May 30, 2025 • 23 mins
Watch Alix and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and John Tucker
Today’s Podcast Features are:
Greg Stohr, Bloomberg Supreme Court Reporter, discusses the Supreme Court allowing the Trump administration to immediately end temporary legal status for migrants from Cuba, Haiti, Nicaragua, and Venezuela, affecting up to half a million people.
Brian Levitt, Global Market Strategist at Invesco, discusses his outlook for the markets. Following a torrid rally that put the S&P 500 on track for its best May since 1990, the gauge lost about 1% Friday. A slide big tech weighed heavily on trading.
Michael McKee, Bloomberg International Economics and Policy Correspondent, discusses U.S eco data. US consumers slowed spending in April, with inflation-adjusted personal spending rising 0.1%, while goods imports plummeted by a record 20% due to higher tariffs.
Henrietta Treyz, Managing Partner and Director of Economic Policy at Veda Partners, discusses the latest on President Trump’s tariffs. A court ruling blocking President Trump's tariffs could create a $2 trillion hole in the US fiscal outlook over the coming decade and remove duties that would have raised nearly $200 billion annually.
See omnystudio.com/listener for privacy information.
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple, Coarclay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
Earlier across the tape that the Supreme Court is going
to let President Trump strip five hundred thousand migrants of
legal status. Let's get the latest reporting on that. Greg Store,
Bloomberg Supreme Court Reporter, Greg. What did the court ruled
here today?
Speaker 3 (00:38):
So the Trump administration is trying to end a so
called parole status for people from Cuba, Haiti, Nicaragua, and Venezuela.
And what that is is a temporary status that let
people live and work here because their home countries are
in crisis. That it's designed to be for humanitarian reasons.
And the question was whether the Trump administration could do
(00:59):
thisguorically rather than on a case by case basis. A
lower court had blocked the Trump administration from doing this.
The Supreme Court today lifted that block. That means these
roughly five hundred thousand people. We don't know the precise number.
No longer have those protections, and many of them are
(01:19):
open to or subject to immediate deportation.
Speaker 4 (01:23):
Who are these five hundred thousand and did they come
here legally?
Speaker 3 (01:27):
They did come here legally. They are allowed into the program.
They were given this status by the Biden administration, and
they have work permits. They are allowed to be here.
But it was always understood that this was a temporary program.
(01:50):
It was done on humanitarian basis. You have to get
into this program, you have to get a US sponsor,
you have to get US government a approval, and you
actually have to pay for your own flight into the country.
But again it was always designed to be temporary. And
what the Trump administration says it's doing is we're just
(02:10):
ending that temporary status has.
Speaker 2 (02:12):
The Are are these widows and orphans or they hardened
gang criminals? Do we know anything more about them?
Speaker 3 (02:20):
Well, it's a big group of people, so undoubtedly there's
there's a mix. But unlike some other things, these are
not people who just slipped across the Mexican border. They
did have to get that US sponsor, The government had
to actually approve them, So there has been some vetting
of these people going in, so you know, it is
certainly not the case that well, it's unlikely that a
(02:43):
big category of them are going to be you know,
hardened criminals, to use your expression, but we don't know
a whole lot, and we don't even as I suggested,
know the exact number of people, because some of them
may have left. We know that there were about five
hundred and thirty two thousand people who came in initially
under these programs. We don't know how many remain in
(03:05):
the country under that status. Some of them may have
some other protected status and maybe aren't subject to immediate deportation,
but certainly a big chunk of them will be subject
to it.
Speaker 2 (03:16):
All right, Greg, thank you so much for your reporting.
Really appreciated. Greg Store, Bloomberg Supreme Court a reporter. Appreciate that.
Speaker 1 (03:23):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (03:37):
If you look at the market, we had that twenty
percent so off in the SP five hundred earlier in
the year as a market was trying to figure out
what's going on with the terrort story. The Mark's kind
of retraced most of that coming back up. Son other
question is where do we go from here? So let's
check in with Brian Levick, Global Market Strategies at Invesco.
He's zooming in from somewhere in the Jersey Burbs there.
(04:00):
What's the message to your clients these days? We've kind
of been whips all but if you look back on
a you to day basis, it's almost like nothing happened here.
Speaker 5 (04:09):
It's amazing. It's like if you woke up today, you
wouldn't have realized that any of this has been going on.
You see that not only in the equity market, but
also the bond market, inflation expectations, really yields, corporate bond
spreads are actually not all that changed since the beginning
of the year. Either. We're talking to our clients about
having optionality in our portfolios. We don't know which way
(04:30):
we're going to be whipsawd, but we also don't want
to be out of these markets. So diversification is sometimes,
you know, a cliche, but it does make sense to
try and diversify your portfolio bring down the valuation. If
you're just SMP five hundred, You're sitting at an elevated valuation,
So bring down the valuation of the portfolio potentially protect yourself.
(04:54):
But if things do become better on a policy front,
you know, other parts to the market, whether it's value
stocks Europe and MidCap should do well in more of
a recovery type feel. So you know, heads hopefully to
you win, tails hopefully you win.
Speaker 4 (05:13):
Hey, Brian, can you ditch US exceptionalism for European exceptionalism.
Speaker 5 (05:19):
I don't like getting rid of the word exceptionalism because
I think that it gives US investors the sense that
they shouldn't be invested in the United States. There still
are exceptional businesses, and it's still going to be an
exceptional economy over the long term. But what you want
(05:39):
to think though, with regards to Europe is there's a
couple of things happening. For one, European equities have been cheaper,
but generally for a good reason, so you need a
catalyst to unlock that. What you have right now, of course,
is easier policy out of the European Central Bank than
you're likely to have out of the US Federal Reserve.
(06:00):
Also have oncoming stimulus from some of the major European
economies and all that's leading to some weakness in the
US scholars. So yeah, I would say we do want
to diversify into non US stocks. Investors in the US
have not wanted to do that for a while. I
don't think that's trading one exceptionalism for the other. It's
(06:20):
more increasing our exposure to the part of the world
where I think a lot of people have become pretty
heavily underweighted too.
Speaker 2 (06:28):
Red headline crossing the Bloomberg Tromoor. I want to get
to the Supreme Court. Let's Trump strip five hundred thousand
migrants of legal status, so we'll have more reporting on
that throughout the day. Brian, what are we doing in
the world of fixed income here? I considered to your
treasury and get darn near four percent, which seems like
a good living there. Do I take credit risk on
top of that?
Speaker 5 (06:49):
Yeah, I would take credit risk. You know, four percent
is what people used to beg for, and now you
can get spread above that on good fundamental corporate bonds.
You can get that in a tax equivalent basis on
fundamentally sound municipal bonds. So look, I mean you you again,
you you don't want to put all your risk into
(07:11):
one place, So diversified mix can help. But I think
just sitting in money markets, you're missing the opportunity to
augment the yield, and you know there's there's the old
pick up in other parts of these markets.
Speaker 4 (07:26):
What does that tell you, how yield at this point
about the recession.
Speaker 6 (07:29):
Risk, it tells you it's not likely in the cars,
I mean how US high yeald bonds have been one
of the best performing asset classes in the United States
this year.
Speaker 5 (07:40):
You know, when we saw volatility spiking the way we
did following Liberation Day, we did see a modest pick
up in high heal bond spreads, but still well below
the long term average. That was comforting to us. I
still few the high heal bond market as the canary
and the coal mine for the cycle. So if volatility
is picking up and credit spreads can't even get to average,
(08:03):
that's a buying opportunity in our perspective, And it's our
view that it's a market that is telling us that
a recession is not in the offing, at least in
the immediate term.
Speaker 2 (08:15):
Hey, Brian, we've seen risk assets most notably US equities
kind of snap back here from some of the initial
shock selling earlier in the year. We have not seen
that in the US dollar to The dollar remains at
its you know, kind of recent lows here. What is
that telling you?
Speaker 5 (08:32):
Yeah, what it's telling us is that there's still some
concerns around US policy and there's still some greater excitement
around being in currencies outside of outside of the United States.
So while the US has essentially gotten back to flat,
you've seen substantially higher returns in other parts in the market,
(08:55):
particularly particularly Germany of other European countries, as well as
some emerging markets. So what it tells me is back
to that diversification story. It's not a collapse in the dollar,
but it's a rebalancing a way to some extent or
diversifying away from.
Speaker 7 (09:12):
Remember, the US dollar was at very elevated levels and
that was based on US growth being stronger than the
rest of the world, and you know that starts to
narrow as we have concerns about ongoing trade policy.
Speaker 2 (09:29):
Brian, thanks so much for joining us, really appreciate it.
On a summer Friday, Brian love It, global macro strategist
at Invesco.
Speaker 1 (09:38):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Applecarclay and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (09:52):
Right now, let's go down to Dallas, Texas. Michael McKee
is in our Texas bureau down there, and I can
tell you he does all the economic stuff for Bloomberg.
We know Michael McKee. Yesterday he was smack in the
oil patch. We're talking like Midland, Odessa, Texas oil gas.
The setting of my new favorite TV showed Landman and
I don't know what he was doing now, Usually that's.
Speaker 4 (10:13):
Out the terror's job as a roused about.
Speaker 2 (10:16):
Roused Michael Mickey arroussabout on an oil rig. Mike, thanks
so much for joining us here. We had some economic
data today. It seems like inflation, Mike, is still pretty
much being contained here. What did you take away from
some of the PCEE data we saw this morning.
Speaker 8 (10:31):
Well, basically, you're right, Paul, we're seeing inflation come down.
We're just a tenth of a percent over the fed's target.
On the pce headline, he came in at two point
one percent this month, So the FED is very close
to being able to say soft landing, except of course,
for the tariffs and everything else that's going on with
the Trump administration. And that's the hard part is consumer
(10:52):
spending held up wasn't great, but it was okay in
April after a lot of people pulled forward purchases into
March in February, So where do we go from here?
That's where the FED is stuck because minute by minute
we get new court decisions that make the tariffs on,
make tariffs off, et cetera. So they can't really do anything.
(11:13):
So we're still sort of still in this groundhog day
of waiting to see what happens next.
Speaker 4 (11:18):
All right, so the Fed's dealing with uncertainty too. There's
a meeting coming up what the eighteenth, and this time around,
we're going to get the little dot things. What are
we going to learn?
Speaker 8 (11:30):
Nothing. When you talk to Fed officials, and this was
of course, before this last week of back and forth
court decisions, most of them would say, you know, take
take these numbers with a grain of salt. We just
have to basically act as if the current conditions are
going to last, and we have no reason to think
that they are going to, but we don't have anything
(11:51):
to base a.
Speaker 5 (11:51):
New forecast on.
Speaker 8 (11:52):
So I think when you get the decision, the dot
plot and the new summary of economic projections, that they
will have a shelf life of an hour or so
and then we'll be back to, well what happens next, Mike.
Speaker 2 (12:06):
We also got the University of Michigan data out for
the month of May, and we showed an improvement from
kind of the shocking decline we saw last month, but
inflation expectations, while they've come down, are still pretty darn high. Here,
what would you learn from the MISS data?
Speaker 8 (12:23):
We didn't learn a whole lot except that people weren't
feeling as bad about the economy in April as they were,
or in May, rather as they were in April. We
saw a rise in consumer expectations, but it's still below
fifty and it didn't match at all the rise in
expectations in the Conference Board survey earlier this week. So
(12:44):
we leave to somewhat in limbo on what people think
about the economy going forward. As you mentioned, the inflation
numbers come down a little bit, but they're still very elevated.
And right now, Conference Board and Michigan match in what
people think is going to happen over the next year. Now,
the drop in the inflation expectations maybe because gasoline prices
have come down a little bit and food prices have
(13:06):
stopped rising as much. But at this point, people still
think that the President's policies are going to be inflationary,
and that's the consensus of most economists. So it's not
telling us anything new. It's telling us that not much
has changed.
Speaker 4 (13:21):
Way back when Arthur Burns was called in to meet
with Richard Nixon, we know the outcome of that. Yesterday,
was it that Donald Trump met with j Powell. What's
going to be the outcome of this meeting?
Speaker 8 (13:34):
If anything, nothing, I don't think Jay Pole reiterated the
FED doesn't know what they're going to be doing. And
here's where we see the economy at the moment. The
President tells us that he told Jay Powell to cut
interest rates, but the Fed isn't going to do what
the President asks just because he's asking if economic conditions
(13:55):
don't warrant it. What it may be is that if
things do turn out better than expected, then Donald Trump
can come out and say well, I told you so.
I told Paul so, and they didn't listen to me.
But if things turn out as economists expect, then Paul
has the better response.
Speaker 2 (14:12):
All right, Mike, thanks so much for joining us. Michael McKee,
International Economics and Policy corresponding for Bloomberg News from our
Dallas bureau. He's got to get back to New York.
Fly back to New York on a summer Friday.
Speaker 4 (14:21):
We could go wrong.
Speaker 2 (14:22):
I mean, you know, for I don't know where he's going,
but I just I've always voided Friday traveling in general,
particularly in the summer. That's just kind of been my
strategy all along. Sometimes it works, sometimes it doesn't.
Speaker 1 (14:37):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (14:51):
We get the latest on what's happening down in Washington, DC.
When I say the latest, people we're doing it on
any hour by hour baby basis. I think it's not
day to day. But somebody who actually has a this
is what they do. They kind of tell us what's
going on in watching in DC, and they're so valuable
to us in our audience. Henrietta trez is the absolute
best managing partner and director of economic policy for Veda Partners. Here,
(15:13):
let's just start with tariff's Henrietta, the courts are kind
of going all over the place. What's the understanding in
Washington with the need administration of kind of where they
are these days?
Speaker 9 (15:25):
Well, I appreciate having me on.
Speaker 10 (15:27):
The administration is preparing for all avenues, and fortunately for them,
they have so many available pathways to perpetuate the president's
trade wars and to keep the tariffs on. And I
think that's why the market is not responding with the
bulliants today or even yesterday that the AIBA tariffs have
been taken off. The reality is we need to pivot
to Section three oh one, which of course was the
(15:49):
entire rationale and the authority used to wage the trade war.
Speaker 9 (15:53):
With China in the first Trump term.
Speaker 10 (15:55):
We need to get very seriously in the weeds on
sectoral tariffs which are coming across sectors, semiconductors, pharmaceuticals, copper, trucking,
air cargo free, you know, the whole shebang. And then
we really need to start thinking about stacking those tariffs,
what that.
Speaker 9 (16:11):
Might mean for individual sectors.
Speaker 10 (16:13):
And then, of course some components of the tax bill
that also include effectively tariff strategy and authority for the
Treasury Secretary. Something that's really captured the street's attention in
the last couple of days is section eight ninety nine,
which creates an authority for the Treasury Secretary too effectively
tax entities from foreign nations, including individuals that have unfair
(16:33):
trade practices or unfair tax practices on everything from the
digital services trade and beyond. So there's a lot still
to do, and you know, the trade wars are going
to be a hallmark of President Trump's second term, just
like they were in his first.
Speaker 4 (16:47):
Okay, did you just tell me that uncertainty is far
from concluded.
Speaker 9 (16:53):
I think it's ramping up.
Speaker 10 (16:54):
I mean, we had a brief reprieve when AIPO was
the law of the land, and now we're in you know,
get out your numbers two oh one, two two, three
oh one. You know, this is what you this is
what you need to pay for now is the expertise
around these various specific components.
Speaker 2 (17:09):
So I guess that's there's more avenues for the administration
to pursue to pursue trade policy. But my understanding is
they are They take much longer than just saying we're
going to have ten percent across the board tariffs, which
the president can do with the stroke of a pen.
What's the timing associated with all this? It sounds complicated, Yeah,
great question.
Speaker 10 (17:29):
So there are The IEPA Statute was the fastest, blondest
and easiest instrument that the president could have taken up,
and that's exactly what he did.
Speaker 9 (17:37):
But we have a number of components that are.
Speaker 10 (17:41):
Already in the pipeline, already in effect, and also that
can easily be effectuated. So, for example, the Balance of
Payments Authority, which is something Ambassador Lithheiser, president Trump's first
trade representative, talked about in the run up to President
Trump's win in November of twenty twenty four, which is
immediately imposed a balance at payments authority, which is an
(18:01):
adval arum duty of up to fifteen percent for one
hundred and fifty days on any nation where there's a
trade deficit.
Speaker 9 (18:06):
That can happen very quickly.
Speaker 10 (18:08):
Customs and Border protection can change tariff rates within twelve hours,
so that's something to be mindful of as sort of
an AIPA replacement. The drawback is that it's capped at
one hundred and fifty days unless Congress authorizes an extension.
Speaker 9 (18:21):
It's my base case expectation.
Speaker 10 (18:23):
That Congress will not authorize that extension, mostly because many
Republicans do not support the President's tariffs because of course
they are taxes on consumers, and they're seeing the blowback
in various industries like the farming sector and small businesses
in manufacturers who are struggling with the lack of imports
from China right now. But compounding that are the Section
(18:44):
two thirty two tariffs that are already in place, including
on automobiles and automobile bill parts. Those rates are twenty
five percent for the most part. They can be ratcheted
up overnight. The President also has a series of investigations
already in the works whose comment period have ended, and
they can release their findings and impose new tariffs pretty
much at any time. Now. That applies to the semiconductor space,
(19:07):
the pharmaceutical space.
Speaker 9 (19:09):
Copper, and a couple of others.
Speaker 10 (19:10):
And then I think the most important to be mindful
of is Section three oh one this is the authority
to tariff everything coming in from China. In Trump's first term,
we did that across List one, two, three, four A,
and we haven't done it on List for B. But
this is five hundred and fifty billion dollars worth of trade.
And there is no upper bound on the tariff rate
that can be imposed under Section three oh one that
(19:32):
I've ever been able to find. So we're mostly at
twenty five percent now, no reason that can't go up
to fifty or one hundred and forty five.
Speaker 4 (19:40):
A reporter asked the president the taco question, and you
heard his response. I think the Trump always chickens out
on tariffs of this sort. He was angry, and he
sounded even more emboldened that What was your take.
Speaker 10 (19:56):
It just reminded me of the twenty eighteen escalation. I'm
sure y'all remember it at the time. I'll never forget it.
The President got upset in the Oval office and he
escalated tariffs almost immediately and during.
Speaker 9 (20:07):
The hot summer months.
Speaker 10 (20:09):
We saw that repeatedly throughout twenty eighteen, and I think that.
Speaker 9 (20:12):
We're looking at it again here.
Speaker 10 (20:13):
I mean, these are very emotional, heady times for him,
and when he puts these tariffs on it, here's something
like the street doesn't take him seriously.
Speaker 9 (20:22):
That's got to be pretty embarrassing. So obviously we're seeing
escalation today.
Speaker 2 (20:25):
All right, that's tariff's Let's move on to another areas
of your expertise, which is Capitol Hill legislation. We've got
a House tax bill. I guess the Senate's now looking
at it. Where are we with that important piece of legislation.
Speaker 10 (20:41):
We've got a cup seventy two hours before things really
kick off on the Senate side.
Speaker 9 (20:46):
The House passed their bill.
Speaker 10 (20:47):
As you point out, it is very comprehensive and really
thread the needle between a whole host of factions that
just don't exist on the Senate side. So, for example,
the deduction for the salt cap is very generous in
the House passed legislation, probably about two hundred billion dollars,
more generous than anything the Senators will agree to.
Speaker 9 (21:08):
So that's going to have to.
Speaker 10 (21:08):
Be something that they change when the Senate takes up
their bill.
Speaker 9 (21:11):
I suspect it'll.
Speaker 10 (21:12):
Probably be about three weeks before we see any legislation
from the Senate Finance Committee. This is the most critical
committee in the Senate. Unlike on the House side where
we have Energy and Commerce that had to cut believe
it's seven hundred and fifteen billion dollars from Medicaid and
then a separate Ways and Means committee that tackle the
four trillion dollar tax package. That's all one committee on
(21:33):
the Senate side. So we're going to get their package
late in the process, probably towards.
Speaker 9 (21:37):
The end of June.
Speaker 10 (21:39):
They're hoping that they can get legislation through their chamber
by the fourth of July, which I think is distinctly
possible and puts.
Speaker 9 (21:45):
Us on a path to get that bill passed.
Speaker 10 (21:47):
And signed into law by the July twenty fourth recess
in the House of the August first start of the
recess in the Senate, since.
Speaker 4 (21:55):
Is breaking news and do this in twenty seconds. The
Supreme Court ruling letting the Administration strip five hundred thousand
migrants of legal status, can you speak to the importance
of migrants to the US economy real quick?
Speaker 10 (22:09):
Yeah, A migration to the US economy is critical for
the housing sector. One of the sectoral tariffs I talked
about I didn't mention was the lumber tariffs. I mean,
these are critical for the housing industry, and the combination
of kicking out five hundred thousand immigrants and imposing tariffs
on lumber has got to be brutal for that whole sector.
Speaker 9 (22:26):
Really would focus on that.
Speaker 2 (22:27):
Henrieta Trees, thank you so much.
Speaker 5 (22:29):
We appreciate it.
Speaker 2 (22:29):
Henryeta Trees, Managing partner and Director of Economic Policy at
VATA Partners. Somehow she keeps all that Washington legislation, tariff
stuff tweets. Somehow she keeps it all in focus, and
she explains it to us because I can't follow it.
Speaker 1 (22:44):
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each
weekday ten am to noon Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal
Bloomberg Audio Studios, podcasts, radio news. You're listening to the
Bloomberg Intelligence Podcast. Catch us live weekdays at ten am
Eastern on Apple, Coarclay and Android Auto with the Bloomberg
Business App. Listen on demand wherever you get your podcasts,
or watch us live on YouTube.
Speaker 2 (00:23):
Earlier across the tape that the Supreme Court is going
to let President Trump strip five hundred thousand migrants of
legal status. Let's get the latest reporting on that. Greg Store,
Bloomberg Supreme Court Reporter, Greg. What did the court ruled
here today?
Speaker 3 (00:38):
So the Trump administration is trying to end a so
called parole status for people from Cuba, Haiti, Nicaragua, and Venezuela.
And what that is is a temporary status that let
people live and work here because their home countries are
in crisis. That it's designed to be for humanitarian reasons.
And the question was whether the Trump administration could do
(00:59):
thisguorically rather than on a case by case basis. A
lower court had blocked the Trump administration from doing this.
The Supreme Court today lifted that block. That means these
roughly five hundred thousand people. We don't know the precise number.
No longer have those protections, and many of them are
(01:19):
open to or subject to immediate deportation.
Speaker 4 (01:23):
Who are these five hundred thousand and did they come
here legally?
Speaker 3 (01:27):
They did come here legally. They are allowed into the program.
They were given this status by the Biden administration, and
they have work permits. They are allowed to be here.
But it was always understood that this was a temporary program.
(01:50):
It was done on humanitarian basis. You have to get
into this program, you have to get a US sponsor,
you have to get US government a approval, and you
actually have to pay for your own flight into the country.
But again it was always designed to be temporary. And
what the Trump administration says it's doing is we're just
(02:10):
ending that temporary status has.
Speaker 2 (02:12):
The Are are these widows and orphans or they hardened
gang criminals? Do we know anything more about them?
Speaker 3 (02:20):
Well, it's a big group of people, so undoubtedly there's
there's a mix. But unlike some other things, these are
not people who just slipped across the Mexican border. They
did have to get that US sponsor, The government had
to actually approve them, So there has been some vetting
of these people going in, so you know, it is
certainly not the case that well, it's unlikely that a
(02:43):
big category of them are going to be you know,
hardened criminals, to use your expression, but we don't know
a whole lot, and we don't even as I suggested,
know the exact number of people, because some of them
may have left. We know that there were about five
hundred and thirty two thousand people who came in initially
under these programs. We don't know how many remain in
(03:05):
the country under that status. Some of them may have
some other protected status and maybe aren't subject to immediate deportation,
but certainly a big chunk of them will be subject
to it.
Speaker 2 (03:16):
All right, Greg, thank you so much for your reporting.
Really appreciated. Greg Store, Bloomberg Supreme Court a reporter. Appreciate that.
Speaker 1 (03:23):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (03:37):
If you look at the market, we had that twenty
percent so off in the SP five hundred earlier in
the year as a market was trying to figure out
what's going on with the terrort story. The Mark's kind
of retraced most of that coming back up. Son other
question is where do we go from here? So let's
check in with Brian Levick, Global Market Strategies at Invesco.
He's zooming in from somewhere in the Jersey Burbs there.
(04:00):
What's the message to your clients these days? We've kind
of been whips all but if you look back on
a you to day basis, it's almost like nothing happened here.
Speaker 5 (04:09):
It's amazing. It's like if you woke up today, you
wouldn't have realized that any of this has been going on.
You see that not only in the equity market, but
also the bond market, inflation expectations, really yields, corporate bond
spreads are actually not all that changed since the beginning
of the year. Either. We're talking to our clients about
having optionality in our portfolios. We don't know which way
(04:30):
we're going to be whipsawd, but we also don't want
to be out of these markets. So diversification is sometimes,
you know, a cliche, but it does make sense to
try and diversify your portfolio bring down the valuation. If
you're just SMP five hundred, You're sitting at an elevated valuation,
So bring down the valuation of the portfolio potentially protect yourself.
(04:54):
But if things do become better on a policy front,
you know, other parts to the market, whether it's value
stocks Europe and MidCap should do well in more of
a recovery type feel. So you know, heads hopefully to
you win, tails hopefully you win.
Speaker 4 (05:13):
Hey, Brian, can you ditch US exceptionalism for European exceptionalism.
Speaker 5 (05:19):
I don't like getting rid of the word exceptionalism because
I think that it gives US investors the sense that
they shouldn't be invested in the United States. There still
are exceptional businesses, and it's still going to be an
exceptional economy over the long term. But what you want
(05:39):
to think though, with regards to Europe is there's a
couple of things happening. For one, European equities have been cheaper,
but generally for a good reason, so you need a
catalyst to unlock that. What you have right now, of course,
is easier policy out of the European Central Bank than
you're likely to have out of the US Federal Reserve.
(06:00):
Also have oncoming stimulus from some of the major European
economies and all that's leading to some weakness in the
US scholars. So yeah, I would say we do want
to diversify into non US stocks. Investors in the US
have not wanted to do that for a while. I
don't think that's trading one exceptionalism for the other. It's
(06:20):
more increasing our exposure to the part of the world
where I think a lot of people have become pretty
heavily underweighted too.
Speaker 2 (06:28):
Red headline crossing the Bloomberg Tromoor. I want to get
to the Supreme Court. Let's Trump strip five hundred thousand
migrants of legal status, so we'll have more reporting on
that throughout the day. Brian, what are we doing in
the world of fixed income here? I considered to your
treasury and get darn near four percent, which seems like
a good living there. Do I take credit risk on
top of that?
Speaker 5 (06:49):
Yeah, I would take credit risk. You know, four percent
is what people used to beg for, and now you
can get spread above that on good fundamental corporate bonds.
You can get that in a tax equivalent basis on
fundamentally sound municipal bonds. So look, I mean you you again,
you you don't want to put all your risk into
(07:11):
one place, So diversified mix can help. But I think
just sitting in money markets, you're missing the opportunity to
augment the yield, and you know there's there's the old
pick up in other parts of these markets.
Speaker 4 (07:26):
What does that tell you, how yield at this point
about the recession.
Speaker 6 (07:29):
Risk, it tells you it's not likely in the cars,
I mean how US high yeald bonds have been one
of the best performing asset classes in the United States
this year.
Speaker 5 (07:40):
You know, when we saw volatility spiking the way we
did following Liberation Day, we did see a modest pick
up in high heal bond spreads, but still well below
the long term average. That was comforting to us. I
still few the high heal bond market as the canary
and the coal mine for the cycle. So if volatility
is picking up and credit spreads can't even get to average,
(08:03):
that's a buying opportunity in our perspective, And it's our
view that it's a market that is telling us that
a recession is not in the offing, at least in
the immediate term.
Speaker 2 (08:15):
Hey, Brian, we've seen risk assets most notably US equities
kind of snap back here from some of the initial
shock selling earlier in the year. We have not seen
that in the US dollar to The dollar remains at
its you know, kind of recent lows here. What is
that telling you?
Speaker 5 (08:32):
Yeah, what it's telling us is that there's still some
concerns around US policy and there's still some greater excitement
around being in currencies outside of outside of the United States.
So while the US has essentially gotten back to flat,
you've seen substantially higher returns in other parts in the market,
(08:55):
particularly particularly Germany of other European countries, as well as
some emerging markets. So what it tells me is back
to that diversification story. It's not a collapse in the dollar,
but it's a rebalancing a way to some extent or
diversifying away from.
Speaker 7 (09:12):
Remember, the US dollar was at very elevated levels and
that was based on US growth being stronger than the
rest of the world, and you know that starts to
narrow as we have concerns about ongoing trade policy.
Speaker 2 (09:29):
Brian, thanks so much for joining us, really appreciate it.
On a summer Friday, Brian love It, global macro strategist
at Invesco.
Speaker 1 (09:38):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Applecarclay and Android Auto
with the Bloomberg Business App. Listen on demand wherever you
get your podcasts, or watch us live on YouTube.
Speaker 2 (09:52):
Right now, let's go down to Dallas, Texas. Michael McKee
is in our Texas bureau down there, and I can
tell you he does all the economic stuff for Bloomberg.
We know Michael McKee. Yesterday he was smack in the
oil patch. We're talking like Midland, Odessa, Texas oil gas.
The setting of my new favorite TV showed Landman and
I don't know what he was doing now, Usually that's.
Speaker 4 (10:13):
Out the terror's job as a roused about.
Speaker 2 (10:16):
Roused Michael Mickey arroussabout on an oil rig. Mike, thanks
so much for joining us here. We had some economic
data today. It seems like inflation, Mike, is still pretty
much being contained here. What did you take away from
some of the PCEE data we saw this morning.
Speaker 8 (10:31):
Well, basically, you're right, Paul, we're seeing inflation come down.
We're just a tenth of a percent over the fed's target.
On the pce headline, he came in at two point
one percent this month, So the FED is very close
to being able to say soft landing, except of course,
for the tariffs and everything else that's going on with
the Trump administration. And that's the hard part is consumer
(10:52):
spending held up wasn't great, but it was okay in
April after a lot of people pulled forward purchases into
March in February, So where do we go from here?
That's where the FED is stuck because minute by minute
we get new court decisions that make the tariffs on,
make tariffs off, et cetera. So they can't really do anything.
(11:13):
So we're still sort of still in this groundhog day
of waiting to see what happens next.
Speaker 4 (11:18):
All right, so the Fed's dealing with uncertainty too. There's
a meeting coming up what the eighteenth, and this time around,
we're going to get the little dot things. What are
we going to learn?
Speaker 8 (11:30):
Nothing. When you talk to Fed officials, and this was
of course, before this last week of back and forth
court decisions, most of them would say, you know, take
take these numbers with a grain of salt. We just
have to basically act as if the current conditions are
going to last, and we have no reason to think
that they are going to, but we don't have anything
(11:51):
to base a.
Speaker 5 (11:51):
New forecast on.
Speaker 8 (11:52):
So I think when you get the decision, the dot
plot and the new summary of economic projections, that they
will have a shelf life of an hour or so
and then we'll be back to, well what happens next, Mike.
Speaker 2 (12:06):
We also got the University of Michigan data out for
the month of May, and we showed an improvement from
kind of the shocking decline we saw last month, but
inflation expectations, while they've come down, are still pretty darn high. Here,
what would you learn from the MISS data?
Speaker 8 (12:23):
We didn't learn a whole lot except that people weren't
feeling as bad about the economy in April as they were,
or in May, rather as they were in April. We
saw a rise in consumer expectations, but it's still below
fifty and it didn't match at all the rise in
expectations in the Conference Board survey earlier this week. So
(12:44):
we leave to somewhat in limbo on what people think
about the economy going forward. As you mentioned, the inflation
numbers come down a little bit, but they're still very elevated.
And right now, Conference Board and Michigan match in what
people think is going to happen over the next year. Now,
the drop in the inflation expectations maybe because gasoline prices
have come down a little bit and food prices have
(13:06):
stopped rising as much. But at this point, people still
think that the President's policies are going to be inflationary,
and that's the consensus of most economists. So it's not
telling us anything new. It's telling us that not much
has changed.
Speaker 4 (13:21):
Way back when Arthur Burns was called in to meet
with Richard Nixon, we know the outcome of that. Yesterday,
was it that Donald Trump met with j Powell. What's
going to be the outcome of this meeting?
Speaker 8 (13:34):
If anything, nothing, I don't think Jay Pole reiterated the
FED doesn't know what they're going to be doing. And
here's where we see the economy at the moment. The
President tells us that he told Jay Powell to cut
interest rates, but the Fed isn't going to do what
the President asks just because he's asking if economic conditions
(13:55):
don't warrant it. What it may be is that if
things do turn out better than expected, then Donald Trump
can come out and say well, I told you so.
I told Paul so, and they didn't listen to me.
But if things turn out as economists expect, then Paul
has the better response.
Speaker 2 (14:12):
All right, Mike, thanks so much for joining us. Michael McKee,
International Economics and Policy corresponding for Bloomberg News from our
Dallas bureau. He's got to get back to New York.
Fly back to New York on a summer Friday.
Speaker 4 (14:21):
We could go wrong.
Speaker 2 (14:22):
I mean, you know, for I don't know where he's going,
but I just I've always voided Friday traveling in general,
particularly in the summer. That's just kind of been my
strategy all along. Sometimes it works, sometimes it doesn't.
Speaker 1 (14:37):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business App. Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 2 (14:51):
We get the latest on what's happening down in Washington, DC.
When I say the latest, people we're doing it on
any hour by hour baby basis. I think it's not
day to day. But somebody who actually has a this
is what they do. They kind of tell us what's
going on in watching in DC, and they're so valuable
to us in our audience. Henrietta trez is the absolute
best managing partner and director of economic policy for Veda Partners. Here,
(15:13):
let's just start with tariff's Henrietta, the courts are kind
of going all over the place. What's the understanding in
Washington with the need administration of kind of where they
are these days?
Speaker 9 (15:25):
Well, I appreciate having me on.
Speaker 10 (15:27):
The administration is preparing for all avenues, and fortunately for them,
they have so many available pathways to perpetuate the president's
trade wars and to keep the tariffs on. And I
think that's why the market is not responding with the
bulliants today or even yesterday that the AIBA tariffs have
been taken off. The reality is we need to pivot
to Section three oh one, which of course was the
(15:49):
entire rationale and the authority used to wage the trade war.
Speaker 9 (15:53):
With China in the first Trump term.
Speaker 10 (15:55):
We need to get very seriously in the weeds on
sectoral tariffs which are coming across sectors, semiconductors, pharmaceuticals, copper, trucking,
air cargo free, you know, the whole shebang. And then
we really need to start thinking about stacking those tariffs,
what that.
Speaker 9 (16:11):
Might mean for individual sectors.
Speaker 10 (16:13):
And then, of course some components of the tax bill
that also include effectively tariff strategy and authority for the
Treasury Secretary. Something that's really captured the street's attention in
the last couple of days is section eight ninety nine,
which creates an authority for the Treasury Secretary too effectively
tax entities from foreign nations, including individuals that have unfair
(16:33):
trade practices or unfair tax practices on everything from the
digital services trade and beyond. So there's a lot still
to do, and you know, the trade wars are going
to be a hallmark of President Trump's second term, just
like they were in his first.
Speaker 4 (16:47):
Okay, did you just tell me that uncertainty is far
from concluded.
Speaker 9 (16:53):
I think it's ramping up.
Speaker 10 (16:54):
I mean, we had a brief reprieve when AIPO was
the law of the land, and now we're in you know,
get out your numbers two oh one, two two, three
oh one. You know, this is what you this is
what you need to pay for now is the expertise
around these various specific components.
Speaker 2 (17:09):
So I guess that's there's more avenues for the administration
to pursue to pursue trade policy. But my understanding is
they are They take much longer than just saying we're
going to have ten percent across the board tariffs, which
the president can do with the stroke of a pen.
What's the timing associated with all this? It sounds complicated, Yeah,
great question.
Speaker 10 (17:29):
So there are The IEPA Statute was the fastest, blondest
and easiest instrument that the president could have taken up,
and that's exactly what he did.
Speaker 9 (17:37):
But we have a number of components that are.
Speaker 10 (17:41):
Already in the pipeline, already in effect, and also that
can easily be effectuated. So, for example, the Balance of
Payments Authority, which is something Ambassador Lithheiser, president Trump's first
trade representative, talked about in the run up to President
Trump's win in November of twenty twenty four, which is
immediately imposed a balance at payments authority, which is an
(18:01):
adval arum duty of up to fifteen percent for one
hundred and fifty days on any nation where there's a
trade deficit.
Speaker 9 (18:06):
That can happen very quickly.
Speaker 10 (18:08):
Customs and Border protection can change tariff rates within twelve hours,
so that's something to be mindful of as sort of
an AIPA replacement. The drawback is that it's capped at
one hundred and fifty days unless Congress authorizes an extension.
Speaker 9 (18:21):
It's my base case expectation.
Speaker 10 (18:23):
That Congress will not authorize that extension, mostly because many
Republicans do not support the President's tariffs because of course
they are taxes on consumers, and they're seeing the blowback
in various industries like the farming sector and small businesses
in manufacturers who are struggling with the lack of imports
from China right now. But compounding that are the Section
(18:44):
two thirty two tariffs that are already in place, including
on automobiles and automobile bill parts. Those rates are twenty
five percent for the most part. They can be ratcheted
up overnight. The President also has a series of investigations
already in the works whose comment period have ended, and
they can release their findings and impose new tariffs pretty
much at any time. Now. That applies to the semiconductor space,
(19:07):
the pharmaceutical space.
Speaker 9 (19:09):
Copper, and a couple of others.
Speaker 10 (19:10):
And then I think the most important to be mindful
of is Section three oh one this is the authority
to tariff everything coming in from China. In Trump's first term,
we did that across List one, two, three, four A,
and we haven't done it on List for B. But
this is five hundred and fifty billion dollars worth of trade.
And there is no upper bound on the tariff rate
that can be imposed under Section three oh one that
(19:32):
I've ever been able to find. So we're mostly at
twenty five percent now, no reason that can't go up
to fifty or one hundred and forty five.
Speaker 4 (19:40):
A reporter asked the president the taco question, and you
heard his response. I think the Trump always chickens out
on tariffs of this sort. He was angry, and he
sounded even more emboldened that What was your take.
Speaker 10 (19:56):
It just reminded me of the twenty eighteen escalation. I'm
sure y'all remember it at the time. I'll never forget it.
The President got upset in the Oval office and he
escalated tariffs almost immediately and during.
Speaker 9 (20:07):
The hot summer months.
Speaker 10 (20:09):
We saw that repeatedly throughout twenty eighteen, and I think that.
Speaker 9 (20:12):
We're looking at it again here.
Speaker 10 (20:13):
I mean, these are very emotional, heady times for him,
and when he puts these tariffs on it, here's something
like the street doesn't take him seriously.
Speaker 9 (20:22):
That's got to be pretty embarrassing. So obviously we're seeing
escalation today.
Speaker 2 (20:25):
All right, that's tariff's Let's move on to another areas
of your expertise, which is Capitol Hill legislation. We've got
a House tax bill. I guess the Senate's now looking
at it. Where are we with that important piece of legislation.
Speaker 10 (20:41):
We've got a cup seventy two hours before things really
kick off on the Senate side.
Speaker 9 (20:46):
The House passed their bill.
Speaker 10 (20:47):
As you point out, it is very comprehensive and really
thread the needle between a whole host of factions that
just don't exist on the Senate side. So, for example,
the deduction for the salt cap is very generous in
the House passed legislation, probably about two hundred billion dollars,
more generous than anything the Senators will agree to.
Speaker 9 (21:08):
So that's going to have to.
Speaker 10 (21:08):
Be something that they change when the Senate takes up
their bill.
Speaker 9 (21:11):
I suspect it'll.
Speaker 10 (21:12):
Probably be about three weeks before we see any legislation
from the Senate Finance Committee. This is the most critical
committee in the Senate. Unlike on the House side where
we have Energy and Commerce that had to cut believe
it's seven hundred and fifteen billion dollars from Medicaid and
then a separate Ways and Means committee that tackle the
four trillion dollar tax package. That's all one committee on
(21:33):
the Senate side. So we're going to get their package
late in the process, probably towards.
Speaker 9 (21:37):
The end of June.
Speaker 10 (21:39):
They're hoping that they can get legislation through their chamber
by the fourth of July, which I think is distinctly
possible and puts.
Speaker 9 (21:45):
Us on a path to get that bill passed.
Speaker 10 (21:47):
And signed into law by the July twenty fourth recess
in the House of the August first start of the
recess in the Senate, since.
Speaker 4 (21:55):
Is breaking news and do this in twenty seconds. The
Supreme Court ruling letting the Administration strip five hundred thousand
migrants of legal status, can you speak to the importance
of migrants to the US economy real quick?
Speaker 10 (22:09):
Yeah, A migration to the US economy is critical for
the housing sector. One of the sectoral tariffs I talked
about I didn't mention was the lumber tariffs. I mean,
these are critical for the housing industry, and the combination
of kicking out five hundred thousand immigrants and imposing tariffs
on lumber has got to be brutal for that whole sector.
Speaker 9 (22:26):
Really would focus on that.
Speaker 2 (22:27):
Henrieta Trees, thank you so much.
Speaker 5 (22:29):
We appreciate it.
Speaker 2 (22:29):
Henryeta Trees, Managing partner and Director of Economic Policy at
VATA Partners. Somehow she keeps all that Washington legislation, tariff
stuff tweets. Somehow she keeps it all in focus, and
she explains it to us because I can't follow it.
Speaker 1 (22:44):
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each
weekday ten am to noon Eastern on Bloomberg dot com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
and always on the Bloomberg terminal
Popular Podcasts
Dateline NBC
Current and classic episodes, featuring compelling true-crime mysteries, powerful documentaries and in-depth investigations. Special Summer Offer: Exclusively on Apple Podcasts, try our Dateline Premium subscription completely free for one month! With Dateline Premium, you get every episode ad-free plus exclusive bonus content.
The Breakfast Club
The World's Most Dangerous Morning Show, The Breakfast Club, With DJ Envy, Jess Hilarious, And Charlamagne Tha God!
Crime Junkie
Does hearing about a true crime case always leave you scouring the internet for the truth behind the story? Dive into your next mystery with Crime Junkie. Every Monday, join your host Ashley Flowers as she unravels all the details of infamous and underreported true crime cases with her best friend Brit Prawat. From cold cases to missing persons and heroes in our community who seek justice, Crime Junkie is your destination for theories and stories you won’t hear anywhere else. Whether you're a seasoned true crime enthusiast or new to the genre, you'll find yourself on the edge of your seat awaiting a new episode every Monday. If you can never get enough true crime... Congratulations, you’ve found your people. Follow to join a community of Crime Junkies! Crime Junkie is presented by audiochuck Media Company.