November 26, 2025 • 31 mins
Watch Carol and Tim LIVE every day on YouTube: http://bit.ly/3vTiACF.
As President Vladimir Putin’s war on Ukraine enters a fourth winter, Russians are having to come to grips with its growing impact on nearly every aspect of their daily lives.
Dozens of regions in central and southern Russia are now feeling the war’s proximity as drones and sometimes missiles hit energy sites and residential buildings. Air raid sirens wail almost every night, offering a constant — and very public — reminder of how the conflict is encroaching.
Beyond the front lines, the rest of Russia, Moscow included, has started to feel the economic toll. From households cutting back on food spending to struggling steel, mining and energy companies, the country’s economic engine is showing multiple fractures, and the earlier resilience spurred by massive fiscal stimulus and record energy revenues is being tested.
The degree of suffering is incomparable to that of Ukraine, and is in any case unlikely to prompt Putin to end the war, yet it underlines the ever-higher cost being extracted for his decision to launch the all-out invasion in February 2022.
The fallout is hitting just as the US applies pressure to curb oil and gas revenue flowing to Moscow as part of the Trump administration’s flurry of activity aimed at reaching a ceasefire. Momentum for a deal is growing, with talks shifting to Moscow and US-Russian negotiations known to have been working behind the scenes on a package that would give Kremlin the sanctions relief it wants.
Today's show features:
- Elise Giuliano, Senior Lecturer in Political Science at Columbia University, on whether the US can ultimately get Russia and Ukraine to agree to peace terms as US presidential envoy Steve Witkoff prepares to visit Moscow
- Bloomberg Economics US and Canada Economist Stuart Paul and Claudia Sahm, Chief Economist for New Century Advisors on Wednesday’s jobless data, the US consumer and the Federal Reserve Beige Book
- Bloomberg Boston Bureau Chief Brooke Sutherland on the latest earnings from Deere, and why its downbeat 2026 forecast is an indicator of broader economic uncertainty
- Max Wasserman, Founder and Senior Portfolio Manager of Miramar Capital, on potential concentration risk and over-reliance on AI and technology stocks for returns
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is Bloomberg business
Weekdaily 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
(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
While President Trump dispatched talk negotiators, including Special Envoy Steve Whitcoff,
for additional high level meetings with both Russia and Ukraine,
but said he would only be willing to meet the
leaders of those countries if talks yielded a so far
elusive pack to end the war, the President telling reporters
to Tim he had no deadline for an agreement.
Speaker 3 (00:49):
Yuri Ushakoff, an aid to Russian President Putin, said he
speaks often with Witcoff, but declined to comment on a
Bloomberg News report that US Envoy Witcoff advised the Kremlin
aid in October fourteen phone call on how Putin should
approach the issue of a peace plan with President Trump.
His guidance included suggestions on setting up a Trump Putin
call before Zelenski's White House visit later that week, and
(01:11):
using a recent Gaza agreement as a way in, the
President was asked about the reported conversation between Yuri Yushakov
and US Special Envoy Steve Witkoff last night on Air
Force One.
Speaker 4 (01:22):
That's a standard thing, you know, because he's going to
sell this to Ukraine. He's going to sell Ukraine to Russia.
That's what he's That's what a deal maker does. You
got to say, look, they want this. You've got to
convince him with this. You know, that's a very standard
form of negotiation. I haven't heard it, but I heard
it was standard negotiation. And I would imagine he's saying
(01:43):
the same thing to Ukraine because each party has to
give it.
Speaker 3 (01:47):
To That was President Trump last night on Air Force One.
Speaker 5 (01:51):
Well let it he back to talk about all of this.
Speaker 2 (01:54):
Elise Juliano she is senior lecturer in political science at
Columbia University, director of graduate studies at Columbia's Paraman Institute
for Russian, Eurasian and East European Studies, and director of
the Program on US Russian Relations. She is here in studio.
So great to have you back with US. Alease, So
I want to ask you this Bloomberg exclusive reporting on
(02:14):
the conversation between Steve Witkoff, specially envoy here in the
US for the president, and you're Yushikov, an ad Russian
President Putin? Is this standard form of negotiation? Is this
normal diplomacy, especially among non ally countries?
Speaker 6 (02:30):
Well, yes, President Trump used the word standard, But usually
what standard is that you talk to your ally when
you are trying to negotiate a ceasefire or an end
to a war involving your ally in Ukraine is the
US ally. But here, what it looks like is that
Witkoff actually in a way took Russia's side by telling
(02:51):
Russia that they should call Trump prior to the meeting
with Zelensky in the White House back in October. So
that looks like they're, you know, the the US is
choosing sides and choosing the wrong side, since it's Russia
that attacked Ukraine and Russia that has been an adversary
state of the US for many years now.
Speaker 3 (03:10):
So when you're reviewed, how does it affect peace negotiations?
Speaker 6 (03:14):
So it can be very dangerous when you have a
negotiator who doesn't understand the war or Russia or Ukraine.
And Witkof worked in real estate in New York and
so he seems to me conceptualizes this conflict as a
war over land or territory. And that's not necessarily a
crazy assumption. There are a lot of wars over land
(03:35):
or territory, but in this case it's wrong. This is
not Russia doesn't need the land or want the land.
What they want to do is destroy Ukrainian sovereignty. And
this is Putin's goal. It's been his goal since twenty
twenty two, and he continues, I believe to seek that goal.
So giving a little bit of land that this is what,
(03:57):
this is what Whitkough suggested that we can find to
get to a peace agreement by giving up some territory,
some land. It's not really what Russia is interested in.
Speaker 2 (04:06):
That is an important distinction because I think even we
say it's about Putin expanding a land grab, right. So
the difference is going back to the way uss are like,
what is it about really for President Putin? Well, why
is it that Ukraine makes them so frustrating that it
(04:27):
has its own independent nation?
Speaker 7 (04:29):
Right?
Speaker 6 (04:30):
So this takes a little bit more time to explain
than we have sorry, but I would I guess I
would say this is a whole thing est right, But
I would say two things we can sort of summarize
is that Number one, Putin wants Ukraine to still be
in the neighborhood of Russia and a close ally of Russia.
Speaker 5 (04:49):
And that means an.
Speaker 6 (04:50):
Authoritarian kind of oligarchic state. It doesn't mean a member
of the EU or YATEA or NATO or democracy or
an ally of the US. So keep the West out
of Ukraine is the fundamental goal of Russia.
Speaker 5 (05:05):
What is Putting so afraid of? Why is that so having.
Speaker 6 (05:08):
A large, powerful democracy on the border. And then there's
this personal element as well, personal oligarchic friends of Putin
who were expelled from positions of power in Ukraine over
the past few years, as well as this concept that
Ukrainians are not a nation, they're not a separate people,
(05:29):
and they don't deserve statehood. They are a little brother
Slavic little brothers of Russians. So this is why they're
kidnapping children and taking Ukrainian children and saying you're actually Russian.
Speaker 3 (05:41):
Does it make you think differently about the US relationship
with Russia.
Speaker 6 (05:46):
It has worsened the US relationship with Russia. It was
already an adversarial relationship, as I mentioned, but now it's
much much worse. We see Americans arrested and used as
just in trades that Russia as political prisoners. We see
lack of any kind of diplomacy with regard to other
(06:10):
countries in the world or other formerly common interests that
the US and Russia shared. So we seem to be
entering a kind of deep freeze in relations with Russia.
And it doesn't look like a kind of ceasefire peace
agreement is going to change some of those underlying issues.
Speaker 5 (06:26):
So, God, here we are in our fourth year on
this war. Remember when it broke out?
Speaker 2 (06:33):
So does it mean that this is a fight to
the bitter end? It feels kind of bitter if I
look at the devastation in Ukraine, people places, if you will,
So is a peace plan even possible?
Speaker 6 (06:47):
So I would say, you know, it's good that the
Trump administration is talking, But the goal of Ukraine and
the goal of the US initially was to kind of
find a ceasefire agreement and then take the time and
the real hard work of diplomacy to reach a peace agreement.
Speaker 5 (07:03):
A peace treaty.
Speaker 6 (07:04):
These aren't usually documents or agreements that are reached quickly,
so a ceasefire agreement would be wonderful. Ukrainians continue to suffer,
they continue to die. I was just talking to my
Ukrainian friend and she said that beyond not being able
to sleep at night because of the huge number of
drone and missile attacks that have increased this summer, she
sometimes can't go to the hospital for her medical care
(07:26):
because there's no hospitals closed and you never know when
it's open or closed. So there's this tragic human ongoing
human element. And there are reasons why both sides might
want to want a ceasefire at the present time. But
there's also this kind of intransigent position of Putin, which
is again the goal to undercut Ukrainian sovereignty and statehood.
(07:47):
And I don't think he's moved off that goal, because
I think he still believes he can make progress on
the battlefield.
Speaker 3 (07:53):
Well, if we think back to when this war started,
there were many observers who thought it would be over
within a week and Ukraine would have to seed to Russia.
Speaker 5 (08:01):
That did not.
Speaker 3 (08:01):
Happen, and we have no idea when it will end,
but just to in the last thirty forty seconds we
have with you, can you make a prediction on how
it could end and when it could actually end.
Speaker 6 (08:11):
Well, it's a war of attrition right now, and it's
a drone war, and it does look like Russia's slowly
making progress. But war is very unpredictable, and Russia is
facing a lot of economic problems due to Ukrainian drone
attacks on its energy and oil infrastructure. So both sides,
like I said, do have an interest maybe in bringing
(08:32):
it to a closer end, but I don't see that
happening within the next six months or year. I could
be wrong, you know, if things are unpredictable, And I
think it's good that the Trump administration is talking to
Ukraine and they're making progress on some issues. So they're
hammering out what aspects of a peace agreement Ukraine might
compromise on, and they likely will have to compromise on
(08:55):
some territory, but they cannot compromise on what Russia's is
asking for right now, because Russia could.
Speaker 2 (09:01):
I know already we're going to be coming back to you,
because I feel like I still have a million questions.
Speaker 5 (09:05):
Alis Juliana senior lecture at Columbia.
Speaker 3 (09:09):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (09:17):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us Live on YouTube.
Speaker 5 (09:31):
Hey, let's get to the fedbage book. It is out.
Speaker 2 (09:35):
It's a qualitative summer you know that what's going on
in the economy today based on info across the twelve
FED districts. It comes out approximately two weeks before FED
meeting and tim Yeah, last meeting is December tenth.
Speaker 3 (09:46):
Well, we're getting some headlines right now. Economic activity was
a little changed since the previous report according to most
of the twelve Federal Reserve districts, though two districts noted
a modest decline and one reported modest growth. Overall, consumer
spending declined further well. Higher end retail spending remained resilient.
On the labor market's employment declines slightly over the current period,
with around half of districts noting weaker labor demand. For more,
(10:10):
let's bring in Stuart Paul, He's bluer economics the US
and Canada economist. He joins us here in the studio. So, Stuart,
I thanks to you, I was able to go through
some of those page book headlines. But what sticks out
to you that the resilience spending among the higher income
consumers is notable, and then weaker labor demand or weaker
labor in the market is notable to me too.
Speaker 8 (10:29):
Yeah, So when I saw the line about resilience at
the upper end of the income distribution, of course I'm
thinking about this k shaped economy narrative that's so pervasive.
But when it comes to policy, we know that FOMC
members need to think about the economic aggregates. So then
when we scroll down to the labor market, seeing employment declining,
I think matters way more than resilience at the upper
(10:51):
end of the income distribution. So if we have both
spending in the aggregate declining, we have employment in the
aggregate declining in firms feeling as though they can only
pass through about twenty percent of higher input costs, which
we saw report in the Kansas City District, my favorite
district in the Beige Book. I think that again the
(11:12):
balance of risk is skewed towards the FED needing to
undergird the economy, maybe needing to take that additional rate
cut in December, and in fact, I think they're going
to deliver it.
Speaker 5 (11:21):
Does that say to you that the Fed has to
cut come December.
Speaker 8 (11:23):
I don't think that the Beige Book is a deciding factor.
But I think when we see the unemployment rate rising
in the September report, when we see employment declining through
early November, Yeah, which is what the Beige Books survey
period includes. When we have those factors front of mind
for policymakers, I think that it's enough to get that got.
Speaker 6 (11:46):
Yeah.
Speaker 2 (11:46):
I'm seeing things kind of hitting on both the dual
mandate that maybe things need to be addressed.
Speaker 8 (11:51):
Yeah, it's stricty. The Fed, we know, is not rushing
to move into accommodate of territory. And when we see
the Beige Book citing price is rising moderately during the
report period, including input cost pressures that are widespread among manufacturers, retailers,
and when those are related to tariff induced increases in
(12:12):
input costs, it's no surprise that the FED is trying
to maintain this balance as best as a cat clodius.
Speaker 2 (12:17):
I'm also with us chief Economists for New Century Advisors.
She's one of the best known economists in the world
thanks to her research he's done on recessions. We talk
about Tom always talks about it, Tom Keane, the Saw Rule,
but what we all do here at Bloomberg and what
it tells us about the US economy. She's with us
from Washington, d C. Stuart's going to stay with us. Hey, Clauda,
you two have had.
Speaker 5 (12:37):
Maybe a few minutes.
Speaker 2 (12:38):
We hope to go out with the Beige Book. You've
been listening also to Stuart Paul. What jemes out for
you and what it says about the US economy and
where you think we are in the US economy.
Speaker 9 (12:50):
Right?
Speaker 10 (12:51):
Well, I think the Beige Book was going to be
an important input to this discussion of like how resilient
is demand because we've seen, you know, we don't have
our complete picture numbers, like they're not going to get
a GDP estimate even for the third quarter before they
meet in December. So the Beige Book is comprehensive. It's qualitative,
but it's structured, and it does give us a flavor
across lots of sectors across the country. So I think
(13:14):
it is interesting that you know, there's a highlight of
the idea that the resiliency that we're seeing in some
of the aggregates is being driven by higher income consumers.
That does you know, the FED acts on like the
country as a whole, Like their mandate is a national
kind of an aggregate mandate. But it really is important
for them to understand like if there's broad based strength
(13:34):
that that says a lot more than if it's just
you know, one part of the economy is kind of
holding things up. That's a much riskier place, even in
when you're seeing good demand.
Speaker 3 (13:42):
So does Quaudia, does anything in the Beige Book today
change your view or change how the FED should be
looking at its meeting on December tenth.
Speaker 10 (13:50):
So there you know, of all the data that they're
going to have in hand in the Beige Book with
certainly something you know that that goes into that into
that calculus. There's really not anything that's going to settle
an argument.
Speaker 7 (14:03):
Right.
Speaker 10 (14:04):
The employment report was mixed.
Speaker 5 (14:06):
I mean you can and.
Speaker 10 (14:07):
I think in particular for even the people, say Boston
FED President Susan Collins, who's one that sounds like she's
probably not in favor of a cut in December. It's
more of this issue. She just doesn't see the urgency,
she doesn't see the deterioration. And we do know there
is a whole you know, burst of data that got
delayed because of the shutdown that the federal get before
(14:28):
their January meeting. So I think there is a really
there is a reasonable case of like, why not just
wait until January. That's not my that's not what I
would do if I were them, But I can completely
see her perspective, and I would be very hard pressed,
I think, to win someone like her over to cutting
in December.
Speaker 8 (14:46):
Now, doctor Salm, I think they're right. It might be
difficult to win over Boston FED President Susan Collins. I'm
glad that you brought her up. One of the most
valuable things, of course about the Beige Book is that
we can see economic activity by district, and in this
Beige Book we see activity in Boston expanding slightly. Of course,
I mentioned earlier in the program. I like to scroll
down to the Beige Book right to Kansas City, because
(15:08):
that's of course home of Kansas City FED President Jeffrey Schmid,
the dissenter in October, who is in favor of a
rate hold during the October meeting. In this Beige book,
we're seeing Kansas City economic activity slowing. We're seeing growth
slowing during the survey window with softer labor market conditions.
(15:29):
So I'm wondering, you know, when you tally up the votes,
where do you end up thinking everything is going to
shake out when it comes to December.
Speaker 10 (15:39):
So I expect that we'll see a divided FED it
come December. I my, you know, I don't think things
are a done deal at this point. I suspect there
probably will be a cut in December, and may be
the last cut that we see from the Powell Fed. Right,
So just cause you get in December doesn't mean we're
like opening the you know, the gates for a whole
set of cuts.
Speaker 5 (15:59):
But but I think.
Speaker 10 (16:01):
We're going to we are in all likelihood going to
see more descents, four descents, maybe five descents, which has
not happened in quite some time with the Fed. I
don't think that's a sign of a problem. I think
it's a sign of like they're legitimately are reasons for
the FED to be conflicted. Inflation is still well above
two percent, has been for years. There are still price pressures.
(16:23):
The basebook talks about those costs that are still out
there with businesses that could end up coming to consumers.
And we have a labor market that, while it's slow,
there's some signs of faltering, it's not going over a
cliff at the moment.
Speaker 5 (16:35):
Yeah right, So, like I think there's a reason.
Speaker 10 (16:37):
For them to disagree. It's a sign of like they're
really serious about their job and they're thinking hard about
a tough problem.
Speaker 2 (16:42):
I want to go to Trade and Tariff's in a moment,
but I just want to follow up with you, Claudia.
You said this could be the last cut of Fetcher J.
Powell's tenure. That tenure expires May twenty twenty six. I'm
looking at twenty twenty six FED meetings and we have
got three meetings January, March April. Are you saying that
we wouldn't ge any more cuts because of the debate
(17:02):
or because the economy won't.
Speaker 5 (17:04):
Need it.
Speaker 10 (17:06):
So inflation is elevated, Yeah, right, And I think it's
probably going to be until the middle of the year
before we really see inflation kind of turned down. The
tariffs work their way through before we can, you know,
really point to data and be like, look, it's going
back to two percent, right, So it's going to take
some time for that to work through. And the FED,
when inflation is elevated, they're going to want to be
(17:28):
putting some restriction on the economy, right, So every cut
they do takes a little bit more restriction out and
we can argue till the cows come home about what
the quote unquote neutral rate is. But you know, if
you're cutting, you're getting closer to it. So every cut
is going to be harder to negotiate with inflation still elevated.
And so I think that's where you could you know,
(17:50):
get to a place where it just if inflation is
still high unless you see clear deterioration in the labor market,
which I very much hope we do not see because
that would be very bad.
Speaker 5 (17:59):
But like that could be.
Speaker 10 (18:00):
A game changer in it. But if we continued this
kind of muddle through, they really could do a pause
for some time, and you know, I think and that
could be a put because again, inflation is it has
been sticky above two percent.
Speaker 3 (18:13):
Blady, you mentioned price pressures and tear. The word tariff
in the Beige Book appears forty seven times. Most of
them or many of them in the prices section are
are how far into the economy or into these numbers
have tariffs made their way?
Speaker 4 (18:30):
Like?
Speaker 3 (18:30):
Have we seen the full effect of them yet? Are
we seeing half of the effect of them right now?
Can you measure that?
Speaker 10 (18:37):
I mean, there's absolutely a cottage industry out there of
different estimates of the past through of teriffs. I mean,
don't you know we don't see them on the price tags,
right We can't just measure them. These are all estimates,
and you know, frankly, it has been surprising how slowly
some of these tariff effects have shown up. I mean,
it is pretty clear goods price inflation really picked up
this year after having you know, come down quite a bit.
(18:59):
So I think we can look at the data and say,
tariffs are in there. They are moving prices up for consumers,
maybe not as much as we'd expected.
Speaker 5 (19:06):
I think there is this.
Speaker 10 (19:06):
Concern that you hear from the hawks, which is a
reasonable concern that you know, say, the economy where to
pick up next year, particularly you know, all the tax
refunds come out, and maybe you know, some of the
uncertainties wane if we have you know, more robust demand
that may be the opportunity businesses have to pass those
costs through that they're still sitting on. Right, There is
this interaction between the demand environment and kind of how
(19:29):
the cost pressures show up in inflation. So the fact
that there's still kind of sitting with businesses, it does
kind of raise some concerns about, you know, eventually consumers
pay these kind of things.
Speaker 5 (19:40):
Yeah, there's for so long.
Speaker 2 (19:41):
Le's that I hey, both of you st it Clauda
Sittip for a second, because you mentioned we're talking r
centerate and I want to bring in Brooks Southerland and
Bloomberg News Boston bureau chiefs. Hes also writer for the
Bloomberg Industrial Strength newsletter, because I want to talk about
deer which is down almost five percent today's session. It's
the world's biggest farm machinery maker week forecast for the year,
(20:02):
and part of that is because of the US farm economy.
There's a lot of uncertainty over the impact of tariffs
and trade deals, and so we're seeing that play out
in Deer Brook. What do we need to know specifically,
you know, when it comes to Deer, always company specific info,
but also the commentary broad more broadly about tariffs and
trade on an impact on a company like Deer.
Speaker 9 (20:23):
Sure. I mean, I think the good news is that
Deer is calling for a bottom in the large agriculture
equipment market next year. But the bad news is that,
you know, you're still looking at declines in that business
and for the industry overall, and I think that just
reflects you know, while there is some optimism that China
resumes agricultural purchases from the US in greater volumes than
(20:46):
it has been lately, it's not very clear exactly what
that looks like. And you know, there's a lot of
ambiguity around that trade framework that the US and China
struck and what that will ultimately mean for US farmers.
There's been a lot of talk about an aid package
from the Trump administration for US farmers, but it is
again not exactly clear what that would amount to, and
(21:08):
you know, whether or not it would be you know,
enough to really help farmers get through this period, or
fits it being more sort of a temporary band aid.
And so I think there's just a lot of uncertainty.
There's a lot of you know, Deer itself is still
working through tariffs, and you know, picking up on what
Claudia was saying, I mean, it is difficult to pass
on those price increases at a time when you're seeing
(21:28):
a period of weak demand for Deer's equipment, and so
I think, you know, going into next year, one thing
that investors are really going to be watching is Deer's
margins and its ability to protect that profitability even if
you don't see a really significant demand resurgence.
Speaker 3 (21:42):
Brook briefly, is the Deer story idiosyncratic or is it?
Or can we extrapolate it as some sort of bell
weather for industrials or the I think.
Speaker 9 (21:51):
If you look at the broader industrial economy, it's really
two stories. So you have the companies that are supplying
the AI data center boom and that things like electrical
equipment and certain types of HVAC equipment, and then you
have pretty much everything else, and everything else has been
in a downturn for really a very extended period. I mean,
(22:12):
if you look at the ISM manufacturing index, I mean,
I think this is the longest period of week demand
you know that we've seen ever, and it's tariffs have
really prolonged this where investors we're looking for recovery there
this year and that has not played out largely just
as companies work through these higher costs. But you're seeing
a lot of reticence in terms of CAPEX spending outside
(22:35):
of the AI data center boom, just because companies aren't
sure what the grounds are, they don't know what things cost,
they don't know where where to spend the money, and
so you're really seeing that hesitancy elsewhere in the industrial sector.
Speaker 5 (22:46):
All right, I always appreciate it.
Speaker 2 (22:47):
Our Boston Bureau chief, Brook Sutherland, follows the industrial space,
So well, Brook, have a good Thanksgiving. I want to
wrap up with Stewart and Claudia. Claudia to you, you know,
just listening to what Brooke had to say, do you
feel like there's more clarity about the US economy at
this point or is there still a lot of things,
whether it's from the White House or elsewhere that could
come at us And just got about forty five seconds.
Speaker 10 (23:11):
I think broadly there is more clarity than say, back
in April. I mean, we've you know, really weathered several
storms in terms of rapidly changing policy landscape, and yet
things are still really uncertain. I mean, you have a
Supreme Court that is going to rule on many of
those tariffs that we are just talking about. We have
a Supreme Court that's going to rule on the ability
(23:32):
of the President to take remove a FED governor. So like,
there are some still some major question marks out there
that could have big implications for what next year looks like.
Speaker 5 (23:42):
And forty five seconds for you too, Stu, I think.
Speaker 8 (23:45):
There's a lot of uncertainty right now out there in
the broader economy. I think that the downside risks to
the economy are mostly posed by things like tariff's remaining
in place, a lot of the policy decisions that we're
likely to see, and a lot of the policy outcomes
that were likely to see over the next year or so. Actually,
I think skew risk to the upside. So where the
(24:06):
uncertainty lies is in whether the current condition can remain
and I think that the actual uncertainty skews risk toward
an even larger expansion.
Speaker 5 (24:16):
All right, So we'll just take a shot for every
time we're here on certainty this Thanksgiving holiday, because like
that's the watch word.
Speaker 2 (24:21):
You guys are amazing Pluitter Bloomberg Economics US and Canada economist.
Speaker 5 (24:25):
Stewart Paul Claudia salm.
Speaker 2 (24:26):
Thank you chief economists for New Century Advisors, so appreciate it.
Speaker 3 (24:31):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (24:39):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Apple Karplay and Android Auto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 3 (24:53):
Markets right now, as we do get a bitch about
ten minutes away from the close of equity trading here,
the S and P still up eight tens of one percent,
the Nastack composite down, I mean up rather a full
percentage point. We can round that up. The dall ups
seven tons of one percent. It's a pretty broad based rally.
Three hundred and ninety eight stocks in the S and
P moving higher, one hundred and five moving lower. But Carol,
it's less broad based than it was earlier in the session.
Speaker 2 (25:15):
Yeah, absolutely, We've just seen kind of markets take a
little bit of a leg down. It could be people
squaring their positions ahead of the Thanksgiving holiday. You know,
markets are open on Friday, shortened holiday trading session on
Friday for both the equity and the bond markets. But
you know, there's some people who want to be a
long weekend, so maybe they're just kind of making some
(25:35):
moves ahead of that. Let's see what Max Wasserman has
to say though about the environment. He's founder and senior
portfolio manager of Mira Mare Capital. The firm has about
five hundred and fifty million dollars in assets under management.
He joins us from Northbrook, Illinois. Hey, Max, good to
have you back with us.
Speaker 7 (25:53):
Thank you so much.
Speaker 5 (25:54):
Yeah, great to have you here.
Speaker 2 (25:55):
I want to just jump to it because you guys
do have some major investments in Microsoft, Alphabet broad Com.
You know the question about the AI spend this week,
Alphabet getting a real boost if you will.
Speaker 5 (26:08):
That stock's been on a.
Speaker 3 (26:09):
Tear fifteen percent just since the thirteenth of the month.
Speaker 5 (26:13):
Yeah, roughly seventy percent this year.
Speaker 2 (26:15):
You know, people wondering whether and Video needs to be
worried because of alphabets. All of a sudden, it seems
like they're making progress in a big way in AI
and they have their own.
Speaker 5 (26:24):
Chips out there. How do you see it? How do
you see these names? Is it a buy seller? Hold here?
Speaker 7 (26:31):
Well, again, thanks for having me on. We have one
of our largest investments now is Alphabet. We've been buying
it for the past year, and we just thought the
stock was being left behind high quality tech stock. I'm
doing all the right things, but just nobody wanted it.
Everybody wanted in the videos, they wanted the Microsoft's, the broadcoms.
They just left it alone and everybody jumped on the
(26:52):
other bandwagon. Now it's rotated, so now people see it,
and they ran this price up dramatically in the last
few weeks, as you mentioned, and right now, I don't
think you can chase these stocks. I think you have
to give them room because if the FED did not
raise interest rates, or the FED one of the chairman's
didn't say they think cutting this would be looking at
a different market. So much liquidity is being needed in
(27:15):
the marketplace that if you get a hiccup in liquidity,
these stocks are going to take a hit. I mean,
you've seen how the attitude can change on an Oracle
you see in it a little bit in the video.
So while these are great companies, the valuations do not
give you a lot of room. On the downside here.
Speaker 3 (27:32):
You know, you have some other other companies that you've
highlighted that are not in tech that I'm eager to
hear from you. On home Depot and McDonald's are companies
that you like.
Speaker 7 (27:42):
Why, Well, I mean, look, let's look at the fact
that we believe that the FED will end up cutting
probably anywhere from twenty five to seventy five basis points
more by next summer. I mean you're looking.
Speaker 3 (27:54):
Wait by next summer. So FED chair jpl is out
in May. Which of those happen? Which of those happen
under his tenure?
Speaker 7 (28:01):
I think you're going to get at least twenty five
to fifty under his tenure.
Speaker 3 (28:05):
Who was on our earlier Kara, was it Claudia Sam? Yeah,
he said yeah, maybe, well this is the last cut under.
Speaker 5 (28:12):
Jay Powell, under Ja Powell. Yeah, and ok, just more meetings.
Speaker 3 (28:15):
We've got a good discussion to share about this, Max.
So it's been like, you know, that's why I want
to It's.
Speaker 7 (28:19):
A calable good. But that's okay. I mean we look
at it this way. I mean, the consumer right now
is tapped. Credit card debt is very high, and actually
even margin debt. If you look at margin debt right now,
it's at one point one trillion, which is double it
was five years ago. And almost four times it was
ten years ago. So you have margin debt high, consumer
debt is high. You're starting to see layoffs take place.
(28:41):
You know, corporations are calling it right sizing now, but
you're seeing a lot of white collar jobs are being
hit in the technology market. So we see the market
slowing down and the pressure to keep job growth going
and liquidity for this market I think is going to
force him. I'm not saying we think they should. We
just believe they will because right now, I think the
Fed's going to have to end up backstopping this market
(29:03):
with liquidity just because of the margin and the heavy
debt that's being out there. So I think they will
cut whether they should against another issue, and I think
coming into a Trump new pointy, you know he likes debt,
he likes lower interest rates. So there's no reason to
believe that this market's not going to get more fuel.
Speaker 5 (29:22):
Could that be problematic? Could that be problematic?
Speaker 2 (29:25):
Because a problem the inflationary target is still above the
fed's two percent preferred rate. You increase liquidity in the system,
and you know, just the velocity increases and potentially could put.
Speaker 5 (29:37):
You know, more inflationary pressures out there. I think it could.
Speaker 7 (29:42):
I think you're right, But the FED has told you
right now it's less concerned about inflation, more concerned about
economic growth and jobs. So I think that's going to
they switch their language a little bit. So yes, I
think it could, but I think they're going to have
to flood this market with more if it slows down,
because the FED does not want a wealth of actually
go in the negative way. So while I think inflationary, yes,
(30:04):
I think it's a mistake, but I think they will.
So the reason we like a home deep owe in
of McDonald's is we think lower interest rates will help
these kind of stocks. And they're not trading at high
multiples right everybody's been getting away from it because of
the housing market. So if we're looking more than three
months out, I think they stand to benefit from that
consumer We'll going to be in a better shape with
lower interest rates. So that's why I think it will be.
(30:25):
But I think technology is playing itself out here. Great companies,
but valuations are high. So as for the Fed, we've
already known that every time the market has a problem,
the FED flinches and gives them low interest rates. The
difference now is not you have the FED doing that,
but you have a president who really is touting that,
So I think it's going to be inflationary. And I
think the real concern could be, what if the ten
(30:47):
year actually the yield curb gets you know, steeper, you know,
not inverted, but lower rates go low and then you
have the higher rates go higher. So maybe you get
a ten year at four and a half five percent
because of this, and I don't think the market's expecting that.
And technology stocks need a lot of liquidity to sustain
themselves at this level.
Speaker 2 (31:07):
All right, We're going to leave it on that note. Hey, Max,
thank you so much. Happy Thanksgiving, Max Wasserman. He's founder
and senior portfolio manager of mer Mar Capital, joining us
on this Wednesday.
Speaker 1 (31:18):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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(31:39):
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(00:23):
as it happens. The Bloomberg Business Week Daily Podcast with
Carol Masser and Tim Stenebeck on Bloomberg Radio.
Speaker 2 (00:32):
While President Trump dispatched talk negotiators, including Special Envoy Steve Whitcoff,
for additional high level meetings with both Russia and Ukraine,
but said he would only be willing to meet the
leaders of those countries if talks yielded a so far
elusive pack to end the war, the President telling reporters
to Tim he had no deadline for an agreement.
Speaker 3 (00:49):
Yuri Ushakoff, an aid to Russian President Putin, said he
speaks often with Witcoff, but declined to comment on a
Bloomberg News report that US Envoy Witcoff advised the Kremlin
aid in October fourteen phone call on how Putin should
approach the issue of a peace plan with President Trump.
His guidance included suggestions on setting up a Trump Putin
call before Zelenski's White House visit later that week, and
(01:11):
using a recent Gaza agreement as a way in, the
President was asked about the reported conversation between Yuri Yushakov
and US Special Envoy Steve Witkoff last night on Air
Force One.
Speaker 4 (01:22):
That's a standard thing, you know, because he's going to
sell this to Ukraine. He's going to sell Ukraine to Russia.
That's what he's That's what a deal maker does. You
got to say, look, they want this. You've got to
convince him with this. You know, that's a very standard
form of negotiation. I haven't heard it, but I heard
it was standard negotiation. And I would imagine he's saying
(01:43):
the same thing to Ukraine because each party has to
give it.
Speaker 3 (01:47):
To That was President Trump last night on Air Force One.
Speaker 5 (01:51):
Well let it he back to talk about all of this.
Speaker 2 (01:54):
Elise Juliano she is senior lecturer in political science at
Columbia University, director of graduate studies at Columbia's Paraman Institute
for Russian, Eurasian and East European Studies, and director of
the Program on US Russian Relations. She is here in studio.
So great to have you back with US. Alease, So
I want to ask you this Bloomberg exclusive reporting on
(02:14):
the conversation between Steve Witkoff, specially envoy here in the
US for the president, and you're Yushikov, an ad Russian
President Putin? Is this standard form of negotiation? Is this
normal diplomacy, especially among non ally countries?
Speaker 6 (02:30):
Well, yes, President Trump used the word standard, But usually
what standard is that you talk to your ally when
you are trying to negotiate a ceasefire or an end
to a war involving your ally in Ukraine is the
US ally. But here, what it looks like is that
Witkoff actually in a way took Russia's side by telling
(02:51):
Russia that they should call Trump prior to the meeting
with Zelensky in the White House back in October. So
that looks like they're, you know, the the US is
choosing sides and choosing the wrong side, since it's Russia
that attacked Ukraine and Russia that has been an adversary
state of the US for many years now.
Speaker 3 (03:10):
So when you're reviewed, how does it affect peace negotiations?
Speaker 6 (03:14):
So it can be very dangerous when you have a
negotiator who doesn't understand the war or Russia or Ukraine.
And Witkof worked in real estate in New York and
so he seems to me conceptualizes this conflict as a
war over land or territory. And that's not necessarily a
crazy assumption. There are a lot of wars over land
(03:35):
or territory, but in this case it's wrong. This is
not Russia doesn't need the land or want the land.
What they want to do is destroy Ukrainian sovereignty. And
this is Putin's goal. It's been his goal since twenty
twenty two, and he continues, I believe to seek that goal.
So giving a little bit of land that this is what,
(03:57):
this is what Whitkough suggested that we can find to
get to a peace agreement by giving up some territory,
some land. It's not really what Russia is interested in.
Speaker 2 (04:06):
That is an important distinction because I think even we
say it's about Putin expanding a land grab, right. So
the difference is going back to the way uss are like,
what is it about really for President Putin? Well, why
is it that Ukraine makes them so frustrating that it
(04:27):
has its own independent nation?
Speaker 7 (04:29):
Right?
Speaker 6 (04:30):
So this takes a little bit more time to explain
than we have sorry, but I would I guess I
would say this is a whole thing est right, But
I would say two things we can sort of summarize
is that Number one, Putin wants Ukraine to still be
in the neighborhood of Russia and a close ally of Russia.
Speaker 5 (04:49):
And that means an.
Speaker 6 (04:50):
Authoritarian kind of oligarchic state. It doesn't mean a member
of the EU or YATEA or NATO or democracy or
an ally of the US. So keep the West out
of Ukraine is the fundamental goal of Russia.
Speaker 5 (05:05):
What is Putting so afraid of? Why is that so having.
Speaker 6 (05:08):
A large, powerful democracy on the border. And then there's
this personal element as well, personal oligarchic friends of Putin
who were expelled from positions of power in Ukraine over
the past few years, as well as this concept that
Ukrainians are not a nation, they're not a separate people,
(05:29):
and they don't deserve statehood. They are a little brother
Slavic little brothers of Russians. So this is why they're
kidnapping children and taking Ukrainian children and saying you're actually Russian.
Speaker 3 (05:41):
Does it make you think differently about the US relationship
with Russia.
Speaker 6 (05:46):
It has worsened the US relationship with Russia. It was
already an adversarial relationship, as I mentioned, but now it's
much much worse. We see Americans arrested and used as
just in trades that Russia as political prisoners. We see
lack of any kind of diplomacy with regard to other
(06:10):
countries in the world or other formerly common interests that
the US and Russia shared. So we seem to be
entering a kind of deep freeze in relations with Russia.
And it doesn't look like a kind of ceasefire peace
agreement is going to change some of those underlying issues.
Speaker 5 (06:26):
So, God, here we are in our fourth year on
this war. Remember when it broke out?
Speaker 2 (06:33):
So does it mean that this is a fight to
the bitter end? It feels kind of bitter if I
look at the devastation in Ukraine, people places, if you will,
So is a peace plan even possible?
Speaker 6 (06:47):
So I would say, you know, it's good that the
Trump administration is talking, But the goal of Ukraine and
the goal of the US initially was to kind of
find a ceasefire agreement and then take the time and
the real hard work of diplomacy to reach a peace agreement.
Speaker 5 (07:03):
A peace treaty.
Speaker 6 (07:04):
These aren't usually documents or agreements that are reached quickly,
so a ceasefire agreement would be wonderful. Ukrainians continue to suffer,
they continue to die. I was just talking to my
Ukrainian friend and she said that beyond not being able
to sleep at night because of the huge number of
drone and missile attacks that have increased this summer, she
sometimes can't go to the hospital for her medical care
(07:26):
because there's no hospitals closed and you never know when
it's open or closed. So there's this tragic human ongoing
human element. And there are reasons why both sides might
want to want a ceasefire at the present time. But
there's also this kind of intransigent position of Putin, which
is again the goal to undercut Ukrainian sovereignty and statehood.
(07:47):
And I don't think he's moved off that goal, because
I think he still believes he can make progress on
the battlefield.
Speaker 3 (07:53):
Well, if we think back to when this war started,
there were many observers who thought it would be over
within a week and Ukraine would have to seed to Russia.
Speaker 5 (08:01):
That did not.
Speaker 3 (08:01):
Happen, and we have no idea when it will end,
but just to in the last thirty forty seconds we
have with you, can you make a prediction on how
it could end and when it could actually end.
Speaker 6 (08:11):
Well, it's a war of attrition right now, and it's
a drone war, and it does look like Russia's slowly
making progress. But war is very unpredictable, and Russia is
facing a lot of economic problems due to Ukrainian drone
attacks on its energy and oil infrastructure. So both sides,
like I said, do have an interest maybe in bringing
(08:32):
it to a closer end, but I don't see that
happening within the next six months or year. I could
be wrong, you know, if things are unpredictable, And I
think it's good that the Trump administration is talking to
Ukraine and they're making progress on some issues. So they're
hammering out what aspects of a peace agreement Ukraine might
compromise on, and they likely will have to compromise on
(08:55):
some territory, but they cannot compromise on what Russia's is
asking for right now, because Russia could.
Speaker 2 (09:01):
I know already we're going to be coming back to you,
because I feel like I still have a million questions.
Speaker 5 (09:05):
Alis Juliana senior lecture at Columbia.
Speaker 3 (09:09):
Stay with us more from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (09:17):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Applecarplay and Android Auto with the Bloomberg Business app,
or watch us Live on YouTube.
Speaker 5 (09:31):
Hey, let's get to the fedbage book. It is out.
Speaker 2 (09:35):
It's a qualitative summer you know that what's going on
in the economy today based on info across the twelve
FED districts. It comes out approximately two weeks before FED
meeting and tim Yeah, last meeting is December tenth.
Speaker 3 (09:46):
Well, we're getting some headlines right now. Economic activity was
a little changed since the previous report according to most
of the twelve Federal Reserve districts, though two districts noted
a modest decline and one reported modest growth. Overall, consumer
spending declined further well. Higher end retail spending remained resilient.
On the labor market's employment declines slightly over the current period,
with around half of districts noting weaker labor demand. For more,
(10:10):
let's bring in Stuart Paul, He's bluer economics the US
and Canada economist. He joins us here in the studio. So, Stuart,
I thanks to you, I was able to go through
some of those page book headlines. But what sticks out
to you that the resilience spending among the higher income
consumers is notable, and then weaker labor demand or weaker
labor in the market is notable to me too.
Speaker 8 (10:29):
Yeah, So when I saw the line about resilience at
the upper end of the income distribution, of course I'm
thinking about this k shaped economy narrative that's so pervasive.
But when it comes to policy, we know that FOMC
members need to think about the economic aggregates. So then
when we scroll down to the labor market, seeing employment declining,
I think matters way more than resilience at the upper
(10:51):
end of the income distribution. So if we have both
spending in the aggregate declining, we have employment in the
aggregate declining in firms feeling as though they can only
pass through about twenty percent of higher input costs, which
we saw report in the Kansas City District, my favorite
district in the Beige Book. I think that again the
(11:12):
balance of risk is skewed towards the FED needing to
undergird the economy, maybe needing to take that additional rate
cut in December, and in fact, I think they're going
to deliver it.
Speaker 5 (11:21):
Does that say to you that the Fed has to
cut come December.
Speaker 8 (11:23):
I don't think that the Beige Book is a deciding factor.
But I think when we see the unemployment rate rising
in the September report, when we see employment declining through
early November, Yeah, which is what the Beige Books survey
period includes. When we have those factors front of mind
for policymakers, I think that it's enough to get that got.
Speaker 6 (11:46):
Yeah.
Speaker 2 (11:46):
I'm seeing things kind of hitting on both the dual
mandate that maybe things need to be addressed.
Speaker 8 (11:51):
Yeah, it's stricty. The Fed, we know, is not rushing
to move into accommodate of territory. And when we see
the Beige Book citing price is rising moderately during the
report period, including input cost pressures that are widespread among manufacturers, retailers,
and when those are related to tariff induced increases in
(12:12):
input costs, it's no surprise that the FED is trying
to maintain this balance as best as a cat clodius.
Speaker 2 (12:17):
I'm also with us chief Economists for New Century Advisors.
She's one of the best known economists in the world
thanks to her research he's done on recessions. We talk
about Tom always talks about it, Tom Keane, the Saw Rule,
but what we all do here at Bloomberg and what
it tells us about the US economy. She's with us
from Washington, d C. Stuart's going to stay with us. Hey, Clauda,
you two have had.
Speaker 5 (12:37):
Maybe a few minutes.
Speaker 2 (12:38):
We hope to go out with the Beige Book. You've
been listening also to Stuart Paul. What jemes out for
you and what it says about the US economy and
where you think we are in the US economy.
Speaker 9 (12:50):
Right?
Speaker 10 (12:51):
Well, I think the Beige Book was going to be
an important input to this discussion of like how resilient
is demand because we've seen, you know, we don't have
our complete picture numbers, like they're not going to get
a GDP estimate even for the third quarter before they
meet in December. So the Beige Book is comprehensive. It's qualitative,
but it's structured, and it does give us a flavor
across lots of sectors across the country. So I think
(13:14):
it is interesting that you know, there's a highlight of
the idea that the resiliency that we're seeing in some
of the aggregates is being driven by higher income consumers.
That does you know, the FED acts on like the
country as a whole, Like their mandate is a national
kind of an aggregate mandate. But it really is important
for them to understand like if there's broad based strength
(13:34):
that that says a lot more than if it's just
you know, one part of the economy is kind of
holding things up. That's a much riskier place, even in
when you're seeing good demand.
Speaker 3 (13:42):
So does Quaudia, does anything in the Beige Book today
change your view or change how the FED should be
looking at its meeting on December tenth.
Speaker 10 (13:50):
So there you know, of all the data that they're
going to have in hand in the Beige Book with
certainly something you know that that goes into that into
that calculus. There's really not anything that's going to settle
an argument.
Speaker 7 (14:03):
Right.
Speaker 10 (14:04):
The employment report was mixed.
Speaker 5 (14:06):
I mean you can and.
Speaker 10 (14:07):
I think in particular for even the people, say Boston
FED President Susan Collins, who's one that sounds like she's
probably not in favor of a cut in December. It's
more of this issue. She just doesn't see the urgency,
she doesn't see the deterioration. And we do know there
is a whole you know, burst of data that got
delayed because of the shutdown that the federal get before
(14:28):
their January meeting. So I think there is a really
there is a reasonable case of like, why not just
wait until January. That's not my that's not what I
would do if I were them, But I can completely
see her perspective, and I would be very hard pressed,
I think, to win someone like her over to cutting
in December.
Speaker 8 (14:46):
Now, doctor Salm, I think they're right. It might be
difficult to win over Boston FED President Susan Collins. I'm
glad that you brought her up. One of the most
valuable things, of course about the Beige Book is that
we can see economic activity by district, and in this
Beige Book we see activity in Boston expanding slightly. Of course,
I mentioned earlier in the program. I like to scroll
down to the Beige Book right to Kansas City, because
(15:08):
that's of course home of Kansas City FED President Jeffrey Schmid,
the dissenter in October, who is in favor of a
rate hold during the October meeting. In this Beige book,
we're seeing Kansas City economic activity slowing. We're seeing growth
slowing during the survey window with softer labor market conditions.
(15:29):
So I'm wondering, you know, when you tally up the votes,
where do you end up thinking everything is going to
shake out when it comes to December.
Speaker 10 (15:39):
So I expect that we'll see a divided FED it
come December. I my, you know, I don't think things
are a done deal at this point. I suspect there
probably will be a cut in December, and may be
the last cut that we see from the Powell Fed. Right,
So just cause you get in December doesn't mean we're
like opening the you know, the gates for a whole
set of cuts.
Speaker 5 (15:59):
But but I think.
Speaker 10 (16:01):
We're going to we are in all likelihood going to
see more descents, four descents, maybe five descents, which has
not happened in quite some time with the Fed. I
don't think that's a sign of a problem. I think
it's a sign of like they're legitimately are reasons for
the FED to be conflicted. Inflation is still well above
two percent, has been for years. There are still price pressures.
(16:23):
The basebook talks about those costs that are still out
there with businesses that could end up coming to consumers.
And we have a labor market that, while it's slow,
there's some signs of faltering, it's not going over a
cliff at the moment.
Speaker 5 (16:35):
Yeah right, So, like I think there's a reason.
Speaker 10 (16:37):
For them to disagree. It's a sign of like they're
really serious about their job and they're thinking hard about
a tough problem.
Speaker 2 (16:42):
I want to go to Trade and Tariff's in a moment,
but I just want to follow up with you, Claudia.
You said this could be the last cut of Fetcher J.
Powell's tenure. That tenure expires May twenty twenty six. I'm
looking at twenty twenty six FED meetings and we have
got three meetings January, March April. Are you saying that
we wouldn't ge any more cuts because of the debate
(17:02):
or because the economy won't.
Speaker 5 (17:04):
Need it.
Speaker 10 (17:06):
So inflation is elevated, Yeah, right, And I think it's
probably going to be until the middle of the year
before we really see inflation kind of turned down. The
tariffs work their way through before we can, you know,
really point to data and be like, look, it's going
back to two percent, right, So it's going to take
some time for that to work through. And the FED,
when inflation is elevated, they're going to want to be
(17:28):
putting some restriction on the economy, right, So every cut
they do takes a little bit more restriction out and
we can argue till the cows come home about what
the quote unquote neutral rate is. But you know, if
you're cutting, you're getting closer to it. So every cut
is going to be harder to negotiate with inflation still elevated.
And so I think that's where you could you know,
(17:50):
get to a place where it just if inflation is
still high unless you see clear deterioration in the labor market,
which I very much hope we do not see because
that would be very bad.
Speaker 5 (17:59):
But like that could be.
Speaker 10 (18:00):
A game changer in it. But if we continued this
kind of muddle through, they really could do a pause
for some time, and you know, I think and that
could be a put because again, inflation is it has
been sticky above two percent.
Speaker 3 (18:13):
Blady, you mentioned price pressures and tear. The word tariff
in the Beige Book appears forty seven times. Most of
them or many of them in the prices section are
are how far into the economy or into these numbers
have tariffs made their way?
Speaker 4 (18:30):
Like?
Speaker 3 (18:30):
Have we seen the full effect of them yet? Are
we seeing half of the effect of them right now?
Can you measure that?
Speaker 10 (18:37):
I mean, there's absolutely a cottage industry out there of
different estimates of the past through of teriffs. I mean,
don't you know we don't see them on the price tags,
right We can't just measure them. These are all estimates,
and you know, frankly, it has been surprising how slowly
some of these tariff effects have shown up. I mean,
it is pretty clear goods price inflation really picked up
this year after having you know, come down quite a bit.
(18:59):
So I think we can look at the data and say,
tariffs are in there. They are moving prices up for consumers,
maybe not as much as we'd expected.
Speaker 5 (19:06):
I think there is this.
Speaker 10 (19:06):
Concern that you hear from the hawks, which is a
reasonable concern that you know, say, the economy where to
pick up next year, particularly you know, all the tax
refunds come out, and maybe you know, some of the
uncertainties wane if we have you know, more robust demand
that may be the opportunity businesses have to pass those
costs through that they're still sitting on. Right, There is
this interaction between the demand environment and kind of how
(19:29):
the cost pressures show up in inflation. So the fact
that there's still kind of sitting with businesses, it does
kind of raise some concerns about, you know, eventually consumers
pay these kind of things.
Speaker 5 (19:40):
Yeah, there's for so long.
Speaker 2 (19:41):
Le's that I hey, both of you st it Clauda
Sittip for a second, because you mentioned we're talking r
centerate and I want to bring in Brooks Southerland and
Bloomberg News Boston bureau chiefs. Hes also writer for the
Bloomberg Industrial Strength newsletter, because I want to talk about
deer which is down almost five percent today's session. It's
the world's biggest farm machinery maker week forecast for the year,
(20:02):
and part of that is because of the US farm economy.
There's a lot of uncertainty over the impact of tariffs
and trade deals, and so we're seeing that play out
in Deer Brook. What do we need to know specifically,
you know, when it comes to Deer, always company specific info,
but also the commentary broad more broadly about tariffs and
trade on an impact on a company like Deer.
Speaker 9 (20:23):
Sure. I mean, I think the good news is that
Deer is calling for a bottom in the large agriculture
equipment market next year. But the bad news is that,
you know, you're still looking at declines in that business
and for the industry overall, and I think that just
reflects you know, while there is some optimism that China
resumes agricultural purchases from the US in greater volumes than
(20:46):
it has been lately, it's not very clear exactly what
that looks like. And you know, there's a lot of
ambiguity around that trade framework that the US and China
struck and what that will ultimately mean for US farmers.
There's been a lot of talk about an aid package
from the Trump administration for US farmers, but it is
again not exactly clear what that would amount to, and
(21:08):
you know, whether or not it would be you know,
enough to really help farmers get through this period, or
fits it being more sort of a temporary band aid.
And so I think there's just a lot of uncertainty.
There's a lot of you know, Deer itself is still
working through tariffs, and you know, picking up on what
Claudia was saying, I mean, it is difficult to pass
on those price increases at a time when you're seeing
(21:28):
a period of weak demand for Deer's equipment, and so
I think, you know, going into next year, one thing
that investors are really going to be watching is Deer's
margins and its ability to protect that profitability even if
you don't see a really significant demand resurgence.
Speaker 3 (21:42):
Brook briefly, is the Deer story idiosyncratic or is it?
Or can we extrapolate it as some sort of bell
weather for industrials or the I think.
Speaker 9 (21:51):
If you look at the broader industrial economy, it's really
two stories. So you have the companies that are supplying
the AI data center boom and that things like electrical
equipment and certain types of HVAC equipment, and then you
have pretty much everything else, and everything else has been
in a downturn for really a very extended period. I mean,
(22:12):
if you look at the ISM manufacturing index, I mean,
I think this is the longest period of week demand
you know that we've seen ever, and it's tariffs have
really prolonged this where investors we're looking for recovery there
this year and that has not played out largely just
as companies work through these higher costs. But you're seeing
a lot of reticence in terms of CAPEX spending outside
(22:35):
of the AI data center boom, just because companies aren't
sure what the grounds are, they don't know what things cost,
they don't know where where to spend the money, and
so you're really seeing that hesitancy elsewhere in the industrial sector.
Speaker 5 (22:46):
All right, I always appreciate it.
Speaker 2 (22:47):
Our Boston Bureau chief, Brook Sutherland, follows the industrial space,
So well, Brook, have a good Thanksgiving. I want to
wrap up with Stewart and Claudia. Claudia to you, you know,
just listening to what Brooke had to say, do you
feel like there's more clarity about the US economy at
this point or is there still a lot of things,
whether it's from the White House or elsewhere that could
come at us And just got about forty five seconds.
Speaker 10 (23:11):
I think broadly there is more clarity than say, back
in April. I mean, we've you know, really weathered several
storms in terms of rapidly changing policy landscape, and yet
things are still really uncertain. I mean, you have a
Supreme Court that is going to rule on many of
those tariffs that we are just talking about. We have
a Supreme Court that's going to rule on the ability
(23:32):
of the President to take remove a FED governor. So like,
there are some still some major question marks out there
that could have big implications for what next year looks like.
Speaker 5 (23:42):
And forty five seconds for you too, Stu, I think.
Speaker 8 (23:45):
There's a lot of uncertainty right now out there in
the broader economy. I think that the downside risks to
the economy are mostly posed by things like tariff's remaining
in place, a lot of the policy decisions that we're
likely to see, and a lot of the policy outcomes
that were likely to see over the next year or so. Actually,
I think skew risk to the upside. So where the
(24:06):
uncertainty lies is in whether the current condition can remain
and I think that the actual uncertainty skews risk toward
an even larger expansion.
Speaker 5 (24:16):
All right, So we'll just take a shot for every
time we're here on certainty this Thanksgiving holiday, because like
that's the watch word.
Speaker 2 (24:21):
You guys are amazing Pluitter Bloomberg Economics US and Canada economist.
Speaker 5 (24:25):
Stewart Paul Claudia salm.
Speaker 2 (24:26):
Thank you chief economists for New Century Advisors, so appreciate it.
Speaker 3 (24:31):
Stay with us. More from Bloomberg Business Week Daily coming
up after this.
Speaker 1 (24:39):
You're listening to the Bloomberg Business Week Daily Podcast. Catch
us live weekday afternoons from two to five eas during
Listen on Apple Karplay and Android Auto with the Bloomberg
Business app, or watch us live on YouTube.
Speaker 3 (24:53):
Markets right now, as we do get a bitch about
ten minutes away from the close of equity trading here,
the S and P still up eight tens of one percent,
the Nastack composite down, I mean up rather a full
percentage point. We can round that up. The dall ups
seven tons of one percent. It's a pretty broad based rally.
Three hundred and ninety eight stocks in the S and
P moving higher, one hundred and five moving lower. But Carol,
it's less broad based than it was earlier in the session.
Speaker 2 (25:15):
Yeah, absolutely, We've just seen kind of markets take a
little bit of a leg down. It could be people
squaring their positions ahead of the Thanksgiving holiday. You know,
markets are open on Friday, shortened holiday trading session on
Friday for both the equity and the bond markets. But
you know, there's some people who want to be a
long weekend, so maybe they're just kind of making some
(25:35):
moves ahead of that. Let's see what Max Wasserman has
to say though about the environment. He's founder and senior
portfolio manager of Mira Mare Capital. The firm has about
five hundred and fifty million dollars in assets under management.
He joins us from Northbrook, Illinois. Hey, Max, good to
have you back with us.
Speaker 7 (25:53):
Thank you so much.
Speaker 5 (25:54):
Yeah, great to have you here.
Speaker 2 (25:55):
I want to just jump to it because you guys
do have some major investments in Microsoft, Alphabet broad Com.
You know the question about the AI spend this week,
Alphabet getting a real boost if you will.
Speaker 5 (26:08):
That stock's been on a.
Speaker 3 (26:09):
Tear fifteen percent just since the thirteenth of the month.
Speaker 5 (26:13):
Yeah, roughly seventy percent this year.
Speaker 2 (26:15):
You know, people wondering whether and Video needs to be
worried because of alphabets. All of a sudden, it seems
like they're making progress in a big way in AI
and they have their own.
Speaker 5 (26:24):
Chips out there. How do you see it? How do
you see these names? Is it a buy seller? Hold here?
Speaker 7 (26:31):
Well, again, thanks for having me on. We have one
of our largest investments now is Alphabet. We've been buying
it for the past year, and we just thought the
stock was being left behind high quality tech stock. I'm
doing all the right things, but just nobody wanted it.
Everybody wanted in the videos, they wanted the Microsoft's, the broadcoms.
They just left it alone and everybody jumped on the
(26:52):
other bandwagon. Now it's rotated, so now people see it,
and they ran this price up dramatically in the last
few weeks, as you mentioned, and right now, I don't
think you can chase these stocks. I think you have
to give them room because if the FED did not
raise interest rates, or the FED one of the chairman's
didn't say they think cutting this would be looking at
a different market. So much liquidity is being needed in
(27:15):
the marketplace that if you get a hiccup in liquidity,
these stocks are going to take a hit. I mean,
you've seen how the attitude can change on an Oracle
you see in it a little bit in the video.
So while these are great companies, the valuations do not
give you a lot of room. On the downside here.
Speaker 3 (27:32):
You know, you have some other other companies that you've
highlighted that are not in tech that I'm eager to
hear from you. On home Depot and McDonald's are companies
that you like.
Speaker 7 (27:42):
Why, Well, I mean, look, let's look at the fact
that we believe that the FED will end up cutting
probably anywhere from twenty five to seventy five basis points
more by next summer. I mean you're looking.
Speaker 3 (27:54):
Wait by next summer. So FED chair jpl is out
in May. Which of those happen? Which of those happen
under his tenure?
Speaker 7 (28:01):
I think you're going to get at least twenty five
to fifty under his tenure.
Speaker 3 (28:05):
Who was on our earlier Kara, was it Claudia Sam? Yeah,
he said yeah, maybe, well this is the last cut under.
Speaker 5 (28:12):
Jay Powell, under Ja Powell. Yeah, and ok, just more meetings.
Speaker 3 (28:15):
We've got a good discussion to share about this, Max.
So it's been like, you know, that's why I want
to It's.
Speaker 7 (28:19):
A calable good. But that's okay. I mean we look
at it this way. I mean, the consumer right now
is tapped. Credit card debt is very high, and actually
even margin debt. If you look at margin debt right now,
it's at one point one trillion, which is double it
was five years ago. And almost four times it was
ten years ago. So you have margin debt high, consumer
debt is high. You're starting to see layoffs take place.
(28:41):
You know, corporations are calling it right sizing now, but
you're seeing a lot of white collar jobs are being
hit in the technology market. So we see the market
slowing down and the pressure to keep job growth going
and liquidity for this market I think is going to
force him. I'm not saying we think they should. We
just believe they will because right now, I think the
Fed's going to have to end up backstopping this market
(29:03):
with liquidity just because of the margin and the heavy
debt that's being out there. So I think they will
cut whether they should against another issue, and I think
coming into a Trump new pointy, you know he likes debt,
he likes lower interest rates. So there's no reason to
believe that this market's not going to get more fuel.
Speaker 5 (29:22):
Could that be problematic? Could that be problematic?
Speaker 2 (29:25):
Because a problem the inflationary target is still above the
fed's two percent preferred rate. You increase liquidity in the system,
and you know, just the velocity increases and potentially could put.
Speaker 5 (29:37):
You know, more inflationary pressures out there. I think it could.
Speaker 7 (29:42):
I think you're right, But the FED has told you
right now it's less concerned about inflation, more concerned about
economic growth and jobs. So I think that's going to
they switch their language a little bit. So yes, I
think it could, but I think they're going to have
to flood this market with more if it slows down,
because the FED does not want a wealth of actually
go in the negative way. So while I think inflationary, yes,
(30:04):
I think it's a mistake, but I think they will.
So the reason we like a home deep owe in
of McDonald's is we think lower interest rates will help
these kind of stocks. And they're not trading at high
multiples right everybody's been getting away from it because of
the housing market. So if we're looking more than three
months out, I think they stand to benefit from that
consumer We'll going to be in a better shape with
lower interest rates. So that's why I think it will be.
(30:25):
But I think technology is playing itself out here. Great companies,
but valuations are high. So as for the Fed, we've
already known that every time the market has a problem,
the FED flinches and gives them low interest rates. The
difference now is not you have the FED doing that,
but you have a president who really is touting that,
So I think it's going to be inflationary. And I
think the real concern could be, what if the ten
(30:47):
year actually the yield curb gets you know, steeper, you know,
not inverted, but lower rates go low and then you
have the higher rates go higher. So maybe you get
a ten year at four and a half five percent
because of this, and I don't think the market's expecting that.
And technology stocks need a lot of liquidity to sustain
themselves at this level.
Speaker 2 (31:07):
All right, We're going to leave it on that note. Hey, Max,
thank you so much. Happy Thanksgiving, Max Wasserman. He's founder
and senior portfolio manager of mer Mar Capital, joining us
on this Wednesday.
Speaker 1 (31:18):
This is the Bloomberg Business Weekdaily podcast, available on Apple, Spotify,
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