April 1, 2025 • 26 mins
Watch Alix and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Intelligence hosted by Paul Sweeney and Alix Steel
Today’s Podcast Features are:
Henrietta Treyz, Managing Partner and Director of Economic Policy at Veda Partners, discusses President Trump's Liberation Day. This includes retaliatory tariffs, bailouts for farmers, and Senate Republicans being hopeful that they will get a final answer from the Parliamentarian either tomorrow or Wednesday as to whether they can write off the $4.6T cost of extending the 2017 tax cuts permanently.
Timothy Fiore, Chair for the Institute for Supply Management’s (ISM) Manufacturing Business Survey Committee, discusses ISM Manufacturing PMI data.
ISM prices paid rose again to the highest level in almost three years, while the new orders-to-inventory component stayed well below one and slipped to its lowest level since 2020. The component gives a reliable short lead on the headline ISM index.
Sarah Ponczek, Financial Advisor at UBS Private Wealth Management, discusses her outlook for the markets.
On April 2, she expects the US to announce tariffs on most major trading partners and trigger a potential tit-for-tat cycle of escalation in the weeks thereafter. The situation appears fluid, with the WSJ on Sunday reporting “Trump has pushed his team to be more aggressive,” but that policy was not yet been agreed or set, and that a 20% tariff on virtually all US trading partners is under consideration.
Steve Man, Bloomberg Intelligence Global Autos and Research Analyst, discusses his autos outlook. US automakers are making a last-ditch effort to sway the Trump administration on tariffs set to take effect this week, contending that levies on the thousands of parts they source abroad could have catastrophic effects on the industry.
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Episode Transcript
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Speaker 1 (00:02):
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Speaker 2 (00:23):
You're looking at a market that's actually turning around, an
unbelievable move.
Speaker 3 (00:26):
It's similar to what we saw yesterday.
Speaker 2 (00:28):
Also, the NASTAC now up by five tenths of one percent,
joining us as Henry to treas Managing partner and director
of Economic Policy at Beta Partners, Henrietta. What the market
seems to want to understand is if tomorrow's going to
be a clearing event or the end of the beginning
before the next phase here of turmoil.
Speaker 4 (00:46):
Yeah.
Speaker 5 (00:46):
I mean that's obviously the critical question. I see no
indication that this is going to be a clearing event.
Speaker 4 (00:51):
I'll give you a couple of reasons why.
Speaker 5 (00:53):
Number one, we know that today the President instructed almost
three months ago, the.
Speaker 4 (01:00):
Federal Trade agencies.
Speaker 5 (01:02):
USTR, Commerce and Treasury to provide him with about fifteen
or more different reports about different components of our trade landscape,
trade relations, with twenty different countries, Not a single one
of those reports has been publicly released yet, So the
background to justify the forthcoming tariffs is something that you
(01:24):
would expect to see publicly released, formalized and a Federal
Register update. We're even discussed with the media in advance
of a publication, should be all laid out if this
is going to be clear.
Speaker 4 (01:36):
Cut and ready to go tomorrow.
Speaker 5 (01:38):
So the disarray that we're seeing, the sort of knives
out reporting we're seeing for Howard Lutnick at Commerce, and
the general disarray and lack of cohesiveness from the White
House around this suggests that while we're going to get
a lot of tariffs announced tomorrow and implemented at midnight,
there's still going to be a substantial amount of uncertainty.
I'm especially concerned about India additional Section three h one investigations,
(02:02):
what it means to pull out of the Phase one
trade deal with China, declare them in violation, and how
that impacts the tariffs will see on China and obviously
Canada and Mexico, which is maybe the most discomforting of
all the tariffs, especially to the auto manufacturers right.
Speaker 6 (02:15):
Now, Henrietta, maybe it's just me but I haven't heard
a whole lot from the US Congress either house about
their views on trade policies and potential changes and potential tariffs.
Is that unusual.
Speaker 5 (02:29):
It's not unusual, but it is, you know, certainly notable,
and I think should be relatively embarrassing for a chamber
that used to pride itself on having authority over you know,
tax policy and trade policy and has been seating those
controls to the.
Speaker 4 (02:45):
White House since the seventies, if not before.
Speaker 5 (02:48):
However, I will say they are going to hold a
vote as early as this evening on the AIPA tariffs
against Canada, and there are a number of Republicans in
the Senate who are telegraphing that they're going to cross
party lines and vote against the President's declaration of national
emergency against Canada, including Senator.
Speaker 4 (03:06):
Collins of Maine.
Speaker 5 (03:08):
I wouldn't be surprised if Obviously Ram Paul, who's a
co sponsor of the legislation from Kentucky, will be there,
Chuck Grassley. Obviously, the farm state senators are the most
exposed here. We know that the USDA is already talking
about another bailout for farmers as we head into a
global transformation of trade that will hurt them substantially.
Speaker 2 (03:27):
Do we get the sense that if there is a
short term pain for US companies that the administration is
going to help subsidize it, which is really what we
saw with farmers back in the first time of administration.
Speaker 3 (03:36):
And is that kind of.
Speaker 2 (03:37):
What the tax bill will be or is it going
to be something more beefy.
Speaker 5 (03:42):
No, the tax bill should not be considered subsidization because
it's an extension of the status quo and it's so
expensive already four point six trillion dollars just to keep
things where they are that you should not expect additional
subsidization or tax cuts for either businesses or individuals. That
is a point blank declaration from Senate staff that I
speak with on Capitol Hill. I would go a little
(04:04):
bit further and say the endeavor they they endeavor to
cut the deficit by one and a half trillion dollars.
My expectation is they ultimately come in at around four
hundred to eight hundred billion dollars and more.
Speaker 4 (04:16):
Paid lip service to deficit reduction.
Speaker 5 (04:18):
But you cannot call it deficit reduction when you'll simultaneously
writing off a four point six trillion dollar extension of
the existing rates. So unless you consider, like many staffers do,
the idea that providing certainty and permanency for individual tax
rates constitute stimulus, there will not be stimulus in this
tax bill. So these TIFFs are coming, they are tax hikes.
(04:38):
There are not tax cuts coming.
Speaker 6 (04:41):
Henriette, can you explain to politics of this tariff thing here?
I mean the markets, you know, stock markets down nine
to ten percent, the dollars trading lower. The markets are
just don't like the uncertainty, I guess more than anything else.
And the concern is it may slow down in this economy,
may push it into a recession, may cause some inflation.
(05:02):
Historically that's not been good politically, it's the economy stupid.
What's the political call here? On behalf of President Trump
and the administration.
Speaker 5 (05:09):
The view from the White House is that they have
a mandate. They have the House, the Senate, and the presidency.
They won the swing states, and they have successfully come
back from a loss in twenty twenty. So they are
going as if this is something that all of America
and certainly their voters, are fully behind.
Speaker 4 (05:29):
The polls suggest that that's not the case.
Speaker 5 (05:31):
The lowest amount of support for President Trump comes on
his tariff's strategy. The American public is very aware that
tariffs are not tax cuts, as the President has proclaimed,
and they do not.
Speaker 4 (05:41):
View tomorrow as liberation Day.
Speaker 5 (05:44):
They view it as a scenario where we're going to
see more tariffs and taxes, mostly because, of course, that
is what is coming, and you can see it in
the pull forward purchases at auto sectors, for example, or
auto sales.
Speaker 4 (05:57):
So you have a.
Speaker 5 (05:58):
Pretty material disconnect between what the White House things that
does a mandate for, and what voters are suggesting they support.
But on Capitol Hill, as you point out, the Senators
and the House members, the best that they can do,
given President Trump's stranglehold on their voters and the incredible
popularity that he shares, is that they have to go
(06:18):
along with this now. And the best they can do
is expect that the uncertainty is really the problem here.
So once we get past tomorrow, you'll hear folks say
eighty percent of the whole market downturn is because things
are uncertain. It's much more likely that once we get
past tomorrow, things will calm down, and then they're very
optimistic that some of these tariffs on especially Canada and
(06:39):
Mexico will start to come off over the summer in
time for a turnaround going into the twenty twenty six
midterm elections, which is about eighteen months away.
Speaker 2 (06:46):
Is there any real data that points to the fact
that that could happen.
Speaker 5 (06:52):
Well, there's no real data on anything except for what's
in Trump's.
Speaker 4 (06:55):
Mind on what could come and what might come off.
Speaker 5 (06:58):
But there is very real concrete data that I think
keeps being ignored, which is that the president has imposed
twenty percent tariffs on nearly five hundred billion dollars worth
of goods coming in from China and twenty five percent
tariffs on all trade coming from Canada and Mexico on
about forty percent of imports. There's also an underreported narrative
(07:19):
that I think we'll hear about in the coming months,
which is that the disruption at the border is incredibly
widespread and underappreciated because you have no one to go
to at USTR that you can get recourse for if
you want to explain that you are USMCA compliant or
seeking an exclusion.
Speaker 4 (07:38):
So there's these.
Speaker 5 (07:38):
Backlogs and confusion at the border taking place right now.
The most concrete example would be when the president be
executive order changed the deminimous rules and created such a
logjam we had to pull it off. That's actually occurring
at the border right now. It's being underreported, I think
in part because businesses are still trying to get exclusions
and they're not able to speak with anybody that they
(07:59):
don't want to rough feathers in the anticipation of hopefully
being able to get an audience in the months ahead.
Speaker 6 (08:04):
All Right, it's not just terifs. At some point, Congress
has got to fund the government and do all that
kind of stuff. How should we think about the to
do list for Congress in the coming days and weeks.
Speaker 4 (08:14):
There's so much there, Okay, So first things.
Speaker 5 (08:17):
First, I would say, the Senate budget that they're working
on right now, I understand, is going to include a
five trillion dollar hike to the debt ceiling.
Speaker 4 (08:28):
Now, that is an exorbitant figure.
Speaker 5 (08:30):
The last time we hiked the debt ceiling by any
dollar figure, it was one point two trillion dollars.
Speaker 4 (08:35):
So five trillion is shocking.
Speaker 5 (08:38):
This belies the reality that current policy baseline accounting for
extending the existing.
Speaker 4 (08:43):
Tax rates is not free. It does matter to the Treasury.
Speaker 5 (08:47):
They do need a five trillion dollar increase in the
debt ceiling, and by the way, that's only to get
through the.
Speaker 4 (08:52):
Twenty twenty six midterms.
Speaker 5 (08:54):
That's not for Trump's full term, which is what I
originally anticipated when I heard that number a month ago.
Speaker 4 (08:59):
So first things first, we have to deal with that.
Speaker 5 (09:01):
I expect it to be in the budget that we
should see from the Senate as early as tonight.
Speaker 4 (09:05):
That'll come due in July.
Speaker 5 (09:07):
Secretary Bessett will give us an update on that in May,
and then, as you point out, we do have a
government funding bill that's going to be due September thirtieth,
and I think that's where we're going to see the
farmers bailout, housed aid to California wildfires, and depending on
the scale and scope of this tax bill, it could
be where you see an expansion of the child tax
credit and extension of the ECA subsidies. The reality is
(09:28):
you need probably ten to twenty Democratic votes in the
Senate for any bill to keep the government open, and
we all saw what happened to Minority Leader Schumer last
go around, so I expect that September period to be
really fraught with negotiations and a lot of tension, much
of which we'll see play out as a result of
the elections in Florida's sixth and first districts tonight. So
(09:50):
that'll be a fascinating precursor to how this will all
play out.
Speaker 2 (09:53):
All right, Henrita, thanks a lot. We really appreciate your analysis,
Henry A. Trist Managing partner and director of Economic Policy
of Beta Partners. Which then raised the question too, and
we talk about a clearing event with all that in store,
how could anything be a clearing event.
Speaker 6 (10:04):
That's a great point.
Speaker 3 (10:05):
Yeah, at this point, yep.
Speaker 6 (10:06):
So I mean you're going to have tomorrow some terrors.
Hopefully that will provide a little bit of clarity for
some members of the marketplace.
Speaker 1 (10:13):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
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Speaker 6 (10:27):
Right now, let's go to Tim Fiori break it down
the He's the chairman of the Manufacturing Business Survey for
the Institute for Supply Management. Tim talk to us about
this im data. The manufacturing headline came into forty nine,
below the consensus and below last month.
Speaker 7 (10:41):
Yeah, I think we disappointed here, but there's no huge
surprise to this. I think the important thing is after
I look through all the data, I had to step
back and say what am I seeing here? And essentially
what you got here is we're not sure what to
do and we're so confused. So if you look at
the three elements, outputs, demands, and input, this PMI is
being supported again by the input strength, which is really
(11:04):
being driven by the terriff issue.
Speaker 6 (11:06):
So if you.
Speaker 7 (11:06):
Remove that out, this month would have been about a
forty eight three, just like last month would have been
a forty eight three. Our demand is still non existent
really because we're waiting to make investments. But I think
the biggest the biggest story here in this month's report
is that revenue is down this month. We're continuing to
d staff and it's all being driven by the uncertainty
around the near term the moderate term market development as
(11:29):
tariffs get deployed. The good thing is tomorrow should shed
a lot more light.
Speaker 2 (11:33):
Yes, well maybe tim to that point. If this uncertainty persists,
what's the end result to that, like is it more destocking,
is it more layoffs, is it less investment, or is
it just deferred.
Speaker 7 (11:47):
Well, so you know our inventory number will drop because
we're probably trying to get two or three months with
the inventory in hand here to avoid the first hits
of the of the tariffs. But I think it's becoming
clear now that these things probably aren't going to go away.
So what's going to happen. Happening is is that it's
going to limit our willingness to invest in capital. We
are investing in inventory, as you can see, we're not
investing in capital goods to replace capital, to expand capital,
(12:10):
R and D capital. That's really all on hold here
until this whole thing settles out. Here, we are one
day before a major day and we're still not sure
of the details, So a lot of uncertainty here. You know,
the market manufacturer does not like uncertainty. We're in the
middle of the uncertainty here. Going to need a little
bit more time to see where this goes. But in
the meantime, you think this would have been a forty
(12:30):
eight to five forty eight three if it was denormalize
for a normal behavior here, which right now we don't have,
so we did disappoint I think we underperformed forty nine.
I think the average was supposed to be forty nine
to five. Not a huge difference. You know, we're not
collapsing here, but we're still reducing our revenue and reducing
our head count, which in a moderate term may not
be good in any kind of recovery cycle.
Speaker 6 (12:52):
All right, Tim, thank you so much for joining us.
Tim Fury, chairman of the Manufacturing Business Survey the Institute
for Supply Management. Again the ICE in headline data, manufacturing
data came into forty nine. The consensus was forty nine
to five, so anything below fifty means a contraction into
manufacturing economy. The ICE prices paid search the sixty nine
point four, well above where folks were looking. And employment
(13:14):
remains weak and actually weaker than expectations, so some issues
there in the manufacturing sector as well.
Speaker 1 (13:22):
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Speaker 3 (13:37):
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Speaker 2 (13:38):
We cover all the top news and business, economics and
finance through a lens of our Bloomberg intelligence folks. They
cover two thousand companies and one hundred and thirty industries
all around the world, and we also like updating you
on the view outside of Bloomberg. Sarah Ponzik is financial
officer at UBS Private Wealth Management. She joins us now
from Boca Raton, Florida for her take on the market. Sarah,
you have private wealth, so your clients are in this
(14:00):
for the long term, but uncertainty can last for quite
a long time. How do you rethink of portfolio to
take advantage of upside but also protection in this weird.
Speaker 8 (14:09):
Time, uncertainty can last for a long time. And what's
interesting is, although you can say ever since we entered
the new year, ever since the new administration took over,
there's been uncertainty, really hasn't been that long. It's only
been a couple of months. But I think we can
all agree it feels like a lifetime. And we have
certainly seen it affect sentiment in sentiment surveys and also
(14:32):
in you know, sentiment from our clients as well. Plenty
of calls, plenty of emails are having conversations every day.
But as your question Alex of how do you think
about this in terms of long term portfolios and rejriggering portfolios,
I think at the end of the day, we all
have to understand volatilities here today.
Speaker 4 (14:49):
It's not going away.
Speaker 8 (14:50):
It's not as though tomorrow is Liberation Day. We're going
to find out exactly what's happening with tariffs and all
of a sudden it's going to be the sailing from here.
That's not the case. There's still going to be a
lot of back and forth, a lot of ups and
downs in markets, a lot of inter day volatility, and
we have to get used to it. But something that
I do think is very important for people to understand
here is that in the past ten percent corrections, which
(15:13):
is just about where we are on the S and
P five hundred, have been great entry points into the
stock market.
Speaker 9 (15:20):
And yes, you have to.
Speaker 8 (15:21):
Have a very strong stomach to be able to weather
the volatility.
Speaker 4 (15:24):
As it continues.
Speaker 8 (15:25):
But if you look at if you what have you know,
phased into the stock market at a ten percent correction
on average throughout history, you would have been well off
into the future.
Speaker 6 (15:35):
What are your clients doing sir, are they going to cash,
are they buying the dip? What are they doing?
Speaker 8 (15:40):
So we've had some clients ask about going to cash,
but that's not necessarily our recommendation at this point in time.
Speaker 4 (15:47):
One.
Speaker 8 (15:48):
I also think it's important to point out if you're
you know someone who's an investor, and you are well diversified,
you're also diversified in high quality bonds, some private investments
like private credit, private equity. You're not only invested in
tech in the market. Yes, it might be a significant
part of your portfolio, but that's not your only investment.
I think a lot of people might be surprised to
(16:09):
understand that if you look at your portfolios your to date,
you're maybe flat to down two percent.
Speaker 1 (16:15):
We really have not.
Speaker 8 (16:16):
Seen big moves yet to the downside that would really
qualify as something extremely scary or extremely extreme. So when
you think about the flip side, if you're going to
go sell investments that you've held for a long time,
go to cash. One, you're probably going to be facing
a big tax bill next year because you're going to
be taking realize gains at the end of the day,
(16:38):
and know you don't want the tax to tail to
waighl the to wag of the investment dog.
Speaker 4 (16:42):
You don't want to be the only reason you don't
do anything.
Speaker 8 (16:45):
But it's more so investors and clients of ours who
have had cash on the sidelines and who have been
waiting for an opportunity. It's more so you take advantage
of the stock market. You take advantage of this volatility,
You get your cash to work slowly, and you also,
you know, do assessment. If you're someone who sees your
portfolio down two percent year to date and you're freaking out,
maybe you have too much risk in your portfolio, that
(17:06):
is a reason to do risk.
Speaker 3 (17:08):
It's such a good point.
Speaker 2 (17:09):
The other side of it is if we see rates
a little lower, a little higher for longer, and there's
obviously a debate for that, because we're seeing a big
bid into the bond market. Goldman Sachs now sees three
cuts for the Fed this year. But if we don't
get that because there is inflation and it's stickier, you
need to diversify more into higher yielding products.
Speaker 8 (17:29):
Well, it gives you the ability to honestly sit in
cash or buy bombs for longer and lock in interest rates.
I know so many people have been talking about you know,
locking and cash rates, locking and cash rates for really
the past year and a half because the expectation where
rates were going to come down and rates just didn't
come down as quickly as expected. They've been, you know,
(17:51):
pretty tough in staying where they are. So if you're
an investor who still has plenty of cash, it's giving
you this opportunity to lock and yields further into the
future by quality bonds and make sure you do lock
yields before rates come down. Our economists are of the
view that, you know that Chair Powell has said that
he expects any inflationary pressures from teriffs to be more so.
(18:12):
I don't want to say transitory, because everyoney's that word.
Now after a couple of years ago you put, you know,
not long standing, and that if there are more so
pressures on growth on the economy, if there are concerns
about the teeriating growth in a recession, than our economists
are of the view that the FED, even with tariffs
in place, would probably start to cut rates at that
point in time too.
Speaker 6 (18:32):
So dividends are they important in the UBS kind of
equity allocation?
Speaker 8 (18:38):
They are I would say dividends are certainly important, especially
if you are an income focused investor. I think the
problem with solely focusing on dividends, you know, there are
some investors who just think, Okay, I want to focus
on equity income. I'm only going to invest in stocks
that give me the highest dividend rates. A lot of
times both stocks, as you know, are value companies, and.
Speaker 4 (18:58):
What's happened over the past five ten.
Speaker 8 (19:00):
Years, frankly, as if you've only invested or focused on
that part of the market is you haven't been invested
in the very companies that have driven much of the
games over the last five to ten years, being big
tech and growth companies. So yes, I think having you know,
value in your portfolio is important, especially if you're an
(19:22):
income oriented investor looking for different ways to get income
in your portfolio and not just from the bond market
is very important. But I think you also want to
be very careful in not focusing too exclusively on evidents,
because if you had done that, you would have underperformed
the S and P five hundred pretty significantly, you know,
over the last.
Speaker 2 (19:39):
Cycle, with the exception of the last three months, or
value actually being with the extend.
Speaker 4 (19:46):
Over the last three months.
Speaker 8 (19:47):
But you know, I'm still not counting growth out, in
counting chech out. We still see the long term growth
potential of tech and growth or we don't think that.
What we've seen over the last couple of months is
you know, a death now to these megacap tech companies.
Oh my gosh, they're no longer what they were. We'd
rather see this as an opportunity to write size exposure
(20:07):
if you've been under exposed all these years.
Speaker 3 (20:10):
Yeah, Sarah, great stuff. Really appreciate it. Thank you so much.
Always good to get your perspective.
Speaker 2 (20:13):
Sarah Ponzik, Financial Advisor, ubs A Private wealth management.
Speaker 1 (20:19):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple Coarcklay, and Android
Auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch US live on YouTube.
Speaker 6 (20:33):
Let's stay on the topic of global auto Steve Man
joins US Global Autos and Industrials research channels for Bloomberg Intelligence. Steve,
what are you telling clients about the impact we may
see tomorrow from President Trump and tariffs on the global
auto business.
Speaker 9 (20:51):
I've been telling clients that.
Speaker 10 (20:53):
I think we're pretty much done for all terriffs for now.
Speaker 9 (20:56):
I think the big big thing that's going to come
up next is really on how parts are going to
be taxed going forward, and you know, it's it's a
big chunk. We had a report out there today. You know,
Tesla even though they make cars, a lot of cars here,
but about a third of their parts actually are imported
(21:18):
from elsewhere, mainly low cost country like Mexico. And surprisingly
Ford does build Ford Motor Company does build a lot
of companies here, a lot of cars here in the US,
but they only have some thirty percent content that's actually
based in the US. So lots to come on on
(21:39):
the auto parts section of the tariffs.
Speaker 2 (21:42):
Yeah, so let's just understand that a little bit more
so you have the actual whole imported car versus the
car part, and the whole imported car stuff should happen
tomorrow or Thursday, whereas the car park is amazing? Am
I getting that relatively correct?
Speaker 9 (21:59):
Yeah, that's right. So it's it could be really huge.
For example, we talked about I was just talking about Ford, right,
anything that comes in from Mexico, for example, the Machi
which they're losing tons of money on already comes from Mexico.
And then you know, if on top of that the
parts are actually coming from Mexico or any other low
(22:22):
cost country, that could actually lift the price of the
vehicle even even higher.
Speaker 6 (22:28):
So are the US automakers is this going to benefit them?
And if so, how on to what degree? I'm not
I'm unclear here.
Speaker 9 (22:36):
Well, I mean it's philosophical, there's I think debate on
both sides. Uh, you know, automated, but automobiles are high
value products. There's no argument against that. And you know,
the design of the vehicle, the production of the vehicle,
the manufacturing of the vehicles creates a lot of jobs
(22:56):
in the US in the manufacturing alone bym you know,
quoting some economists, every job that manufacturing creates, it creates
another point four jobs, you know, peripheral jobs for that
to support that manufacturing. So it does create a lot
of jobs. It does create a lot of innovation. Example,
(23:18):
you know, we just had Rivian on a lot of
these peer plays like Rivian of Tesla.
Speaker 11 (23:26):
Uh, they make a lot of the high value components
in house and in the US already, and that has
created a lot of innovation around cars.
Speaker 9 (23:37):
And around how to.
Speaker 10 (23:38):
Make cars as in a cheap way a less expensive way.
And you know, I.
Speaker 9 (23:46):
Think there's debate right a lot of the likeas the
automakers have you know, outsource that manufacturing to low cost
country and maybe that's why they're facing a lot of
the competition around the world where they can ain't really
built cars cheaply to the masses.
Speaker 2 (24:06):
Is it possible that some of the winners are actually
going to be other foreign companies, Like we're talking about
Paul just at least a hybrid that was built either
in Ohio or what was it, Virginia? Some US based
so but it's a Honda. You can make the same
argument for Toyota, like are those cars actually going to
be the bigger winners here?
Speaker 9 (24:27):
It could be like Japanese if you look at you know,
potentially increasing prices for consumer from an automaker's perspective, you know,
I think the Japanese are in a better position because
the there's huge still a lot of demand for their vehicles.
Their inventory is relatively low, around thirty days to forty
(24:48):
days of sales versus the average industry is like seventy days.
Some automakers are over one hundred days. So in terms
of pricing, I think the consumers will be willing to
pay a little bit extra, and so Honda and you
know examples of Honda and Toyota may be able to
(25:09):
get the consumers to absorb some of the higher tear
of costs.
Speaker 6 (25:12):
Have we heard any US auto manufacturer announced plans for
new factories or they're going to add jobs. What have
we heard from the US manufacturers?
Speaker 9 (25:23):
Not yet? Not yet. I think there's a lot of
discussion on you know, can we you know, with Trump
about not taxing parts certain parts auto parts, but there
we haven't heard of restoring. But you know, we've also
had a lot of analysis. We've done a lot of analysis
on restoring. It's going to be a huge cash flow
(25:45):
headwind for the automakers, you know, if they have to
if the automaker have to build a green field plant
back in the US, that could cost upwards of four
billion dollars just for one plant. So that's that's humongous.
Speaker 10 (26:01):
So we haven't heard.
Speaker 9 (26:03):
I think I think the automakers are hoping that these
terrorists don't last forever.
Speaker 10 (26:09):
But you know, it's you know, I'm sure in the
boardrooms they're thinking about the contingencies around how to manage
that cap ax and probably asking the administration for financial
support if they do have to bring back a lot
of that manufacturing into the US.
Speaker 3 (26:27):
All Right, we really appreciate Steve. Thanks so much.
Speaker 2 (26:29):
Steve Mann, Bloomberg Intelligence, Senior autos Analyst.
Speaker 1 (26:32):
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Speaker 6 (26:54):
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Speaker 2 (00:23):
You're looking at a market that's actually turning around, an
unbelievable move.
Speaker 3 (00:26):
It's similar to what we saw yesterday.
Speaker 2 (00:28):
Also, the NASTAC now up by five tenths of one percent,
joining us as Henry to treas Managing partner and director
of Economic Policy at Beta Partners, Henrietta. What the market
seems to want to understand is if tomorrow's going to
be a clearing event or the end of the beginning
before the next phase here of turmoil.
Speaker 4 (00:46):
Yeah.
Speaker 5 (00:46):
I mean that's obviously the critical question. I see no
indication that this is going to be a clearing event.
Speaker 4 (00:51):
I'll give you a couple of reasons why.
Speaker 5 (00:53):
Number one, we know that today the President instructed almost
three months ago, the.
Speaker 4 (01:00):
Federal Trade agencies.
Speaker 5 (01:02):
USTR, Commerce and Treasury to provide him with about fifteen
or more different reports about different components of our trade landscape,
trade relations, with twenty different countries, Not a single one
of those reports has been publicly released yet, So the
background to justify the forthcoming tariffs is something that you
(01:24):
would expect to see publicly released, formalized and a Federal
Register update. We're even discussed with the media in advance
of a publication, should be all laid out if this
is going to be clear.
Speaker 4 (01:36):
Cut and ready to go tomorrow.
Speaker 5 (01:38):
So the disarray that we're seeing, the sort of knives
out reporting we're seeing for Howard Lutnick at Commerce, and
the general disarray and lack of cohesiveness from the White
House around this suggests that while we're going to get
a lot of tariffs announced tomorrow and implemented at midnight,
there's still going to be a substantial amount of uncertainty.
I'm especially concerned about India additional Section three h one investigations,
(02:02):
what it means to pull out of the Phase one
trade deal with China, declare them in violation, and how
that impacts the tariffs will see on China and obviously
Canada and Mexico, which is maybe the most discomforting of
all the tariffs, especially to the auto manufacturers right.
Speaker 6 (02:15):
Now, Henrietta, maybe it's just me but I haven't heard
a whole lot from the US Congress either house about
their views on trade policies and potential changes and potential tariffs.
Is that unusual.
Speaker 5 (02:29):
It's not unusual, but it is, you know, certainly notable,
and I think should be relatively embarrassing for a chamber
that used to pride itself on having authority over you know,
tax policy and trade policy and has been seating those
controls to the.
Speaker 4 (02:45):
White House since the seventies, if not before.
Speaker 5 (02:48):
However, I will say they are going to hold a
vote as early as this evening on the AIPA tariffs
against Canada, and there are a number of Republicans in
the Senate who are telegraphing that they're going to cross
party lines and vote against the President's declaration of national
emergency against Canada, including Senator.
Speaker 4 (03:06):
Collins of Maine.
Speaker 5 (03:08):
I wouldn't be surprised if Obviously Ram Paul, who's a
co sponsor of the legislation from Kentucky, will be there,
Chuck Grassley. Obviously, the farm state senators are the most
exposed here. We know that the USDA is already talking
about another bailout for farmers as we head into a
global transformation of trade that will hurt them substantially.
Speaker 2 (03:27):
Do we get the sense that if there is a
short term pain for US companies that the administration is
going to help subsidize it, which is really what we
saw with farmers back in the first time of administration.
Speaker 3 (03:36):
And is that kind of.
Speaker 2 (03:37):
What the tax bill will be or is it going
to be something more beefy.
Speaker 5 (03:42):
No, the tax bill should not be considered subsidization because
it's an extension of the status quo and it's so
expensive already four point six trillion dollars just to keep
things where they are that you should not expect additional
subsidization or tax cuts for either businesses or individuals. That
is a point blank declaration from Senate staff that I
speak with on Capitol Hill. I would go a little
(04:04):
bit further and say the endeavor they they endeavor to
cut the deficit by one and a half trillion dollars.
My expectation is they ultimately come in at around four
hundred to eight hundred billion dollars and more.
Speaker 4 (04:16):
Paid lip service to deficit reduction.
Speaker 5 (04:18):
But you cannot call it deficit reduction when you'll simultaneously
writing off a four point six trillion dollar extension of
the existing rates. So unless you consider, like many staffers do,
the idea that providing certainty and permanency for individual tax
rates constitute stimulus, there will not be stimulus in this
tax bill. So these TIFFs are coming, they are tax hikes.
(04:38):
There are not tax cuts coming.
Speaker 6 (04:41):
Henriette, can you explain to politics of this tariff thing here?
I mean the markets, you know, stock markets down nine
to ten percent, the dollars trading lower. The markets are
just don't like the uncertainty, I guess more than anything else.
And the concern is it may slow down in this economy,
may push it into a recession, may cause some inflation.
(05:02):
Historically that's not been good politically, it's the economy stupid.
What's the political call here? On behalf of President Trump
and the administration.
Speaker 5 (05:09):
The view from the White House is that they have
a mandate. They have the House, the Senate, and the presidency.
They won the swing states, and they have successfully come
back from a loss in twenty twenty. So they are
going as if this is something that all of America
and certainly their voters, are fully behind.
Speaker 4 (05:29):
The polls suggest that that's not the case.
Speaker 5 (05:31):
The lowest amount of support for President Trump comes on
his tariff's strategy. The American public is very aware that
tariffs are not tax cuts, as the President has proclaimed,
and they do not.
Speaker 4 (05:41):
View tomorrow as liberation Day.
Speaker 5 (05:44):
They view it as a scenario where we're going to
see more tariffs and taxes, mostly because, of course, that
is what is coming, and you can see it in
the pull forward purchases at auto sectors, for example, or
auto sales.
Speaker 4 (05:57):
So you have a.
Speaker 5 (05:58):
Pretty material disconnect between what the White House things that
does a mandate for, and what voters are suggesting they support.
But on Capitol Hill, as you point out, the Senators
and the House members, the best that they can do,
given President Trump's stranglehold on their voters and the incredible
popularity that he shares, is that they have to go
(06:18):
along with this now. And the best they can do
is expect that the uncertainty is really the problem here.
So once we get past tomorrow, you'll hear folks say
eighty percent of the whole market downturn is because things
are uncertain. It's much more likely that once we get
past tomorrow, things will calm down, and then they're very
optimistic that some of these tariffs on especially Canada and
(06:39):
Mexico will start to come off over the summer in
time for a turnaround going into the twenty twenty six
midterm elections, which is about eighteen months away.
Speaker 2 (06:46):
Is there any real data that points to the fact
that that could happen.
Speaker 5 (06:52):
Well, there's no real data on anything except for what's
in Trump's.
Speaker 4 (06:55):
Mind on what could come and what might come off.
Speaker 5 (06:58):
But there is very real concrete data that I think
keeps being ignored, which is that the president has imposed
twenty percent tariffs on nearly five hundred billion dollars worth
of goods coming in from China and twenty five percent
tariffs on all trade coming from Canada and Mexico on
about forty percent of imports. There's also an underreported narrative
(07:19):
that I think we'll hear about in the coming months,
which is that the disruption at the border is incredibly
widespread and underappreciated because you have no one to go
to at USTR that you can get recourse for if
you want to explain that you are USMCA compliant or
seeking an exclusion.
Speaker 4 (07:38):
So there's these.
Speaker 5 (07:38):
Backlogs and confusion at the border taking place right now.
The most concrete example would be when the president be
executive order changed the deminimous rules and created such a
logjam we had to pull it off. That's actually occurring
at the border right now. It's being underreported, I think
in part because businesses are still trying to get exclusions
and they're not able to speak with anybody that they
(07:59):
don't want to rough feathers in the anticipation of hopefully
being able to get an audience in the months ahead.
Speaker 6 (08:04):
All Right, it's not just terifs. At some point, Congress
has got to fund the government and do all that
kind of stuff. How should we think about the to
do list for Congress in the coming days and weeks.
Speaker 4 (08:14):
There's so much there, Okay, So first things.
Speaker 5 (08:17):
First, I would say, the Senate budget that they're working
on right now, I understand, is going to include a
five trillion dollar hike to the debt ceiling.
Speaker 4 (08:28):
Now, that is an exorbitant figure.
Speaker 5 (08:30):
The last time we hiked the debt ceiling by any
dollar figure, it was one point two trillion dollars.
Speaker 4 (08:35):
So five trillion is shocking.
Speaker 5 (08:38):
This belies the reality that current policy baseline accounting for
extending the existing.
Speaker 4 (08:43):
Tax rates is not free. It does matter to the Treasury.
Speaker 5 (08:47):
They do need a five trillion dollar increase in the
debt ceiling, and by the way, that's only to get
through the.
Speaker 4 (08:52):
Twenty twenty six midterms.
Speaker 5 (08:54):
That's not for Trump's full term, which is what I
originally anticipated when I heard that number a month ago.
Speaker 4 (08:59):
So first things first, we have to deal with that.
Speaker 5 (09:01):
I expect it to be in the budget that we
should see from the Senate as early as tonight.
Speaker 4 (09:05):
That'll come due in July.
Speaker 5 (09:07):
Secretary Bessett will give us an update on that in May,
and then, as you point out, we do have a
government funding bill that's going to be due September thirtieth,
and I think that's where we're going to see the
farmers bailout, housed aid to California wildfires, and depending on
the scale and scope of this tax bill, it could
be where you see an expansion of the child tax
credit and extension of the ECA subsidies. The reality is
(09:28):
you need probably ten to twenty Democratic votes in the
Senate for any bill to keep the government open, and
we all saw what happened to Minority Leader Schumer last
go around, so I expect that September period to be
really fraught with negotiations and a lot of tension, much
of which we'll see play out as a result of
the elections in Florida's sixth and first districts tonight. So
(09:50):
that'll be a fascinating precursor to how this will all
play out.
Speaker 2 (09:53):
All right, Henrita, thanks a lot. We really appreciate your analysis,
Henry A. Trist Managing partner and director of Economic Policy
of Beta Partners. Which then raised the question too, and
we talk about a clearing event with all that in store,
how could anything be a clearing event.
Speaker 6 (10:04):
That's a great point.
Speaker 3 (10:05):
Yeah, at this point, yep.
Speaker 6 (10:06):
So I mean you're going to have tomorrow some terrors.
Hopefully that will provide a little bit of clarity for
some members of the marketplace.
Speaker 1 (10:13):
You're listening to the Bloomberg Intelligence Podcast. Catch us live
weekdays at ten am Eastern on Apple, Coarcklay, and Android
Auto with the Bloomberg Business app, Listen on demand wherever
you get your podcasts, or watch us live on YouTube.
Speaker 6 (10:27):
Right now, let's go to Tim Fiori break it down
the He's the chairman of the Manufacturing Business Survey for
the Institute for Supply Management. Tim talk to us about
this im data. The manufacturing headline came into forty nine,
below the consensus and below last month.
Speaker 7 (10:41):
Yeah, I think we disappointed here, but there's no huge
surprise to this. I think the important thing is after
I look through all the data, I had to step
back and say what am I seeing here? And essentially
what you got here is we're not sure what to
do and we're so confused. So if you look at
the three elements, outputs, demands, and input, this PMI is
being supported again by the input strength, which is really
(11:04):
being driven by the terriff issue.
Speaker 6 (11:06):
So if you.
Speaker 7 (11:06):
Remove that out, this month would have been about a
forty eight three, just like last month would have been
a forty eight three. Our demand is still non existent
really because we're waiting to make investments. But I think
the biggest the biggest story here in this month's report
is that revenue is down this month. We're continuing to
d staff and it's all being driven by the uncertainty
around the near term the moderate term market development as
(11:29):
tariffs get deployed. The good thing is tomorrow should shed
a lot more light.
Speaker 2 (11:33):
Yes, well maybe tim to that point. If this uncertainty persists,
what's the end result to that, like is it more destocking,
is it more layoffs, is it less investment, or is
it just deferred.
Speaker 7 (11:47):
Well, so you know our inventory number will drop because
we're probably trying to get two or three months with
the inventory in hand here to avoid the first hits
of the of the tariffs. But I think it's becoming
clear now that these things probably aren't going to go away.
So what's going to happen. Happening is is that it's
going to limit our willingness to invest in capital. We
are investing in inventory, as you can see, we're not
investing in capital goods to replace capital, to expand capital,
(12:10):
R and D capital. That's really all on hold here
until this whole thing settles out. Here, we are one
day before a major day and we're still not sure
of the details, So a lot of uncertainty here. You know,
the market manufacturer does not like uncertainty. We're in the
middle of the uncertainty here. Going to need a little
bit more time to see where this goes. But in
the meantime, you think this would have been a forty
(12:30):
eight to five forty eight three if it was denormalize
for a normal behavior here, which right now we don't have,
so we did disappoint I think we underperformed forty nine.
I think the average was supposed to be forty nine
to five. Not a huge difference. You know, we're not
collapsing here, but we're still reducing our revenue and reducing
our head count, which in a moderate term may not
be good in any kind of recovery cycle.
Speaker 6 (12:52):
All right, Tim, thank you so much for joining us.
Tim Fury, chairman of the Manufacturing Business Survey the Institute
for Supply Management. Again the ICE in headline data, manufacturing
data came into forty nine. The consensus was forty nine
to five, so anything below fifty means a contraction into
manufacturing economy. The ICE prices paid search the sixty nine
point four, well above where folks were looking. And employment
(13:14):
remains weak and actually weaker than expectations, so some issues
there in the manufacturing sector as well.
Speaker 1 (13:22):
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 3 (13:37):
This is Bloomberg Intelligence Radio.
Speaker 2 (13:38):
We cover all the top news and business, economics and
finance through a lens of our Bloomberg intelligence folks. They
cover two thousand companies and one hundred and thirty industries
all around the world, and we also like updating you
on the view outside of Bloomberg. Sarah Ponzik is financial
officer at UBS Private Wealth Management. She joins us now
from Boca Raton, Florida for her take on the market. Sarah,
you have private wealth, so your clients are in this
(14:00):
for the long term, but uncertainty can last for quite
a long time. How do you rethink of portfolio to
take advantage of upside but also protection in this weird.
Speaker 8 (14:09):
Time, uncertainty can last for a long time. And what's
interesting is, although you can say ever since we entered
the new year, ever since the new administration took over,
there's been uncertainty, really hasn't been that long. It's only
been a couple of months. But I think we can
all agree it feels like a lifetime. And we have
certainly seen it affect sentiment in sentiment surveys and also
(14:32):
in you know, sentiment from our clients as well. Plenty
of calls, plenty of emails are having conversations every day.
But as your question Alex of how do you think
about this in terms of long term portfolios and rejriggering portfolios,
I think at the end of the day, we all
have to understand volatilities here today.
Speaker 4 (14:49):
It's not going away.
Speaker 8 (14:50):
It's not as though tomorrow is Liberation Day. We're going
to find out exactly what's happening with tariffs and all
of a sudden it's going to be the sailing from here.
That's not the case. There's still going to be a
lot of back and forth, a lot of ups and
downs in markets, a lot of inter day volatility, and
we have to get used to it. But something that
I do think is very important for people to understand
here is that in the past ten percent corrections, which
(15:13):
is just about where we are on the S and
P five hundred, have been great entry points into the
stock market.
Speaker 9 (15:20):
And yes, you have to.
Speaker 8 (15:21):
Have a very strong stomach to be able to weather
the volatility.
Speaker 4 (15:24):
As it continues.
Speaker 8 (15:25):
But if you look at if you what have you know,
phased into the stock market at a ten percent correction
on average throughout history, you would have been well off
into the future.
Speaker 6 (15:35):
What are your clients doing sir, are they going to cash,
are they buying the dip? What are they doing?
Speaker 8 (15:40):
So we've had some clients ask about going to cash,
but that's not necessarily our recommendation at this point in time.
Speaker 4 (15:47):
One.
Speaker 8 (15:48):
I also think it's important to point out if you're
you know someone who's an investor, and you are well diversified,
you're also diversified in high quality bonds, some private investments
like private credit, private equity. You're not only invested in
tech in the market. Yes, it might be a significant
part of your portfolio, but that's not your only investment.
I think a lot of people might be surprised to
(16:09):
understand that if you look at your portfolios your to date,
you're maybe flat to down two percent.
Speaker 1 (16:15):
We really have not.
Speaker 8 (16:16):
Seen big moves yet to the downside that would really
qualify as something extremely scary or extremely extreme. So when
you think about the flip side, if you're going to
go sell investments that you've held for a long time,
go to cash. One, you're probably going to be facing
a big tax bill next year because you're going to
be taking realize gains at the end of the day,
(16:38):
and know you don't want the tax to tail to
waighl the to wag of the investment dog.
Speaker 4 (16:42):
You don't want to be the only reason you don't
do anything.
Speaker 8 (16:45):
But it's more so investors and clients of ours who
have had cash on the sidelines and who have been
waiting for an opportunity. It's more so you take advantage
of the stock market. You take advantage of this volatility,
You get your cash to work slowly, and you also,
you know, do assessment. If you're someone who sees your
portfolio down two percent year to date and you're freaking out,
maybe you have too much risk in your portfolio, that
(17:06):
is a reason to do risk.
Speaker 3 (17:08):
It's such a good point.
Speaker 2 (17:09):
The other side of it is if we see rates
a little lower, a little higher for longer, and there's
obviously a debate for that, because we're seeing a big
bid into the bond market. Goldman Sachs now sees three
cuts for the Fed this year. But if we don't
get that because there is inflation and it's stickier, you
need to diversify more into higher yielding products.
Speaker 8 (17:29):
Well, it gives you the ability to honestly sit in
cash or buy bombs for longer and lock in interest rates.
I know so many people have been talking about you know,
locking and cash rates, locking and cash rates for really
the past year and a half because the expectation where
rates were going to come down and rates just didn't
come down as quickly as expected. They've been, you know,
(17:51):
pretty tough in staying where they are. So if you're
an investor who still has plenty of cash, it's giving
you this opportunity to lock and yields further into the
future by quality bonds and make sure you do lock
yields before rates come down. Our economists are of the
view that, you know that Chair Powell has said that
he expects any inflationary pressures from teriffs to be more so.
(18:12):
I don't want to say transitory, because everyoney's that word.
Now after a couple of years ago you put, you know,
not long standing, and that if there are more so
pressures on growth on the economy, if there are concerns
about the teeriating growth in a recession, than our economists
are of the view that the FED, even with tariffs
in place, would probably start to cut rates at that
point in time too.
Speaker 6 (18:32):
So dividends are they important in the UBS kind of
equity allocation?
Speaker 8 (18:38):
They are I would say dividends are certainly important, especially
if you are an income focused investor. I think the
problem with solely focusing on dividends, you know, there are
some investors who just think, Okay, I want to focus
on equity income. I'm only going to invest in stocks
that give me the highest dividend rates. A lot of
times both stocks, as you know, are value companies, and.
Speaker 4 (18:58):
What's happened over the past five ten.
Speaker 8 (19:00):
Years, frankly, as if you've only invested or focused on
that part of the market is you haven't been invested
in the very companies that have driven much of the
games over the last five to ten years, being big
tech and growth companies. So yes, I think having you know,
value in your portfolio is important, especially if you're an
(19:22):
income oriented investor looking for different ways to get income
in your portfolio and not just from the bond market
is very important. But I think you also want to
be very careful in not focusing too exclusively on evidents,
because if you had done that, you would have underperformed
the S and P five hundred pretty significantly, you know,
over the last.
Speaker 2 (19:39):
Cycle, with the exception of the last three months, or
value actually being with the extend.
Speaker 4 (19:46):
Over the last three months.
Speaker 8 (19:47):
But you know, I'm still not counting growth out, in
counting chech out. We still see the long term growth
potential of tech and growth or we don't think that.
What we've seen over the last couple of months is
you know, a death now to these megacap tech companies.
Oh my gosh, they're no longer what they were. We'd
rather see this as an opportunity to write size exposure
(20:07):
if you've been under exposed all these years.
Speaker 3 (20:10):
Yeah, Sarah, great stuff. Really appreciate it. Thank you so much.
Always good to get your perspective.
Speaker 2 (20:13):
Sarah Ponzik, Financial Advisor, ubs A Private wealth management.
Speaker 1 (20:19):
You're listening to the Bloomberg Intelligence podcast. Catch us live
weekdays at ten am Eastern on Apple Coarcklay, and Android
Auto with the Bloomberg Business app. Listen on demand wherever
you get your podcasts, or watch US live on YouTube.
Speaker 6 (20:33):
Let's stay on the topic of global auto Steve Man
joins US Global Autos and Industrials research channels for Bloomberg Intelligence. Steve,
what are you telling clients about the impact we may
see tomorrow from President Trump and tariffs on the global
auto business.
Speaker 9 (20:51):
I've been telling clients that.
Speaker 10 (20:53):
I think we're pretty much done for all terriffs for now.
Speaker 9 (20:56):
I think the big big thing that's going to come
up next is really on how parts are going to
be taxed going forward, and you know, it's it's a
big chunk. We had a report out there today. You know,
Tesla even though they make cars, a lot of cars here,
but about a third of their parts actually are imported
(21:18):
from elsewhere, mainly low cost country like Mexico. And surprisingly
Ford does build Ford Motor Company does build a lot
of companies here, a lot of cars here in the US,
but they only have some thirty percent content that's actually
based in the US. So lots to come on on
(21:39):
the auto parts section of the tariffs.
Speaker 2 (21:42):
Yeah, so let's just understand that a little bit more
so you have the actual whole imported car versus the
car part, and the whole imported car stuff should happen
tomorrow or Thursday, whereas the car park is amazing? Am
I getting that relatively correct?
Speaker 9 (21:59):
Yeah, that's right. So it's it could be really huge.
For example, we talked about I was just talking about Ford, right,
anything that comes in from Mexico, for example, the Machi
which they're losing tons of money on already comes from Mexico.
And then you know, if on top of that the
parts are actually coming from Mexico or any other low
(22:22):
cost country, that could actually lift the price of the
vehicle even even higher.
Speaker 6 (22:28):
So are the US automakers is this going to benefit them?
And if so, how on to what degree? I'm not
I'm unclear here.
Speaker 9 (22:36):
Well, I mean it's philosophical, there's I think debate on
both sides. Uh, you know, automated, but automobiles are high
value products. There's no argument against that. And you know,
the design of the vehicle, the production of the vehicle,
the manufacturing of the vehicles creates a lot of jobs
(22:56):
in the US in the manufacturing alone bym you know,
quoting some economists, every job that manufacturing creates, it creates
another point four jobs, you know, peripheral jobs for that
to support that manufacturing. So it does create a lot
of jobs. It does create a lot of innovation. Example,
(23:18):
you know, we just had Rivian on a lot of
these peer plays like Rivian of Tesla.
Speaker 11 (23:26):
Uh, they make a lot of the high value components
in house and in the US already, and that has
created a lot of innovation around cars.
Speaker 9 (23:37):
And around how to.
Speaker 10 (23:38):
Make cars as in a cheap way a less expensive way.
And you know, I.
Speaker 9 (23:46):
Think there's debate right a lot of the likeas the
automakers have you know, outsource that manufacturing to low cost
country and maybe that's why they're facing a lot of
the competition around the world where they can ain't really
built cars cheaply to the masses.
Speaker 2 (24:06):
Is it possible that some of the winners are actually
going to be other foreign companies, Like we're talking about
Paul just at least a hybrid that was built either
in Ohio or what was it, Virginia? Some US based
so but it's a Honda. You can make the same
argument for Toyota, like are those cars actually going to
be the bigger winners here?
Speaker 9 (24:27):
It could be like Japanese if you look at you know,
potentially increasing prices for consumer from an automaker's perspective, you know,
I think the Japanese are in a better position because
the there's huge still a lot of demand for their vehicles.
Their inventory is relatively low, around thirty days to forty
(24:48):
days of sales versus the average industry is like seventy days.
Some automakers are over one hundred days. So in terms
of pricing, I think the consumers will be willing to
pay a little bit extra, and so Honda and you
know examples of Honda and Toyota may be able to
(25:09):
get the consumers to absorb some of the higher tear
of costs.
Speaker 6 (25:12):
Have we heard any US auto manufacturer announced plans for
new factories or they're going to add jobs. What have
we heard from the US manufacturers?
Speaker 9 (25:23):
Not yet? Not yet. I think there's a lot of
discussion on you know, can we you know, with Trump
about not taxing parts certain parts auto parts, but there
we haven't heard of restoring. But you know, we've also
had a lot of analysis. We've done a lot of analysis
on restoring. It's going to be a huge cash flow
(25:45):
headwind for the automakers, you know, if they have to
if the automaker have to build a green field plant
back in the US, that could cost upwards of four
billion dollars just for one plant. So that's that's humongous.
Speaker 10 (26:01):
So we haven't heard.
Speaker 9 (26:03):
I think I think the automakers are hoping that these
terrorists don't last forever.
Speaker 10 (26:09):
But you know, it's you know, I'm sure in the
boardrooms they're thinking about the contingencies around how to manage
that cap ax and probably asking the administration for financial
support if they do have to bring back a lot
of that manufacturing into the US.
Speaker 3 (26:27):
All Right, we really appreciate Steve. Thanks so much.
Speaker 2 (26:29):
Steve Mann, Bloomberg Intelligence, Senior autos Analyst.
Speaker 1 (26:32):
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.
Speaker 6 (26:54):
You
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