and things like that, maybe lift sanctions, go
into big business deals with Russia. Maybe, but that the
walk still go on and the message to the Europeans
from the US will be you have to take care
of this.
Speaker 3 (06:06):
Any outcome where President Putin gets to hold on to
the territory that he has taken over and is more
favorable to him, does that only embolden him going forward?
Speaker 5 (06:21):
Well, of course it does, because right now, as we
believe the negotiations stand, the Trump administration is willing to
say that Russia should only one should only recognize that
part of those four territories that Russia actually occupies, and
that the unoccupied parts of these four territories would still
be Ukrainian. And so you know that would certainly be
(06:47):
a mild gain for Ukraine.
Speaker 3 (06:48):
And what does embolded mean? Does it mean we've talked
with you about this before? Like, does it just mean
I don't know, in a year, two years, five years,
six months, he goes after some thing else. Potentially.
Speaker 6 (07:01):
Yeah.
Speaker 5 (07:02):
So let's say there's a ceasefire and it's more than
thirty days. I mean, the initial ceasefire that Zelensky has
agreed to would be for thirty days. Russia hasn't agreed
to that yet. But if there were a ceasefire for
thirty days, then we would have to see would Russia
then immediately start bombing again, or would the thirty day
(07:22):
cease fire lead to a more permanent cease fire, in
which case Russia might wait some time to attack again.
But the way that the Russians are talking at the
moment is that they still want to achieve their maximum goals,
which they can do right now. I mean when President
Trump said, well, it's already a concession that Russia hasn't
(07:44):
taken over all of Ukraine, That's exactly what they tried
to do in February of twenty twenty two when they couldn't.
So they might try that again later.
Speaker 4 (07:52):
On, doctor Sten before we let you go just thirty seconds.
You know, I ask you this every time and past
you repeatedly over the last three years as you've joined us.
Given what we know now, how do you see this
war ending?
Speaker 7 (08:05):
So?
Speaker 5 (08:05):
I think at the moment it still looks as if
it would end with some kind of territorial I mean
recognition by Ukraine that at least temporarily the territory that
Russia now occupies in Ukraine will remain with Russia. I
think you could have a cease fire again. Going back
to the North Korean South Korean example, but you would
(08:29):
have to have that very heavily policed with some forces,
and then you know it would be over for a while.
But I don't see at the moment this ending in
any way that one could be really sure that Russia
wouldn't attack again unless Ukraine joins NATO.
Speaker 3 (08:47):
Doctor Angelas stant Thinks Always Always, Senior fellow at the
Brookings Institution, former National Intelligence Officer for Russia and Eurasia
at the National Intelligence Council, author of the book Putins World.
Speaker 2 (09:00):
As you were listening to the Bloomberg Business Week podcast,
catch US Live weekday afternoons from two to five pm Eastern.
Listen on Apple CarPlay and the Android Auto with the
Bloomberg Business app, or watch US Live on YouTube.
Speaker 3 (09:16):
All Right, you know this already. We've been talking about it.
This week, marking the first one hundred days of President
trump second term, we covered it. Question is we want
to dig a little bit more into tim what comes next?
Speaker 4 (09:25):
The US Treasury Secretary Scott Besson and congressional Republicans will
meet to sketch out the plan for passing a multi
trillion dollar tax cut in the coming weeks. As polling
shows that voters largely disapprove of the White House's handling
of the economy. President Trump leighing in on taxes yesterday
as he was traveling back to Washington, DC.
Speaker 8 (09:43):
We're going to be taking in a tremendous amount of money.
Speaker 4 (09:47):
And we're going to make a lot of money, and we're.
Speaker 7 (09:48):
Going to cut.
Speaker 4 (09:49):
Taxes for the people of this cutting this possible.
Speaker 9 (09:52):
We'll do a complete tax cut, because I think the
daris will be enough to cut all of the income.
Speaker 4 (09:57):
Tax, enough to cut all of the income tax.
Speaker 3 (10:00):
I don't have to pay income tax anymore.
Speaker 4 (10:02):
I think Congress will have something to do with that.
Let's ask Nathan Dane.
Speaker 3 (10:06):
All right, let's bring him in. He's Bloomberg Intelligence senior
policy analyst, typically based in DC. Likely for us to
be here at Bloomberg headquarters in New York City all
income tax.
Speaker 9 (10:15):
No, I don't think it's going to happen, but you
are going to get There are going to be some
tax cuts in this bill.
Speaker 8 (10:20):
I mean, so what they're.
Speaker 9 (10:21):
Talking about is a five point three trillion dollar reconciliation bill.
There's about one point five trillion earmarked in therefore tax cuts. Primarily,
what we're thinking is no taxes on tips, no taxes
on overtime, and for you know, no taxes on Social Security.
Those are like the three main priorities. But there has
been this push by President Trump to try and lower
you know, other taxes for individuals that make less than
(10:42):
two hundred thousand dollars.
Speaker 8 (10:44):
That's what they're thinking. The idea here is that tariffs
are going to pay for it.
Speaker 9 (10:47):
And you know, all the analysis that we've done, all
the analysis that we've seen for other people do is
it's not exactly sure that money is ever going to
be there.
Speaker 8 (10:54):
So, you know, we.
Speaker 5 (10:56):
From Paris for the Tax correct and.
Speaker 9 (10:58):
So what we're telling our clients is that we've i
think as of right now, with specifics likely to come
out over the next couple of weeks, the more likely
scenario is you are going to see Congress pretty much
kick the can on a lot of these cuts. We
don't think there's going to be material cuts to snap Medicaid,
the Inflation Reduction Act, but what you are going to
see is most likely a very large deficit inducing bill
at the end of this which could be multiple trillion dollars.
(11:20):
Because it's much easier from the policy perspective to kick
the can of the issue down the road than it
is to take a bill or a vote that's going
to actually pull back benefits within the near time.
Speaker 3 (11:30):
Can I just say we've kicked the cans how far
the Cans and mars right at this point? I mean,
we just keep doing this and doing this well.
Speaker 9 (11:36):
And again that's the problem is is that you know,
for a lot of in both sides of the aisle,
it's both Democrats and Republicans. For them to actually take
a vote that actually claused back some provisions or entitlements
and so forth, it's extremely difficult. In fact, it was
reporting over the weekend that from some of the tax provisions,
let's talk about Medicaid and snap benefits. Rather than implementing
(11:57):
those cuts immediately, the thought now is that you would
implement it after the election, whether it's the midterm election
or even four years, and now implement.
Speaker 8 (12:04):
It after the Trump administration.
Speaker 9 (12:05):
So they understand, they being the Republicans, understand that this
is not a popular vote. We've seen Senator Josh Holly
from Missouri come out and say don't touch Medicaid. We've
seen the Chairman of the House Ad Committee, Glenn Thompson,
come out and say, look, we can't really touch snap
benefits outside of maybe just trying to combat waste and fraud.
So there's a lot of ideas out there, but at
the end of the day, it's much easier to kick
(12:26):
the can on the deficit than to do anything else.
Speaker 4 (12:28):
So do you think that indeed we will see tax
on tips taken away? So no tax in this next bill,
no taxes on tips, no taxes on social security, and
no taxes on overtime. Do you think that'll pass?
Speaker 9 (12:39):
I think that's like the idea. So what we're waiting
for is markups. So this week we have a couple
of markups from the Bloomberg client perspective, not the most.
If you're in the defense industry, you'll care, but for
the macro investor, not all that important. The big one
you're looking for is the House Ways and Means Committee,
probably going to be around in mid March, I'm sorry,
mid May, and that is the one that's going to
have a lot of these ideas in there.
Speaker 4 (13:00):
And what's the total there that would add up to?
What are some rough estimates on how much revenue the
government would lose out on as a result of not
taxing those things.
Speaker 8 (13:08):
So here's the interesting thing.
Speaker 9 (13:09):
So the Senate resolution and the House resolution had two
different They were the same at the top number, five
point three trillion dollar bill, but where it differs is
how are you going to cut in order to pay
for this one point five trillion.
Speaker 8 (13:21):
What the Senate did is they said, well.
Speaker 9 (13:23):
We're going to just as a floor cut four billions,
so with a B the House that we're going to
cut one point five trillion, so we'll have like for like.
But it's much easier to say that you're just going
to kick the can than it is to cut. So
that one point five trillion will most likely include some
form of no taxes on tips, no form on overtime.
We'll have to see what the estimates actually come out
to be. And for the New Yorkers in Connecticut and
(13:43):
New Jersey folks, the salt deduction most likely, we think
we'll go from around ten thousand dollars to the general
dealing in Washington right now is around twenty five to
thirty thousand.
Speaker 3 (13:51):
What do you think, Carol Better? Okay Better? Is this governing?
Is this governing for the people or is this just
governing to make sure I keep my job? So by
members of Congress.
Speaker 9 (14:03):
This is governing to avoid the filibuster and to do
something without the opposition party. And so this is how
President Obama got Obamacare through. This is how President Biden
got the Inflation Net Reduction Act through, and this is
how President Trump got Trump one point zero tax cuts through.
But using reconciliation, you have a majority vote in the House,
a majority vote in the Senate, you bypass the filibuster.
But the Cavia idea is that you should only be
(14:24):
able to do things that impact the budget. What the
Senate did is they said, you know what, the current
cost of these Trump era tax cuts of extending it
is effectively zero because it's current policy, that's something that
hasn't really worked in the past. They just said we're
going to do at this time and as a result,
the deficit now may go up significantly as a result
of this.
Speaker 8 (14:43):
But you know, we're also to.
Speaker 9 (14:44):
Our clients that there are a lot of deficit hawks
out there that wouldn't be going for this. But we
think President Trump ultimately would use his political capital to
get those Republicans on.
Speaker 4 (14:52):
Board, meaning sign this, go with me, or you're getting primary.
Speaker 9 (14:56):
Exactly and you march down to Capitol Hill, look them
in the eye and say, are you're going to do
real my plan?
Speaker 1 (15:01):
Yeah?
Speaker 4 (15:01):
And look, Jordan Favian was talking about this earlier, Carol.
He only has so much political capital at this point,
especially with some of the poll numbers coming in that
we've seen.
Speaker 3 (15:10):
Is that exactly Is that good enough, Nathan to keep
the Republicans come the mid terms?
Speaker 9 (15:14):
Well, I would just say here, what's the ultimate goal
for the Republicans in this package, and that is to
ensure that individual taxes don't go up.
Speaker 8 (15:21):
At the end of the year. Right now, they're trying
for a permanent.
Speaker 9 (15:23):
Text cut, but nothing says that. If they can't come
up with a deal that maybe they say, you know,
instead of ten years or permanent, let's just do this
four years so that taxes would go up and under
the next administration, that brings the price tag lower and
then would make it much easier to pass a bill.
Speaker 3 (15:37):
Is it ever permanent?
Speaker 8 (15:38):
Well, it is for the corporate tax right, That's what
they did in the first one.
Speaker 5 (15:41):
Permanent.
Speaker 3 (15:42):
No other administration can come in or no other Congress
can come in and change it.
Speaker 9 (15:46):
Well, you can obviously change it if it's but it's
permanent and from the standpoint that there's no sunset provision.
Speaker 3 (15:50):
Okay, got it, got it, got it, got it. I
mean it's going to take legislative action to change it.
Speaker 4 (15:55):
When you have the pencil sharpened, when you have Excel open,
and you're going through these calculations, how do you think
about potentially the burden being eased on lower income Americans
with some of these provisions, but then potentially the inflationary
aspects of tariffs if those indeed remain in place. Because
the President says, hey, this is a revenue raiser for us.
(16:16):
We saw a lot of reports over the weekend about
companies starting to add a specific line item as a
result of an import tax and import duty. Does that
then hit those Americans who this would likely benefit?
Speaker 9 (16:27):
Yeah, you know, I just saw our restaurant analyst, Michael
Halen's downstairs, and you know, I was talking with a
bunch of our consumer.
Speaker 8 (16:32):
Analysts a few minutes ago.
Speaker 9 (16:33):
And the questions that we have from this package is
Commerce Secretary Howard likes to say that it's stimulating, but
if you're spending the bulk of this extending current policy,
where's the stimulus. So when it comes to retail in particular.
You know, there's a lot of our analysts are looking
at this and they're just saying, look, you know, you
know spending is still somewhat strong from now, but what
(16:55):
happens if we get supply chains and a few supply
chain shortages in a few weeks. There's a lot of
different questions here, but ultimately the question is can the
consumer to continue to spend as they're spending today And
a lot of our analysts aren't exactly sure that can happen.
Speaker 3 (17:08):
What do you hear from the investor base and you know,
various corporate base. You are a policy expert analyst in
terms of trying to figure out what the next I
don't know one hundred days or next six months are
for a Trump White House.
Speaker 9 (17:24):
So the first question is obviously on the tariffs. The
number one question we get is when are these exceptions
or when is President Trump going to quote unquote back
down on tariffs? And what we tell our clients is
is that, like, look, within the next three to four
weeks president Trump. Bloomberg News reported this over the weekend
that President Trump is going to announce deals within quote
three to four weeks, but Treasury Secretary Scott Bessont.
Speaker 8 (17:43):
Isn't going to wait that long.
Speaker 9 (17:44):
He's feeling the pressure, and so you are going to
see I think later this week or beginning of next
week quote unquote understandings or memor amums. I think essentially,
I think it's like three to four page bullet points
rather than an actual deal.
Speaker 8 (17:57):
So obviously that's goin too well.
Speaker 9 (17:59):
I don't know if I China, but you know, they're
negotiating with seventy countries, and the idea from the Treasury
Department that we've learned is that this isn't so much
of a US China negotiation, but rather you know, they've
been saying India potentially could be a first one in
South Korea Japan. So you have this tariff argument that's
going or this tariff debate that's taking place with I
don't want to say the ultimate answer, but at least
(18:20):
some more clarity. But then the Republicans on the House
are trying to get this tax extension bill. They want
to get it done by Memorial Day. We don't think
that can happen. I think it's going to happen during
my vacation in late July, but more likely than not
because the debt ceiling is included. I think they will
get it done before the mid July.
Speaker 4 (18:36):
I hope for your sake it doesn't happen on your vacation, Nick,
and I want to go back to something that you
said about stimulative effects or potential stimulative effects of this bill.
There's this narrative that has emerged in recent weeks, given
the challenges that the that analysts are saying the economy
faces as a result of this tariff policy, that there
needs to be some sort of stimulus to the economy,
(18:56):
and they're saying it's all about the tax bill. They're
using this as a way to say, Okay, we got
to get this tax bill through because that is what's
going to push the economy. You just spoke to the
folks on the retail side. Is that indeed the case?
Can it be stimulative in its current iteration?
Speaker 9 (19:10):
Well, I mean when you're essentially extending current policy, you know,
I think the stimulation from yesterday's taxes to tomorrow's taxes sorry,
tariffs and taxes. You know you're not going to see
much change in the current way of current taxes. Then
you're going to see this no taxes on tip, no
taxes and overtime. Potentially this like tax cut the President
Trump's talking about.
Speaker 8 (19:30):
Is that enough that really gets the market going?
Speaker 9 (19:33):
We're not exactly sure that's the case, but I will
say is is that, you know, Republicans, there's no other
option here if they don't pass this, they you know,
there's really no other bills out there that people are
talking about between now and the midterm elections that are
going to try and address this, even bills to try
and claw back authority from President Trump on tariffs. Just
the White House just this morning put out a veto
(19:54):
threat on a resolution that's going to come in the
Senate later this week.
Speaker 8 (19:56):
So this is it, Democrats. The Democrats are messaging for
twenty twenty six.
Speaker 9 (20:03):
Mean, they don't have the power at the moment, and
when you're the party in minority, you know you essentially
have to prepare for tomorrow.
Speaker 3 (20:09):
Unbelievable interesting times, no doubt about it. Nathan, so much,
so great to have you here in studio. Thank you,
thank you, do you appreciate it. Bloomberg Intelligence Senior policy
analyst Nathan Dean joining us.
Speaker 2 (20:21):
This is the Bloomberg Business Week Podcast. Listen live each
weekday starting a two pm Eastern up on Apple car
Play and the 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 4 (20:39):
President Trump promised Americans a quote boom like no other
if they elected in president, But based on the stock
market's performance during his first one hundred days in office,
it depends on what you mean by boom. Esha Day
writes about Trump's first one hundred days and the worst
stock slump in the first one hundred days in more
than fifty years. Asha's US Equities deputy team leader senior
(21:00):
reporter for Bloombergner. She joins us from New York. Give
us the numbers here, Kasha, what did you What does
boom mean in this case?
Speaker 7 (21:11):
And thanks for having me? So? Yeah, I mean the
boom was also a lot of volatility, which I guess
none of us who are watching markets day to day
can't really forget about. We're still kind of in the
midst of it. But let's look at the numbers, of course.
So SMP five hundred as of today's close, which was
ten minutes back, is down about eight percent, just shy
(21:32):
of eight percent since Jan. Twenty eighth, which was an
inauguration day for Donald Trump. Now, Trump's one hundred day
would be April twenty ninth, So by April thirtieth, which
is like the end of this month, he would have
completed like one hundred days of his administration. So we
have like one or two more sessions to go to
(21:53):
kind of see where this record lands. But right now,
this is the worst decline for the SIMP five hundred
in a precedent's first hundred day since Gerald Ford was
president in nineteen seventy four. So yeah, I mean, we
all remember what a tumultuous time that was for American
politics at that point.
Speaker 5 (22:14):
This is ti.
Speaker 7 (22:14):
Multious too, so you know, it's a long time and
also not a very good comparison to look at.
Speaker 5 (22:20):
So there's that when.
Speaker 3 (22:22):
You look at and you drill down into sectors and
so on, Right, what else do you see and how
broad based all the selling was.
Speaker 7 (22:31):
Selling was very broad based, But the biggest declines that
came since Jan. Twenty eight came from the two most
expensively valued sectors as well, and also the two sectors
that house most of the megacap like the top seven names,
the ones we call the magnificent seven, right, So that's
(22:52):
the technology sector within the sent five hundred and the
consumer discretionary sectors. These had the biggest declines as sectors
over these almost one hundred days. And then when we
look into stocks, we really kind of see a lot
of these stocks that took like the biggest beatings are
the ones that will be in the forefront of this
(23:13):
kind of higher tariff regimes. And if the tariffs that
have been proposed by these administration they stick around, we
would be seeing the highest tariffs on these trading partners
since over the past hundred years. So that that's a
big hit, and that kind of explains why these names
are taking such a head. So for example, you know
Deckers Outdoors, this is a footwear maker, is one of
(23:35):
the biggest stickliners Bugs.
Speaker 4 (23:38):
Those are the companies that they have.
Speaker 7 (23:40):
That's correct, That's correct. I mean it's almost a household name, right,
like we all know these brands. Then there are chip makers.
Chip makers you know, show up very widely. These of
course are not household names. So these are again and
almost like the front line of this stariff war. Chip making,
the semi conductor sector really is a globally spread supply chain,
(24:02):
just as autos, and these are going to be hit
very badly, and we have seen the shares kind of
starting to tell that story. Another group that did pretty
badly is the travel group. And that makes sense, right, like,
if there's concern about the economy, if there's concerns about
economy growth, people are unsure about spending. That's kind of
the discretionary spending that gets hit travel and leisure. So
(24:25):
all the big airline names, the legacy airline names, the
United Deltas, and the American airlines of the world. They
have come out, they're reported results already for the first quarter,
and the outlooks have been very money to say the least.
Or the other big group within the travel sector that
took a big hits are the cruise liners. Again a
really classic example of that kind of discretionary spending that
(24:48):
can be really impacted when consumers are feeling unsure.
Speaker 4 (24:52):
And unsteady interested in sort of how you're thinking about
what companies have said thus far, at least about the outlook.
Carol mentioned this note from Gina mar n Adam's a
little earlier today, Esha, you know there are those out
there who say this is short term pain for a
stronger America longer term. That's what the administration would say
(25:12):
if a member of the administration we're sitting here right now,
is is that what you're hearing from companies that this
could be a minor speed bump or is this something
they're worried about something bigger.
Speaker 7 (25:24):
It's a great question, I think right now. The lack
of clarity is such that what we're hearing over and
over again from these companies is that we just have
no clue about what's coming next. And that was kind
of I would say. There is the outlook from United Airlines,
which reported early on in the first quarter reporting season,
(25:45):
where it came out with essentially two sets of outlook
for two different scenarios. So in case there's a recession,
this is what we expect to happen, and in case
there's no recession, this is how much we expect to earn.
That is something everybody's kind of pointing out too. And
seeing that that tells you that, oh, like they're completely
flying in the dark at this point.
Speaker 3 (26:06):
Hey, one thing I want to ask you, and this
is something like we were trying to get to with
Eric Wiener, who also follows the markets for us here
at Bloomberg. But I am just curious about positioning within
the market that whether it's equity positioning or fixing positioning,
like what it tells us about the psyche of investors
at this point, which might determine whether or not, you know,
(26:27):
they're ready to kind of change if the sentiment or
the narrative changes quickly.
Speaker 7 (26:35):
Yeah. No, that's a great question. So when we look
at positioning data, especially from the big banks who are
kind of sharing those numbers, what we are seeing, and
a doatcha bank every week puts out really good set
of stats on this, and they're still seeing that equity
positioning is really near the bottom of its range, which
is kind of typical for times of great uncertainties. At
(26:57):
the same time, you know, when we talk about positioning,
we really have to talk about all these kind of
sentiment surveys that are coming out and showing us over
and over again how investor sentiment has really turned extremely
bullish at this point and given this really low positioning
once some kind of certainty, and this is something when
I talk to my sources comes up over and over again.
Once there's some kind of certainty the bounce back in
(27:20):
the markets. There's enough clue from positioning to tell us
that the bounce back from the markets could be strong enough,
especially since both these things. Positioning is towards the bottom
and sentiment is just really kind of near rock bottom almost.
But then, what people really need, it's something solid, something
concrete to latch onto. This more kind of vague promises,
(27:44):
our ideas of agreements deals that is not going to
cut it at this point because money managers, institutional investors,
they've just seen it a lot, and they're absolutely not
willing to kind of buite the bullet at this point.
Speaker 3 (27:57):
Interesting, interesting, right, gets to kind of the center to
me and psyche out there. Esha, thanks so much, Esha Day.
She's US Equity's deputy team leader, senior reporter at Bloomberg News,
joining us right here in New York City. Now about
you let me drive?
Speaker 9 (28:12):
Oh no, no, no, no, this is not a toy.
Speaker 5 (28:17):
Please gravel ecuse I want to drive. It's a good question.
Speaker 1 (28:28):
This is the drive to the clothes punks a thing
well on Bloomberg Radio.
Speaker 4 (28:34):
What a trade today?
Speaker 3 (28:36):
I know?
Speaker 5 (28:37):
Are you feeling bored?
Speaker 4 (28:38):
I would never say I'm bored, Carol. What I will
say with the whiplash of the last three weeks. Yeah,
it's like this feels a little weird to me.
Speaker 3 (28:45):
It feels a little it feels like a calm before
the storm.
Speaker 5 (28:47):
Perhaps.
Speaker 3 (28:48):
Yeah, I don't know that that's going to be the case.
You doing a lot coming right now? Yeah, I mean,
super super interesting. Let's see what our drive to the
closed guest has to say. Great to have back with us,
Carol Schleife. She's investment strategist at BMO Family Office, joining
us from minneappleist Carol, Good to have you here. It
does feel a little quiet and subdued today, considering what
(29:09):
we've seen over the last month. What's you read here?
Speaker 6 (29:13):
It does feel no one really wants to take too
strong a stance coming into We've got big earnings, we've
got big data. It's sort of like peak week for
a lot of a lot of information, and it's nerve wracking,
I think for anyone to want to get a too
bold in front of that.
Speaker 4 (29:32):
I mean, I'm having a hard time understanding the next
catalyst here because we thought we'd get it with alphabet
last week. We got the jobs report coming up on Friday,
We've got earnings of slew of earnings. We got Microsoft,
we got Amazon, we got Apple coming in the next
couple of days. What do you see as the biggest catalyst, hopefully.
Speaker 6 (29:55):
Of a narrative change if we can get Congress really
focusing on and some of the more pro growth business
aspects of things and get movement there. It's going to
be difficult because investors are hanging on a lot of
these earnings reports hoping to get guidance from companies on
what they're doing relative to tariffs. But it's honestly, we're
(30:15):
not going to get that kind of clarity probably until
the next quarter of the following quarter, when we figure
out what they're doing. Because if you're a retailer right now,
you're trying to decide do I take the goods do
I take the chance that there might be big tariffs
on those goods coming in for the fall and Christmas,
because we're moving into those months where they have to
make those decisions, and so as investors, we're not necessarily
(30:38):
going to get clarity on that. Although I do think
it's positive that you're seeing a lot of companies either
suspend guns bring it down. It smells a lot like
it did in March of twenty twenty, when companies set
the bar very low. Then things stabilized and we were
able to move.
Speaker 5 (30:54):
Off of that.
Speaker 6 (30:54):
So I think the only sort of catalysts we're going
to get for markets in the very short term is
a narrative catalyst change. If Congress can can be back
in talking about you know, accelerated depreciation being reinstated, and
perhaps some credits for manufacturing construction, that if we can
(31:15):
get the narrative focused on that, that will help.
Speaker 3 (31:20):
But Carol's safe to say that it's hard to make
that investment bet on stable markets right until we get
more clarity. And so does that mean for investors are
putting not committing new money, taking existing money and putting
in in safer plays like what's going on? And I
understand investors invest for the long term, but it's got
(31:42):
to be a little startling to see what's happened over
the last month.
Speaker 6 (31:45):
I think the piece of it is is we've been
trying for years to get people to invest in globally
diversified portfolios, and so I think part of it is
refocusing on that. Let's look outside the United States and
poke around at some of the other areas, and fixed
income actually is held in Okay. There's been a lot
of nervousness about the tenure and extending extending out, but
(32:08):
it's actually most of the capital markets have behaved very
reasonably in here despite the volatility we've seen, and so
looking at those portfolios, rounding up where we might be underweight,
because you know, for years the only trade was to
invest in the US, and now while you're waiting for
some clarity there, maybe picking away at other things on
(32:29):
the fringes makes some sense.
Speaker 4 (32:31):
Like when you say fringes, what do.
Speaker 6 (32:32):
You mean, I just mean broader in terms of looking
at some of the you know, we've actually had play
participation in China, Japan for some China, I know is
very controversial, but you look at them as an investment opportunity.
You look at some of the non US markets where
(32:53):
a little we're more underweight than we would want to
be in Europe right now, but there's some places to
look there too, and so global funds as well, because
you know, the one thing you've seen is that if
you look at the All Country World Index, the US
used to be fifty five percent of it. For decades,
and then over the last number of years it's grown
(33:14):
to percent. You're back to rebalancing the world. So looking
at your portfolio and seeing if it's more aligned with
what global GDP is would be one way to take it.
Speaker 3 (33:27):
Do you think about longer term two in terms of
the US being more disconnected from the global economy, or
do you just think this is a moment of chaos
and that things will settle down and be more normal
quote unquote in terms of the US relationship to the world.
Speaker 6 (33:45):
I think this is where my long term optimist keeps
raising its head up. Having watched this for a very
long period of time, I have to, in my heart
of hearts, believe that in the long run, maybe that
the shine is off the US exceptionalism crown. I'm not
giving up on the US. It's a place to invest
because I do believe we've got the innovation. We'll figure
(34:05):
out a way to do things. And the interesting thing is,
is this near term cast for companies. It doesn't mean
they're standing still behind the scenes. They're monking a bunch
of different things, and once it gets some sort of clarity,
they're going to be quick off those starting blocks to
figure out how to participate in this because companies have
to grow. It's part and parcel of what we are.
They either have to grow for their shareholders, they have
(34:28):
to grow for their owners, or they have to grow
for their bankers. So, you know, one way, shape or form,
they have to figure this out. And we still have
a lot of innovation going on here. And if we
can get this figured out, where we pick key industries
we want to invest in and we start investing in them,
that's a pretty great long cicture too.
Speaker 4 (34:47):
You know, we've been taught, Carolyn. I've been talking a
lot about the US's place in the world, and just
in the last forty five seconds that we have with you,
when it comes to innovation, is there do you see
a risk, given what's happening in trade, that the US
sort of loses the mantle as this most innovative place.
Speaker 6 (35:06):
I do see a risk in that, and I see
a risk in what we're doing to hire ed and
interest in some of that. If we want to own
those industries, we need a whole infrastructure and ecosystem that
goes with those industries. So we have to be very
careful to make sure that we're not discouraging great young
people from coming here to innovate, and the government needs
(35:26):
to fund some of that, like they have all along,
or we wouldn't have iPhones, who wouldn't have GPS, We
wouldn't have all of what we had if it hadn't
been for the public private partnership. And there is a
risk there if we're not very careful.
Speaker 3 (35:38):
Interesting, Carol, Thank you so much. Carrol's Life, chief investment
strategist at BMO Family Office, joining us from Minneapolis, Minnesota.
Speaker 2 (35:49):
This is the Bloomberg Business Week Daily podcast, available on Apple, Spotify,
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