May 15, 2025 • 41 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyMay 15th, 2025
Featuring:
1) Michael Darda, Chief Economist at Roth Capital Partners, talks about a decreased recession risk as trade deals begin and why Trump's raising taxes and increasing the marginal tax rate won't necessarily lead to economic and financial upheaval. Traders are looking ahead to a speech by Federal Reserve Chair Jerome Powell and a slew of economic reports to gauge the sustainability of the recent equity rally, with billionaire Steve Cohen predicting a 45% chance of a US recession.
2) Gene Seroka, CEO at the Port of LA, joins for a discussion on shipping and why normalizing relations with China won't lead to a surge in imports. Recently, Seroka has noted that the US-China tariff truce likely won't cause businesses to frontload inventory.
3) Michelle Meyer, Chief Economist, North America at the MasterCard Economics Institute, reacts to retail sales and talks about her outlook for the consumer. Market participants have a downbeat view of retails sales heading into the day, but alternative measures of spending suggest tariff frontrunning has continued during the month. Signs of a resilient consumer could continue to support stocks.
4) Elizabeth Economy, Hargrove senior fellow and co-director of the U.S., China and the world program at the Hoover Institution at Stanford University, talks about the "total reset" in the US' relationship with China, whether the US or China are winning in trade negotiations so far, and whether we'll see meaningful change in Chinese market practices. In a sign of discord today, Beijing has pushed back against a US decision aimed at curbing Chinese-made artificial intelligence chips.
5) Lisa Mateo joins with the latest headlines in newspapers across the US, including a Financial Times story on Gen Z changing what it means to be a reader and TripAdvisor's top destinations for travelers.
See omnystudio.com/listener for privacy information.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:02):
Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
Chinnings Now for an extended conversation synthesizing this economic moment
with the Marcus. Michael Darta joins us this morning, thrill
that he could be with us with Roth Capital. Michael,
you go all hysterical on me here. You go back
to President Hubert Heaver nineteen thirty nineteen thirty two, We
had a tariff hike and they raise the marginal tax
(00:49):
rate on the fancy people. Are we going to get
a REDUCS on that? Or is that bluff and bluster
from President Trump.
Speaker 3 (00:56):
Great to be on with you both, Tom. You know
a bit of a cautionary tale here, I think for
the Republican Party and the Trump administration because obviously, even
with this simmering down of trade tensions, the average effective
tariff rate is going up meaningfully, you know, the highest
one hundred years. So you have to go back to
(01:17):
Smoot Hawley Herbert Hoover. President Hoover signed that in June
of nineteen thirty and then he also signed a gigantic
tax increase, big rise in the top marginal tax rate
through the Revenue Act of nineteen thirty two. The Republicans
would not see the presidency for two decades, and obviously
Smoot and Hally got run out of office in nineteen
(01:40):
thirty three, never to be heard from again.
Speaker 2 (01:42):
I look at this, it's a great walk to a history, folks.
And the backdrop of this, of course, is a small
mayorship election in Omaha, Nebraska where the Democrats doun. Nobody
saw that coming but Michael Darter within the stew that
you're looking at at roth Capitol. Now, do you perceive
that tariffs will be pulled back ever further from the
(02:05):
ridiculous numbers down to thirteen or seventeen percent whatever earning,
Tedesky says, and it will bring him down even more
so in the coming weeks and months.
Speaker 3 (02:15):
Well, I think Tom, that you know the China deal
announced over the previous weekend is important because those tariff
rates were clearly in the prohibitive portion of the Laugher curve.
You essentially had a trade embargo with those rates up
at one hundred and forty five percent, so no trade,
no revenues, right, I mean, this is a good lesson
(02:37):
in supply side economics. So getting those down to around
thirty I think is important. So it's still a big
step up in tariff rates from where we were prior
to the administration coming into office, But that backing down
I think is important in the sense that if you're
just doing a static forecast for how much this could
(02:57):
disrupt growth this year, you know, more of a more
of a slow down dislocation versus you know, potential contraction.
Speaker 2 (03:05):
Pauls when he wants to jump in here and Torston
Slack publishing seconds ago, we bring that to you, and
this goes right to the Dartak conversation. Paul, you look
at imports coming in. You think all the money goes
to China. That's what the president thinks. Wrong, Torston Slack
saying fifty six percent of the money stays in the US,
only forty four cents on the dollar goes to whomever
(03:27):
in China.
Speaker 4 (03:28):
Just want to bring that up absolutely so, Michael, can
we I mean just as recently as you know, two
or three weeks ago, the recession discussion was certainly front
and center for a lot of investors. Can we put
we put that on the back burner a little bit
here now that the President is walking back some of
these tariff discussions.
Speaker 3 (03:47):
I think so, Paul. I mean, you know, we came
into the year obviously with Marke it's very hopeful that
most of what President Trump was talking about on trade
trade was going to be bluster. And you know, obviously
Liberation Day was a scorched earth set of proposals that
markets did not expect, and then there was some feeling
(04:09):
out for where the Trump put would be. So now
I think we know, right, I mean, the administration is
ultimately sensitive to what's happening in equity and credit markets.
It may have been the bond market action in that
first week of April that you know, finally finally got
the President to start to back off a bit. So
(04:29):
I do think we can breathe somewhat of a sigh
of relief here. If you look at the high yield
debt market, you know, those spreads shot up dramatically going
into the first week of April, basically a fifty plus
percent recession probability that's now receded down into the teens,
if not lower. So that's quite helpful. Now, look, markets
(04:50):
can be wrong, but I think in this case, the
high yield market and jobless claims watch those two really
closely because they've been on the front edge of this
soft landing and resilient economy.
Speaker 4 (05:03):
So, Michael, in that context, here, how does a federal
reserve kind of look at the world here? How do
you think they're going to behave this year?
Speaker 3 (05:12):
Yeah, I think you know, related to your previous question,
if you know, the tariffs alone really shouldn't put us
into recession. I mean, where Tom and I started talking
about this mood and Hawley and tariff or Hoover tax
and tariff increases. Really, the Federal Reserve was responsible for
torpedoing the business cycle in the nineteen thirties, allowing a
(05:34):
money supply contraction of thirty percent and nominal GDP to
fall fifty percent. Massive monetary contraction. So that's not going
to happen this time. But there is some risk that
the interaction between tariffs and monetary policy could create some problems.
And really it would be that the tariff disruption lowers
the neutral rate, and if the Fed is tardy in
(05:57):
lowering the policy rate, the business cycle software landing could
slip away. Now that these tariffs have been scaled back
and moderated, that risk has declined, and the risk of
the FED potentially falling behind the curve is also declined.
I'm pretty comfortable with where the FED is right now.
If you look at bond market inflation expectations, they've been
(06:17):
low and stable, consistent with price stability. Nominal wage growth,
which is not going to be affected on a first
order impact from the tariffs, perfect running right in line
with price stability. So the Fed has the flexibility to
move if need be. But with the tariff threat being
scaled back, then there's going to be, you know, less
(06:40):
need for the Fed to move. I still think they
will ultimately lower rates, but they're going to want to
see a few months of the hard data in my opinion,
before they start to move, and that could put us
into July perhaps, Michael.
Speaker 4 (06:52):
How about the consumer here? We're going to get some
retail sales here later on this morning, still looking for
some decent growth kind of mind month of the month here,
How do you view the consumer these days?
Speaker 3 (07:03):
You know, Paul, it's just been amazing the consumers held
in there this well. We know the low end is
under pressure, but that's been the case for a while.
The high end consumer, you know, drives a bulk of
the spending, and you know, with the stock market wobbling,
that was a threat in February, in March, but we've
had this huge bounce back in risk markets, and at
(07:25):
least so far so far, the labor market's been pretty steady.
So I think that is going to be the key
going forward. Watch those first time jobless claims numbers. If
they start to break out, you know, that's going to
be more of a potential issue. But you know we've
held in there so far, so fingers crossed.
Speaker 2 (07:43):
We'll see that in claims today at any thirty. Also
retail sales here. Thank you to Commonwealth for support of
all we do in economics. Michael Darni, whether's or rot Capital,
We welcome all of you on your commune across the nation.
Goodbardy ninety nine one FM, Washington ninety two nine FM,
up to Milanocket. We said the Celtics won last night.
Speaker 4 (08:03):
I did any one pretty decided? Coming back to the
garden Bloomber.
Speaker 2 (08:06):
Eleventh, three zero of the game, coming up here of
basketball in the coming days. Uh Michael darted Kenrougoff with
US yesterday and he reframed he didn't get on the
disinflationary vector. He got on the stable rate or higher
rate vector. And I'm sorry, I'm seeing it ever so
slightly on the tape. I got a four ninety five
(08:29):
thirty year bond. Should we prepare for a higher nominal
interest rate regime?
Speaker 3 (08:38):
Well, I think you know that is certainly a with
fiscal policy makers not really taking the threats seriously. You know,
we've seemed to have missed an opportunity here. I mean,
Speaker Johnson has his hands full with just a two
seat Republican majority, and he's essentially been held hostage by
(08:59):
coastal Republicans that really want to boost that salt tax exemption. So,
you know, Tom, it goes back to basic public finance
theory that I agree brought to possible bait. Brought it
brought us possible base with the lowest rates achievable, and
if you move away from that, the code becomes less efficient.
(09:19):
There's really been no stomach to do meaningful spending, complete
entitlement reforms. So you know, the we're not on a
sustainable fiscal path.
Speaker 2 (09:30):
Yeah, Michael, let me cut to the chase. Let's do
some Wisconsin whitewater academics here. Rogue offs with us yesterday.
Stiglitz is known for the little g The growth rate
is really really important when looking at the debt and deficit.
Are we finally at the place where in America, like
maybe say in Italy, the growth rate doesn't keep up
(09:52):
with our fiscal expansion.
Speaker 3 (09:56):
Yeah, I mean, look, we are on a completely unsustainable
fiscal course. I don't even really think there's a debate
about that, but it's politically inconvenient to deal with it
unless markets are forcing your hand. Are we at that point?
You know? I don't think we're at that point just yet,
but nobody knows when that's going to come. And then
(10:16):
if you're trying to straighten things out in a rush,
in a haphazard way where you don't have time to
think about what the proper policy adjustments are, that's not
going to be an optimal outcome. I will say this
on the ten year yield, you know, the yield has
been picking up, and that is creating some hand ringing.
For sure. That looks a little more orderly to me
(10:38):
with risk assets rallying and the macro data being pretty
stable on the hard data side in April so far,
versus what we were seeing that first week of April,
where the yields shot up fifty basis points over five
sessions with risk assets cratering. I mean, that is not
what you want to see. So I don't think that
you know, we're in the list Liz trust moment just yet.
(11:02):
It certainly is a risk factor.
Speaker 4 (11:05):
Pub Hey, Michael, we're going to get some initial job
as claims today. You know, a number kind of like
two hundred and twenty eight thousand, a number we've been
pretty accustomed to. How do you think about this US
labor market? It seems pretty solid.
Speaker 3 (11:15):
Here, It really is. I mean, you know, we are
in an unprecedented environment through the lens of financial history,
and that is the unemployment rate moved up eight tenths
of a percentage point from the lows of the cycle
in the spring of twenty twenty three to its recent
(11:36):
level in the summer of twenty twenty four. That kind
of a movement has never occurred with the unemployment rate
leveling off like it has over the last ten months,
has never happened. So this is really the first time,
maybe in history, that the FED has succeeded in creating
a soft landing where all these recession rules of thumb
(11:58):
have completely failed. I mean everyone going down the line.
So maybe it's luck, maybe it's skill, maybe it's something else,
but it's a unique business cycle and this labor market
is held in there beautifully. Now. Hiring rates are weak.
So if firing rates pick up, the unemployment rate will
start rising again. And if that unfold, then I do
(12:20):
think the FED will be ready to start easing in
a significant way, but probably not until we have evidence
of that, and so far we do not.
Speaker 2 (12:28):
Michael Darted with Roth Capital greatly appreciate it.
Speaker 1 (12:36):
You're listening to the Bloomberg Surveillance Podcast. Catch us live
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Speaker 2 (12:49):
Joining us Tanned and rest at Jed Soroka. He's executive
director of everything we do in the LA. The Port
of Los Angeles is the muster.
Speaker 4 (12:58):
I mean, it's acre anchors.
Speaker 2 (13:01):
How many total.
Speaker 5 (13:02):
Employees at the Port of Los Angeles A little more
than nine hundred every day on those docks, more than
one hundred thousand people go to work.
Speaker 2 (13:10):
Hundred thousand. Yeah, it's just like genormous. Forget about that.
A few years ago Roosevelt opened the Panama Canal. You
were with American President Lines in the deep port of
Cincinnati on the Ohio River. What was your first day
like in shipping on the Ohio River?
Speaker 5 (13:29):
Tom, I came out of graduate school in New Orleans.
The price of oil was nine dollars a barrel. Unemployment
was going up. We just had a stock market crash
in eighty seven. I recall that unfortunately, and I got
offered an interview because my dad worked for American Airlines
and I could fly up to Cincinnati for free. There
you get my first day on the job. I was
(13:49):
getting coffee and dry cleaning for the sales reps. Took
a car to get it washed. That was my introduction
to the shipping industry.
Speaker 2 (13:56):
This is so important right now. Every kid out there
is trying to get a job, and what you used
to serve there is when they want coffee jet, it's
others to it. What's changed now in the real world
of the Port of Los Angeles. I mean sheriffs have
been blown up. Is every ship in the nation to
want to crowd into your port?
Speaker 5 (14:14):
I don't think so. But there's a lot of product
on the ground in China that was manufactured before the
one hundred and forty five percent tariff was introduced. Every
conversation I have in business is about what's next. Business
community wants certainty. Ninety days of this reprieve tom is
not a long runway in our business.
Speaker 4 (14:35):
So what are you seeing when you I just envisioned
you in your office in the port of Los Angeles
and you have this view of the Los Angeles Harbor
and the Pacific Ocean, You see all these ships coming
over the horizon from China. Are the ships coming?
Speaker 5 (14:46):
Not yet?
Speaker 4 (14:47):
Not yet?
Speaker 5 (14:47):
And I was on the phone last night with some
friends in Singapore and Hong Kong and bookings are picking up,
reservations for containers picking up. But here again, it's really
quiet in Los Angeles today. By the end of this month,
seventeen of eighty scheduled ship arrivals will have been canceled.
Our volume down twenty five percent. But even as this
(15:09):
booking or reservation system has an uptick, it's going to
take about two weeks for the liner shipping companies to
reposition their vessels, and then once they load up the
cargo that's on the ground, another two weeks to come
to LA. Then we have to distribute throughout the country.
Speaker 4 (15:24):
We still have even though the I'm not even sure
where we are right now, but I just I believe
the tariffs have come down from their high levels Visa
EA China, there's still way higher than they were five
months ago. So that has to impact just what Walmart's buying,
what every retailer is across the US are buying, and
what you're seeing at your port right right.
Speaker 5 (15:45):
The headlines from just a couple of minutes ago. Walmart's
CFO says prices will likely rise towards the end of
this month. Now, we have one hundred and twenty five
thousand companies that import through the Port of Los Angeles.
They're not all the big guys. I'm most concerned about
the small to medium sized retailer. Your corner hardware store
(16:06):
has to buy now at thirty fifty percent, and if
they try to raise the price on the hammer or
the toolkit that they're selling, they can't because they're competing.
Speaker 2 (16:16):
With the big guys.
Speaker 5 (16:17):
This is a really tough position.
Speaker 4 (16:20):
Can you explain how the tariffs work? So, when a
good comes off a ship in your port, how does
a tariff get done?
Speaker 5 (16:27):
Yeah, depending on the terms of sale and the nuances,
et cetera. When an importing company wants to accept the
goods take them off the port property, they're given an
invoice by customs and Border Protection based on a harmonized
code and what products are in that container. Before they
can take possession of that box, they will have had
to pay that tariff.
Speaker 4 (16:48):
Okay, all right, so the importer pays the tear. I
guess that just happens, right, I mean, because it seems
like it's so fluid. I'm not sure what the tariffs
are if I'm an importer, right.
Speaker 5 (16:59):
And think about the customs agent who's got to assess
what's in that container, the price of those goods, et cetera.
And just to keep up with this is I'm in
this business and it's hard to keep up your.
Speaker 2 (17:11):
Point of Cincinnati, What was your first day in Shangh?
I like they send you abroad. You're the ugly American Shanghai.
You're looking for a cheap suit. What was it like
your first day in Shanghai.
Speaker 5 (17:20):
Tom, I was thirty four years old and you're on
the bund. The bund in Shanghai. Beautiful, the lights up,
the architecture, unbelievable. I had people like Frank Chen, William Chen,
Philip Shu just holding my hand guiding me through this.
But what they said was our hope is that you
can learn a lot about what we do here and
(17:40):
take that back to America. And for the guys and
ladies on the ground here in the US, it was
like we have a contact over in Shanghai. I learned
a little bit about how to move all this cargo,
Who's who, what we can do?
Speaker 2 (17:52):
What an opportunity. Ring it forward now from the bund
down to Ho Chi Minh City down to the booming Vietnam.
That Kiming experiment right now identify for all of our
listeners across this nation, the China to Vietnam to US
trade moment.
Speaker 5 (18:09):
Yeah, this is interesting too, because I think many of
us were surprised once that one hundred and forty five
percent tariff was put in. The American importer slammed on
the brakes and said, I'm not buying because I don't
know if the information is going to change in two hours,
two days, or two months. So what the liner shipping
companies did was say, look, I've got to profile these vessels.
(18:30):
I normally make a call in Shahai or jah Men
and then come to La. I'm going to make another
call in Haifunk or Ho Chi Minh City. I'm going
to try to get cargo from Lomshabog and Sodakeep in Thailand.
Because if I don't profile this vessel, it's a cash loser. Right,
I've got to get ninety five percent utilization on the
ship or else that voyage is cash flow negative. So
(18:53):
you saw people just scramble it.
Speaker 2 (18:55):
So right there, folks as the window, it's no different
than the true from Dallas to Amarillo. You've got to
have a full truck or it doesn't work. Paul, get
one more, one more jeens.
Speaker 4 (19:06):
So are what are you seeing today? How do you
kind of envision the next one month, two months, three
months in terms of your port of Los Angeles.
Speaker 5 (19:15):
I think you'll see a little bit of an upticking
cargo Again. May is down precipitously with respect to volume.
Folks are going to have to bring product in because
we're at a critical point summer fashion, back to school, year,
end holidays. We're going to have to have product on
the shelf and online to buy. The question is going
to be what will be the consumer's willingness to pay.
(19:37):
So the retailers are trying to do all this calculation
right now, and I don't think anyone has the answer.
Speaker 4 (19:42):
Is theres going to be any empty shelves in the
next several weeks months.
Speaker 5 (19:47):
I think you'll probably see lower levels of inventory and
less selection. Okay, with prices ticking up just a little bit.
Speaker 2 (19:57):
We don't care. All we want to know is can
the Padres stay with the Dodgers?
Speaker 1 (20:01):
Oh?
Speaker 5 (20:01):
That National League West is something else? These guys, Manny Machado,
these Padres, I tell you want to live there.
Speaker 2 (20:08):
The bottom line is all the superstars want to.
Speaker 5 (20:10):
Live and that rivalry is something else. Locally, this is
the team to watch.
Speaker 2 (20:15):
Porter Los Angeles tickets. I mean they're right by the
Tom LOWSDA box. Yep, yep, thank you. When are you
coming back?
Speaker 5 (20:27):
We're going to keep up. This information is so fluid,
but I really want to thank you guys and Lisa,
You're amplifying what the ground truth is in the supply chain,
and it really is resonating with the people we do
business with.
Speaker 2 (20:39):
Well, we're trying to thank you. On Coast to Coast
Good Morning is on gin Soroka with us her executive director,
Porter Los Angeles. Lets not forget Long Beach.
Speaker 1 (20:47):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon Alexa from our Flat New York station.
Just say Alexa Play Bloomberg eleven thirty.
Speaker 2 (21:04):
Schoe Meyer was definitive at the Bank of America and
in analyzing the consumers. So much of the Bank of
America credit card analysis she invented with her team. She
was stolen. It's like, you know, a trade with the
Yankees in a red sox. Mishall Meyer at master Card
Economics Institute is their chief economists as well. That's the
(21:26):
curiosity is what does master Card see? What do you
actually see in the behavior of American consumers?
Speaker 6 (21:35):
So when you look at the trend in spending, consumers
are still spending. And I think that the retail sales
numbers show that pretty clearly as well. When you look
through March and April, March was revised even higher, so
pretty exceptional spending, and the fact that April was essentially
flat shows that you didn't even see a payback after that,
Like typically when you have outsized month of a month
(21:55):
games you see a payback thereafter. So looking through the
last few month on, certainly consumers are still out there spending,
and I think they have the purchasing power to do it.
And that's what we're seeing in our data as well.
When we look at that pulse of the consumer in
terms of expenditures, we see engagement consumer spending.
Speaker 4 (22:15):
Is that when we think about retail sales consumer spending
the folks that you know were you are master Card?
Is it really just about the job market? If I
have a job, my spending ham much are pretty consistent.
Is that how it works?
Speaker 7 (22:29):
Or I think that is the primary factor.
Speaker 6 (22:32):
It's do I have a job today, do I expect
to have a job tomorrow? And what am I seeing
in terms of my income flow to therefore accommodat.
Speaker 7 (22:40):
Or support my spending needs.
Speaker 6 (22:43):
Now, of course they're going to be influenced by expectations
so how you feel about the future. Are you worried
about the stability of your income?
Speaker 7 (22:53):
Are you worried.
Speaker 6 (22:53):
About higher prices? Which is obviously something consumers are worried
about now. The wealth effect matters, particularly for higher income consumers,
and the overall balance sheet matters too in terms of
debt levels.
Speaker 7 (23:06):
But yes, I think you hit it.
Speaker 6 (23:09):
Exactly right, which is that it's a function of purchasing power,
which is driven by the labor market.
Speaker 4 (23:15):
You know, you see a lot of the survey data,
whether it's University of Michigan or others, and it indicates
that the consumers is a little uncertain as turfs and
so on, and you know, all that kind of stuff.
How does that do we see that in retail sales?
I'm not sure we saw it necessarily today.
Speaker 6 (23:30):
Well, look, I mean, consumers have a lot of reasons
to be uncerted in The headlines have been scary and
they've been changing rapidly. So if you're trying to plan
for the future, I do think there's some.
Speaker 7 (23:41):
Concern right now.
Speaker 6 (23:42):
But you need what you need when you need it,
and if you have the purchasing power to purchase it.
Speaker 1 (23:47):
You do.
Speaker 7 (23:48):
And that's what the data shows.
Speaker 2 (23:49):
I get hate mail, Lisa gets the love notes, Paul
gets the love notes. I get down.
Speaker 7 (23:53):
I can't imagine.
Speaker 2 (23:54):
And the hate mail is Tom, we're flat on our back.
And this is what you're expert at. You invent this
a few years ago. How concentrated is our buoyant consumer?
Are we down to ten percent of the country's driving consumption?
Is it twenty? Is it? What's that number in your head?
Speaker 7 (24:14):
Yeah? So yes.
Speaker 6 (24:16):
The upper income cohort drive spending disproportionally, of course, because
they have the most amount of income, and they have
that wealth and they.
Speaker 2 (24:24):
Have the confidence people are I look at the delinquency
rates and all that. I know you don't want to
talk about it. What percentage of America is doing our consumption?
It's teen sweens, right, Lisa, that's a technical.
Speaker 7 (24:37):
Phrase, teen sweens?
Speaker 2 (24:40):
How much is it?
Speaker 3 (24:41):
So?
Speaker 7 (24:41):
Yeah?
Speaker 6 (24:41):
I mean if you look at the consumer expenditure survey
from the Federal Reserve, it will give you a good
indication something along the lines of forty percent of spending
is driven by the top twenty percent of the income distribution.
That and they also have more consistent spending because they
can smooth through shocks. Right, You talked about the confidence
that is part of it. They they have the ability
to navigate economic cycles a lot easier because they.
Speaker 7 (25:04):
Have a cushion.
Speaker 6 (25:05):
But the incremental movement in spending is very much driven
by not the upper income but the lower income consumers,
and we saw a lot of that during the post
pandemic period. We're spending largely exceeded expectations because you had
very healthy labor market conditions, stimulus had flowed through, they
had a low level of interest rates, deleveraging on household
(25:28):
balance sheets, and lower income consumers were much much more active.
Speaker 4 (25:32):
What are the leading indicators that you look at for
the consumer here?
Speaker 6 (25:37):
So I would say, I love the fact that the
data is hitting right now because you have a combination
of amazing data sets, but initial jobless claims, so just
out I think are extremely important right every Thursday morning,
eight thirt Eastern, paying attention to see if jobless claims
are moving from the trend.
Speaker 2 (25:53):
They're not commercial free for this half hour with two
important conversations. Michelle Meyer with US with master Card Economics Institute,
scheduled to be with US Elizabeth Economy from Stanford in
the Hoover Institution in the Pacific rim as well. Okay,
I have to ask because they ruined your weekend. I
Michelle was like, you know, working from home three days
(26:14):
a week, the whole thing, and they MasterCard ruined your
weekend the tariff impact that MasterCard sees, what's it going
to be.
Speaker 7 (26:23):
My weekend was not ruined.
Speaker 6 (26:24):
I had a lovely weekend on baseball fields for my children.
But no, I think the headlines are obviously essential to follow,
and we're doing a very close job doing that in
the Economics Institute. But we're also really trying to be
careful about swinging around our views and our forecast at
the Institute too rapidly, given how quickly the situation is evolving.
(26:47):
So we're living in a world of scenarios like I
think many others are, and we're responding as we see
the data change if it changes. And frankly the moment,
when you look again at consumer spending, you're not significant ships.
Speaker 4 (27:02):
What's the key thing here for you know, mastercro when
you think about the economic outlook here is the recession.
Is the risk of a recession less today than maybe
it was three four weeks ago? Has it changed that much?
Or again? Are we kind of trying to look through
all that stuff.
Speaker 6 (27:16):
So I think one of the differences in my seat
now at the Economics Institute is that relative to my
prior life on Wall Street and most recently a Bank
of America, is I think we has a lot more
flexibility in terms of the forecasting process, right in the
sense that we have the ability now to look longer term.
We're trying to guide our clients and our partners around
(27:38):
the business cycle. Right, where are we going generally in
the business, likele what are the big themes, what are
the big trends Versus When I was in my prior role,
it was it was more markets driven, So you had
to have a view at that moment is there going
to be a recession or not?
Speaker 7 (27:51):
And when is that going to be?
Speaker 6 (27:52):
And that's a difficult place to live in an environment
that we that we that were coming out of.
Speaker 7 (27:57):
So we've been very consistent and I think pretty.
Speaker 6 (28:00):
Relative to other economists in saying we're going to monitor
the risks, we're going to adapt, we're going to adjust
our forecast in our views, and we'll talk about scenarios.
But the modal forecast, frankly, it hasn't moved all that much.
Speaker 2 (28:13):
Mischell Meyer, Thank you so much, Great Brie, Chief Economists
MasterCard Economics at Institute. Can't say enough about her visceral
feel for the American consumer.
Speaker 1 (28:29):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. You can also watch us
live every weekday on YouTube and always on the Bloomberg terminal.
Speaker 2 (28:43):
She's absolutely definitive, and not only China, but this odd
relationship of Beijing with Washington. Elizabeth Economy Hargrove, Senior Fellow,
co director of the US China and World Program at
the Hoover Instatution at Stanford University, and any series of books,
including Books of the Summer for Me and Books of
(29:06):
the Year, were thrilled that doctor Economy could join us
this morning. Liz, I'm not trying to be snarky, but
what's next for China? I think they got a victory.
We lowered terriffs, we lowered the import text into America.
What is next for Beijing?
Speaker 8 (29:24):
I mean, so, let me say, I know that the
narrative has been that China won.
Speaker 3 (29:31):
I'm not sure there was any real winner in this.
Speaker 8 (29:34):
I think China demonstrated that yes, it could go toe
to toe with the United States, but both sides, you know,
reduce the tariffs. You know, China had called for the
United States to completely erase the tariffs before it even
sat down at the table. I think people have forgotten
that an administration didn't do that. They did come to
(29:55):
the table with, you know, a pretty concrete proposal on
how to you control the feedenol precursor exports that has
been so central to the Trump administration, and they took
off all of the non tariff sort of punishments that
they had put on the administration, things like the export
controls on critical minerals and rare earths. So I just
(30:17):
want to I want to level set a little bit
just because I think, you know, let's understand the full
sort of scope of this negotiation in terms of where
China goes next. I think what we've seen already is
that China is going to move very aggressively to diversify
their exports away from the United States. You know, in
(30:37):
part there was a twenty percent drop in Chinese exports
to the US. There was a twenty percent increase in
Chinese exports to Southeast Asia over the past month or so,
and even I think in the sort of low margin
you know, factories, apparel, boys, et cetera. They're all talking
about how to move how to reduce their dependence on
(30:58):
the US market.
Speaker 3 (30:59):
So I think we've really.
Speaker 8 (31:00):
Introduced a pretty significant new factor into the Chinese thinking
about the dependence of the United I mean, about the
liability of the United States. I think that's the big
next thing for China.
Speaker 4 (31:14):
So, Elizabeth, if you're China, are they looking to really
kind of go it alone visa VI the West or
do they feel like it's in the best long term
interest to have a stronger relationship with the West strong
broadly defined.
Speaker 2 (31:31):
No.
Speaker 8 (31:31):
I think they're definitely not looking to go it alone
and move away from the West.
Speaker 3 (31:36):
I mean they've made a big play.
Speaker 8 (31:38):
Over the past couple of months, you know, because of
the sort of overall chaos that the Trump administration has
induced globally with these global tariffs, They've made a big
play to try to assert themselves as the global stabilizing force.
You know, They've gone to Australia and said please join hands.
They've gone to Europe. I think they would love to
(32:01):
revive the Comprehensive Agreement on investment that you know sunk
about eight years ago. Now they love to bring that back.
I don't think the Europeans are interested, but the Chinese
would like to do that. So I think, you know,
their strategy is to try to present themselves as a
responsible and reliable trade and investment partner where the.
Speaker 3 (32:22):
US is not.
Speaker 8 (32:23):
And they'll do that, you know, with the dance market
economies and with the global South.
Speaker 2 (32:28):
Well, as we were talking and this goes back, I can't.
This is like when she was at Michigan as a freshman.
This is ten years ago. Elizabeth Economy here on China's
rise in Southeast Asia. One of the teams we're addressing
Elizabeth Economy is that China has other outros. It's not
a bilateral outcome or dare I say unilateral for mister Trump.
(32:48):
And that you can funnel China trade through Vietnam, through Malaysia,
through other nations as well. Is that just a given
for you?
Speaker 8 (32:58):
I mean, I think certainly we know that we've seen that,
and frankly, in the Biden administration, we became aware of
that when I served with Secretary Mundo in the Commerce
Department in sort of some of the critical technologies, like
advanced chips. That became a real problem because this was
a good way for the you know, to avoid the
export controls. Actually was US chips going through Southeast Asia
(33:21):
and to China. So that corridor, which you know works
both ways, can be problematic, and I do think that's
something that the Trump administration negotiations with countries in Southeast Asia,
with Mexico, with others, They're trying to plug that hole
to prevent China from doing that sort of third party
shipping through to the US to avoid any kind of
(33:42):
restrictions or tariffs or other controls that the US might
be placing on Chinese products. So to their credit, I
think the Trump administration is trying to manage that process.
Speaker 4 (33:53):
Elizabeth, in the world of global technology, that appears to be,
you know, a cold war that has developed is developing
between China and the West. A. Do you agree with
that and be how do you think that might play
out going forward?
Speaker 3 (34:11):
Yeah, I mean, I think.
Speaker 8 (34:12):
It's important to recognize that China began the process of
sort of technological decoupling around Made in China twenty twenty five.
Back in twenty fifteen, and we've talked about that before
on this show. Basically China's effort to ensure that its
companies dominated in the manufacturing of components and ten critical
(34:33):
cutting edge areas of technology like new materials and AI
and evs, and that then they become became these Louisville champions.
So they started, you know, by trying to close off
their market in many areas so that Chinese companies would dominate.
I think the US has been more concerned about the
strategic and security ramifications of some of these technologies, and
(34:55):
so we saw, you know, beginning with the first Trump administration,
through Biden and now Trump again, you know, a dramatic
increase in the use of our economic tools like export
controls in an outbound investment screening, trying to move supply chains,
you know, out of any sort of soul source dependency,
but particularly in a country like China where we feel
that they're not a reliable partner, where they do use
(35:18):
their economic leverage in coercive ways. So there's been I
think this this pull in this you know, a way
between China and the advanced market democracies. Whether that continues,
I think is going to remains to be seen. I
mean President Trump, you know, has sort of thrown a
rentional plan. He talked about this massive reset in the
US China relationship as a result of these talks, you know,
(35:40):
in Geneva's not clear what that means, but he did
say we are going to open our market to them.
They're going to open their market to US. I don't
know what he means by that, but one possibility would
be to permit some of those companies, Chinese companies like
c at L, which produce batteries, to actually manufacture.
Speaker 2 (36:01):
In the US.
Speaker 8 (36:02):
So we may see some rethinking about that technology balance.
Speaker 2 (36:07):
Liz thirty seconds. Should we let China evs into America?
Speaker 8 (36:12):
I have to say this is an area where I
think we need to protect our market and or we
need to find a way to, I think, thoughtfully address
the subsidies that China puts in not only EVS, all
of those made in China twenty twenty five products. I
think until we do that, the tariffs are probably a
good move.
Speaker 2 (36:30):
See how she goes British. There she goes right back
to infant industry theory. Elizabeth economy, thank you, thank you
so much. Out of Michigan and how it stands for
the Hoover Institution. And I can't say enough about her books.
I'll do something out on Twitter and LinkedIn and today
with some of her brilliant books on Beijing and their politics.
Speaker 1 (36:50):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa, play Bloomberg eleven thirty.
Speaker 2 (37:07):
Sign for the newspaper. It's going to get right to it.
She had a choice of like fourteen really crazy stories
today she would have down to eight. What do you got, Lisa?
What do you have this?
Speaker 4 (37:17):
Okay?
Speaker 9 (37:17):
I want to start with some tech news. This was
a good one from Mark German. He says Apple plants
to add this eye scrolling feature to that nearly thirty
five hundred dollars vision pro headset. Okay, So side I scroll, Okay,
not ie roll that your teenagers give you my scroll? Okay,
Like if you're looking on YouTube, it's when your eyes
kind of up and down and you can change the apps. Okay,
(37:39):
So how it works? Yes, you scroll through the software
with your eyes on the vision Pro headset. Okay, works
across all their apps. What users are doing now is
that they're scrolling with their eyes, but then they select
by pinching their fingers, So now you don't need the
fingers apparently you'll just do the eyes.
Speaker 5 (37:59):
But it works.
Speaker 2 (38:02):
Is all this stuff remotely successful? Not only Apple, but
Facebook and the others. I just I get the whole
dream of it. I don't want to be an old
you know, fogy boring born. But the future are your
kids using it? My kids have no.
Speaker 9 (38:18):
Interest in My kids have no interest in it, but
they they've tried the eck. They've tried the eye tracking
feature before with the iPhone. I mean it was for
like people with disabilities and things like that, and other
people have tried it. But they're just trying anything to
get this Vision Pro like you know, the.
Speaker 3 (38:34):
Pro starts at.
Speaker 2 (38:38):
Yeah, there you go, there you go?
Speaker 9 (38:39):
Enough said next, they're trying to get some spark behind it. Okay,
So what does it mean to be a reader? We're
talking about eyes right reading a book. So the Financial
Time says that gen z could be changing the definition
of what it means to be a reader because a
lot of these are early teens to late twenties. Just
to give you an idea, A lot of reports show
that they're not reading for pleasure, They're not doing this,
(39:01):
but what Financial Times it says they are. Readers are
just shifting in how they read. So for example, they
like audio books, they like online reading communities, they like
heading to YouTube, social media, following book influencers. So it's
changing how reading is by books less.
Speaker 4 (39:19):
And I'm really just said about that. I used to
be a very good reader, not a very good okay,
but I I'm not. And I say this summer, I'm
going to be reading on the beach. That's but I
said that last summer.
Speaker 9 (39:29):
Is it because you're on your phone?
Speaker 4 (39:31):
Yes, yes, okay, yeah it's Joe wasn't.
Speaker 2 (39:34):
All about this. And we're both actively reading at home
just as almost as a symbol. Again it's a protest.
I would say, yeah, and I'm going I'm failing at
home every day with the kids. It's like we could
see why look at that.
Speaker 4 (39:50):
You know, university campuses at one of the market centerpieces
of Loemost, every campus is the library. My question is
what function does A lot I very served today, I don't.
Speaker 2 (40:03):
Know, you know, to me.
Speaker 9 (40:07):
Next that was terriblest Sorry, I knew you would get
under your skin.
Speaker 2 (40:10):
That's why I picked these.
Speaker 1 (40:11):
Come on.
Speaker 9 (40:12):
Okay, So if you haven't decided on your summer vacation yet,
trip Advisor has their annual summer Summer Travel Index, so
here you go.
Speaker 7 (40:19):
When it comes to.
Speaker 9 (40:20):
Top global sum summer travel destinations for Americans, number one
is actually Cancun, Mexico. If you want to be on
the beach, you can't coun Mexico. Apparently that's the number
one on spot Paris, France. Second, there you go, Tom Third, London.
Speaker 3 (40:34):
So that's the order.
Speaker 9 (40:35):
Now when you talk domestic like here in the US,
lots of vacant yes, yes, yes, Number two, Hey, we
don't have to go far. It's New York City, So
there you go. And then number three is Myrtle Beach.
But they say they also want yes, I do do,
and we'll do, we'll get the drive.
Speaker 4 (40:56):
You can do everything there, Yes.
Speaker 9 (40:57):
And you can, and it's beautiful. But would be they're
saying too, is they want more experiences. So I don't
know if when you go on vacation, if you do
the whole excursion thing, and like they're saying more people
want that rather than just sit on the beach.
Speaker 2 (41:09):
That's the whole travel thing is turned upside down. And
I noticed in the inflation report yesterday airlines actually at
a negative statistic. Yeah, it was down.
Speaker 4 (41:19):
All the airlines kind of hould their guidance, lower their guidance.
Speaker 2 (41:22):
Yeah, yeah, newspapers. Lisa Mateo, thank you so much, greatly
appreciate that.
Speaker 1 (41:27):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Easter and on Bloomberg dot Com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
(41:47):
and always on the Bloomberg terminal
Bloomberg Audio Studios, Podcasts, radio news. This is the Bloomberg
Surveillance Podcast. Catch us live weekdays at seven am Eastern
on Apple CarPlay or Android Auto with the Bloomberg Business App.
Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
Chinnings Now for an extended conversation synthesizing this economic moment
with the Marcus. Michael Darta joins us this morning, thrill
that he could be with us with Roth Capital. Michael,
you go all hysterical on me here. You go back
to President Hubert Heaver nineteen thirty nineteen thirty two, We
had a tariff hike and they raise the marginal tax
(00:49):
rate on the fancy people. Are we going to get
a REDUCS on that? Or is that bluff and bluster
from President Trump.
Speaker 3 (00:56):
Great to be on with you both, Tom. You know
a bit of a cautionary tale here, I think for
the Republican Party and the Trump administration because obviously, even
with this simmering down of trade tensions, the average effective
tariff rate is going up meaningfully, you know, the highest
one hundred years. So you have to go back to
(01:17):
Smoot Hawley Herbert Hoover. President Hoover signed that in June
of nineteen thirty and then he also signed a gigantic
tax increase, big rise in the top marginal tax rate
through the Revenue Act of nineteen thirty two. The Republicans
would not see the presidency for two decades, and obviously
Smoot and Hally got run out of office in nineteen
(01:40):
thirty three, never to be heard from again.
Speaker 2 (01:42):
I look at this, it's a great walk to a history, folks.
And the backdrop of this, of course, is a small
mayorship election in Omaha, Nebraska where the Democrats doun. Nobody
saw that coming but Michael Darter within the stew that
you're looking at at roth Capitol. Now, do you perceive
that tariffs will be pulled back ever further from the
(02:05):
ridiculous numbers down to thirteen or seventeen percent whatever earning,
Tedesky says, and it will bring him down even more
so in the coming weeks and months.
Speaker 3 (02:15):
Well, I think Tom, that you know the China deal
announced over the previous weekend is important because those tariff
rates were clearly in the prohibitive portion of the Laugher curve.
You essentially had a trade embargo with those rates up
at one hundred and forty five percent, so no trade,
no revenues, right, I mean, this is a good lesson
(02:37):
in supply side economics. So getting those down to around
thirty I think is important. So it's still a big
step up in tariff rates from where we were prior
to the administration coming into office, But that backing down
I think is important in the sense that if you're
just doing a static forecast for how much this could
(02:57):
disrupt growth this year, you know, more of a more
of a slow down dislocation versus you know, potential contraction.
Speaker 2 (03:05):
Pauls when he wants to jump in here and Torston
Slack publishing seconds ago, we bring that to you, and
this goes right to the Dartak conversation. Paul, you look
at imports coming in. You think all the money goes
to China. That's what the president thinks. Wrong, Torston Slack
saying fifty six percent of the money stays in the US,
only forty four cents on the dollar goes to whomever
(03:27):
in China.
Speaker 4 (03:28):
Just want to bring that up absolutely so, Michael, can
we I mean just as recently as you know, two
or three weeks ago, the recession discussion was certainly front
and center for a lot of investors. Can we put
we put that on the back burner a little bit
here now that the President is walking back some of
these tariff discussions.
Speaker 3 (03:47):
I think so, Paul. I mean, you know, we came
into the year obviously with Marke it's very hopeful that
most of what President Trump was talking about on trade
trade was going to be bluster. And you know, obviously
Liberation Day was a scorched earth set of proposals that
markets did not expect, and then there was some feeling
(04:09):
out for where the Trump put would be. So now
I think we know, right, I mean, the administration is
ultimately sensitive to what's happening in equity and credit markets.
It may have been the bond market action in that
first week of April that you know, finally finally got
the President to start to back off a bit. So
(04:29):
I do think we can breathe somewhat of a sigh
of relief here. If you look at the high yield
debt market, you know, those spreads shot up dramatically going
into the first week of April, basically a fifty plus
percent recession probability that's now receded down into the teens,
if not lower. So that's quite helpful. Now, look, markets
(04:50):
can be wrong, but I think in this case, the
high yield market and jobless claims watch those two really
closely because they've been on the front edge of this
soft landing and resilient economy.
Speaker 4 (05:03):
So, Michael, in that context, here, how does a federal
reserve kind of look at the world here? How do
you think they're going to behave this year?
Speaker 3 (05:12):
Yeah, I think you know, related to your previous question,
if you know, the tariffs alone really shouldn't put us
into recession. I mean, where Tom and I started talking
about this mood and Hawley and tariff or Hoover tax
and tariff increases. Really, the Federal Reserve was responsible for
torpedoing the business cycle in the nineteen thirties, allowing a
(05:34):
money supply contraction of thirty percent and nominal GDP to
fall fifty percent. Massive monetary contraction. So that's not going
to happen this time. But there is some risk that
the interaction between tariffs and monetary policy could create some problems.
And really it would be that the tariff disruption lowers
the neutral rate, and if the Fed is tardy in
(05:57):
lowering the policy rate, the business cycle software landing could
slip away. Now that these tariffs have been scaled back
and moderated, that risk has declined, and the risk of
the FED potentially falling behind the curve is also declined.
I'm pretty comfortable with where the FED is right now.
If you look at bond market inflation expectations, they've been
(06:17):
low and stable, consistent with price stability. Nominal wage growth,
which is not going to be affected on a first
order impact from the tariffs, perfect running right in line
with price stability. So the Fed has the flexibility to
move if need be. But with the tariff threat being
scaled back, then there's going to be, you know, less
(06:40):
need for the Fed to move. I still think they
will ultimately lower rates, but they're going to want to
see a few months of the hard data in my opinion,
before they start to move, and that could put us
into July perhaps, Michael.
Speaker 4 (06:52):
How about the consumer here? We're going to get some
retail sales here later on this morning, still looking for
some decent growth kind of mind month of the month here,
How do you view the consumer these days?
Speaker 3 (07:03):
You know, Paul, it's just been amazing the consumers held
in there this well. We know the low end is
under pressure, but that's been the case for a while.
The high end consumer, you know, drives a bulk of
the spending, and you know, with the stock market wobbling,
that was a threat in February, in March, but we've
had this huge bounce back in risk markets, and at
(07:25):
least so far so far, the labor market's been pretty steady.
So I think that is going to be the key
going forward. Watch those first time jobless claims numbers. If
they start to break out, you know, that's going to
be more of a potential issue. But you know we've
held in there so far, so fingers crossed.
Speaker 2 (07:43):
We'll see that in claims today at any thirty. Also
retail sales here. Thank you to Commonwealth for support of
all we do in economics. Michael Darni, whether's or rot Capital,
We welcome all of you on your commune across the nation.
Goodbardy ninety nine one FM, Washington ninety two nine FM,
up to Milanocket. We said the Celtics won last night.
Speaker 4 (08:03):
I did any one pretty decided? Coming back to the
garden Bloomber.
Speaker 2 (08:06):
Eleventh, three zero of the game, coming up here of
basketball in the coming days. Uh Michael darted Kenrougoff with
US yesterday and he reframed he didn't get on the
disinflationary vector. He got on the stable rate or higher
rate vector. And I'm sorry, I'm seeing it ever so
slightly on the tape. I got a four ninety five
(08:29):
thirty year bond. Should we prepare for a higher nominal
interest rate regime?
Speaker 3 (08:38):
Well, I think you know that is certainly a with
fiscal policy makers not really taking the threats seriously. You know,
we've seemed to have missed an opportunity here. I mean,
Speaker Johnson has his hands full with just a two
seat Republican majority, and he's essentially been held hostage by
(08:59):
coastal Republicans that really want to boost that salt tax exemption. So,
you know, Tom, it goes back to basic public finance
theory that I agree brought to possible bait. Brought it
brought us possible base with the lowest rates achievable, and
if you move away from that, the code becomes less efficient.
(09:19):
There's really been no stomach to do meaningful spending, complete
entitlement reforms. So you know, the we're not on a
sustainable fiscal path.
Speaker 2 (09:30):
Yeah, Michael, let me cut to the chase. Let's do
some Wisconsin whitewater academics here. Rogue offs with us yesterday.
Stiglitz is known for the little g The growth rate
is really really important when looking at the debt and deficit.
Are we finally at the place where in America, like
maybe say in Italy, the growth rate doesn't keep up
(09:52):
with our fiscal expansion.
Speaker 3 (09:56):
Yeah, I mean, look, we are on a completely unsustainable
fiscal course. I don't even really think there's a debate
about that, but it's politically inconvenient to deal with it
unless markets are forcing your hand. Are we at that point?
You know? I don't think we're at that point just yet,
but nobody knows when that's going to come. And then
(10:16):
if you're trying to straighten things out in a rush,
in a haphazard way where you don't have time to
think about what the proper policy adjustments are, that's not
going to be an optimal outcome. I will say this
on the ten year yield, you know, the yield has
been picking up, and that is creating some hand ringing.
For sure. That looks a little more orderly to me
(10:38):
with risk assets rallying and the macro data being pretty
stable on the hard data side in April so far,
versus what we were seeing that first week of April,
where the yields shot up fifty basis points over five
sessions with risk assets cratering. I mean, that is not
what you want to see. So I don't think that
you know, we're in the list Liz trust moment just yet.
(11:02):
It certainly is a risk factor.
Speaker 4 (11:05):
Pub Hey, Michael, we're going to get some initial job
as claims today. You know, a number kind of like
two hundred and twenty eight thousand, a number we've been
pretty accustomed to. How do you think about this US
labor market? It seems pretty solid.
Speaker 3 (11:15):
Here, It really is. I mean, you know, we are
in an unprecedented environment through the lens of financial history,
and that is the unemployment rate moved up eight tenths
of a percentage point from the lows of the cycle
in the spring of twenty twenty three to its recent
(11:36):
level in the summer of twenty twenty four. That kind
of a movement has never occurred with the unemployment rate
leveling off like it has over the last ten months,
has never happened. So this is really the first time,
maybe in history, that the FED has succeeded in creating
a soft landing where all these recession rules of thumb
(11:58):
have completely failed. I mean everyone going down the line.
So maybe it's luck, maybe it's skill, maybe it's something else,
but it's a unique business cycle and this labor market
is held in there beautifully. Now. Hiring rates are weak.
So if firing rates pick up, the unemployment rate will
start rising again. And if that unfold, then I do
(12:20):
think the FED will be ready to start easing in
a significant way, but probably not until we have evidence
of that, and so far we do not.
Speaker 2 (12:28):
Michael Darted with Roth Capital greatly appreciate it.
Speaker 1 (12:36):
You're listening to the Bloomberg Surveillance Podcast. Catch us live
weekday afternoons from seven to ten am Eastern Listen on
Applecarplay and Android Auto with the Bloomberg Business app, or
watch us live on YouTube.
Speaker 2 (12:49):
Joining us Tanned and rest at Jed Soroka. He's executive
director of everything we do in the LA. The Port
of Los Angeles is the muster.
Speaker 4 (12:58):
I mean, it's acre anchors.
Speaker 2 (13:01):
How many total.
Speaker 5 (13:02):
Employees at the Port of Los Angeles A little more
than nine hundred every day on those docks, more than
one hundred thousand people go to work.
Speaker 2 (13:10):
Hundred thousand. Yeah, it's just like genormous. Forget about that.
A few years ago Roosevelt opened the Panama Canal. You
were with American President Lines in the deep port of
Cincinnati on the Ohio River. What was your first day
like in shipping on the Ohio River?
Speaker 5 (13:29):
Tom, I came out of graduate school in New Orleans.
The price of oil was nine dollars a barrel. Unemployment
was going up. We just had a stock market crash
in eighty seven. I recall that unfortunately, and I got
offered an interview because my dad worked for American Airlines
and I could fly up to Cincinnati for free. There
you get my first day on the job. I was
(13:49):
getting coffee and dry cleaning for the sales reps. Took
a car to get it washed. That was my introduction
to the shipping industry.
Speaker 2 (13:56):
This is so important right now. Every kid out there
is trying to get a job, and what you used
to serve there is when they want coffee jet, it's
others to it. What's changed now in the real world
of the Port of Los Angeles. I mean sheriffs have
been blown up. Is every ship in the nation to
want to crowd into your port?
Speaker 5 (14:14):
I don't think so. But there's a lot of product
on the ground in China that was manufactured before the
one hundred and forty five percent tariff was introduced. Every
conversation I have in business is about what's next. Business
community wants certainty. Ninety days of this reprieve tom is
not a long runway in our business.
Speaker 4 (14:35):
So what are you seeing when you I just envisioned
you in your office in the port of Los Angeles
and you have this view of the Los Angeles Harbor
and the Pacific Ocean, You see all these ships coming
over the horizon from China. Are the ships coming?
Speaker 5 (14:46):
Not yet?
Speaker 4 (14:47):
Not yet?
Speaker 5 (14:47):
And I was on the phone last night with some
friends in Singapore and Hong Kong and bookings are picking up,
reservations for containers picking up. But here again, it's really
quiet in Los Angeles today. By the end of this month,
seventeen of eighty scheduled ship arrivals will have been canceled.
Our volume down twenty five percent. But even as this
(15:09):
booking or reservation system has an uptick, it's going to
take about two weeks for the liner shipping companies to
reposition their vessels, and then once they load up the
cargo that's on the ground, another two weeks to come
to LA. Then we have to distribute throughout the country.
Speaker 4 (15:24):
We still have even though the I'm not even sure
where we are right now, but I just I believe
the tariffs have come down from their high levels Visa
EA China, there's still way higher than they were five
months ago. So that has to impact just what Walmart's buying,
what every retailer is across the US are buying, and
what you're seeing at your port right right.
Speaker 5 (15:45):
The headlines from just a couple of minutes ago. Walmart's
CFO says prices will likely rise towards the end of
this month. Now, we have one hundred and twenty five
thousand companies that import through the Port of Los Angeles.
They're not all the big guys. I'm most concerned about
the small to medium sized retailer. Your corner hardware store
(16:06):
has to buy now at thirty fifty percent, and if
they try to raise the price on the hammer or
the toolkit that they're selling, they can't because they're competing.
Speaker 2 (16:16):
With the big guys.
Speaker 5 (16:17):
This is a really tough position.
Speaker 4 (16:20):
Can you explain how the tariffs work? So, when a
good comes off a ship in your port, how does
a tariff get done?
Speaker 5 (16:27):
Yeah, depending on the terms of sale and the nuances,
et cetera. When an importing company wants to accept the
goods take them off the port property, they're given an
invoice by customs and Border Protection based on a harmonized
code and what products are in that container. Before they
can take possession of that box, they will have had
to pay that tariff.
Speaker 4 (16:48):
Okay, all right, so the importer pays the tear. I
guess that just happens, right, I mean, because it seems
like it's so fluid. I'm not sure what the tariffs
are if I'm an importer, right.
Speaker 5 (16:59):
And think about the customs agent who's got to assess
what's in that container, the price of those goods, et cetera.
And just to keep up with this is I'm in
this business and it's hard to keep up your.
Speaker 2 (17:11):
Point of Cincinnati, What was your first day in Shangh?
I like they send you abroad. You're the ugly American Shanghai.
You're looking for a cheap suit. What was it like
your first day in Shanghai.
Speaker 5 (17:20):
Tom, I was thirty four years old and you're on
the bund. The bund in Shanghai. Beautiful, the lights up,
the architecture, unbelievable. I had people like Frank Chen, William Chen,
Philip Shu just holding my hand guiding me through this.
But what they said was our hope is that you
can learn a lot about what we do here and
(17:40):
take that back to America. And for the guys and
ladies on the ground here in the US, it was
like we have a contact over in Shanghai. I learned
a little bit about how to move all this cargo,
Who's who, what we can do?
Speaker 2 (17:52):
What an opportunity. Ring it forward now from the bund
down to Ho Chi Minh City down to the booming Vietnam.
That Kiming experiment right now identify for all of our
listeners across this nation, the China to Vietnam to US
trade moment.
Speaker 5 (18:09):
Yeah, this is interesting too, because I think many of
us were surprised once that one hundred and forty five
percent tariff was put in. The American importer slammed on
the brakes and said, I'm not buying because I don't
know if the information is going to change in two hours,
two days, or two months. So what the liner shipping
companies did was say, look, I've got to profile these vessels.
(18:30):
I normally make a call in Shahai or jah Men
and then come to La. I'm going to make another
call in Haifunk or Ho Chi Minh City. I'm going
to try to get cargo from Lomshabog and Sodakeep in Thailand.
Because if I don't profile this vessel, it's a cash loser. Right,
I've got to get ninety five percent utilization on the
ship or else that voyage is cash flow negative. So
(18:53):
you saw people just scramble it.
Speaker 2 (18:55):
So right there, folks as the window, it's no different
than the true from Dallas to Amarillo. You've got to
have a full truck or it doesn't work. Paul, get
one more, one more jeens.
Speaker 4 (19:06):
So are what are you seeing today? How do you
kind of envision the next one month, two months, three
months in terms of your port of Los Angeles.
Speaker 5 (19:15):
I think you'll see a little bit of an upticking
cargo Again. May is down precipitously with respect to volume.
Folks are going to have to bring product in because
we're at a critical point summer fashion, back to school, year,
end holidays. We're going to have to have product on
the shelf and online to buy. The question is going
to be what will be the consumer's willingness to pay.
(19:37):
So the retailers are trying to do all this calculation
right now, and I don't think anyone has the answer.
Speaker 4 (19:42):
Is theres going to be any empty shelves in the
next several weeks months.
Speaker 5 (19:47):
I think you'll probably see lower levels of inventory and
less selection. Okay, with prices ticking up just a little bit.
Speaker 2 (19:57):
We don't care. All we want to know is can
the Padres stay with the Dodgers?
Speaker 1 (20:01):
Oh?
Speaker 5 (20:01):
That National League West is something else? These guys, Manny Machado,
these Padres, I tell you want to live there.
Speaker 2 (20:08):
The bottom line is all the superstars want to.
Speaker 5 (20:10):
Live and that rivalry is something else. Locally, this is
the team to watch.
Speaker 2 (20:15):
Porter Los Angeles tickets. I mean they're right by the
Tom LOWSDA box. Yep, yep, thank you. When are you
coming back?
Speaker 5 (20:27):
We're going to keep up. This information is so fluid,
but I really want to thank you guys and Lisa,
You're amplifying what the ground truth is in the supply chain,
and it really is resonating with the people we do
business with.
Speaker 2 (20:39):
Well, we're trying to thank you. On Coast to Coast
Good Morning is on gin Soroka with us her executive director,
Porter Los Angeles. Lets not forget Long Beach.
Speaker 1 (20:47):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon Alexa from our Flat New York station.
Just say Alexa Play Bloomberg eleven thirty.
Speaker 2 (21:04):
Schoe Meyer was definitive at the Bank of America and
in analyzing the consumers. So much of the Bank of
America credit card analysis she invented with her team. She
was stolen. It's like, you know, a trade with the
Yankees in a red sox. Mishall Meyer at master Card
Economics Institute is their chief economists as well. That's the
(21:26):
curiosity is what does master Card see? What do you
actually see in the behavior of American consumers?
Speaker 6 (21:35):
So when you look at the trend in spending, consumers
are still spending. And I think that the retail sales
numbers show that pretty clearly as well. When you look
through March and April, March was revised even higher, so
pretty exceptional spending, and the fact that April was essentially
flat shows that you didn't even see a payback after that,
Like typically when you have outsized month of a month
(21:55):
games you see a payback thereafter. So looking through the
last few month on, certainly consumers are still out there spending,
and I think they have the purchasing power to do it.
And that's what we're seeing in our data as well.
When we look at that pulse of the consumer in
terms of expenditures, we see engagement consumer spending.
Speaker 4 (22:15):
Is that when we think about retail sales consumer spending
the folks that you know were you are master Card?
Is it really just about the job market? If I
have a job, my spending ham much are pretty consistent.
Is that how it works?
Speaker 7 (22:29):
Or I think that is the primary factor.
Speaker 6 (22:32):
It's do I have a job today, do I expect
to have a job tomorrow? And what am I seeing
in terms of my income flow to therefore accommodat.
Speaker 7 (22:40):
Or support my spending needs.
Speaker 6 (22:43):
Now, of course they're going to be influenced by expectations
so how you feel about the future. Are you worried
about the stability of your income?
Speaker 7 (22:53):
Are you worried.
Speaker 6 (22:53):
About higher prices? Which is obviously something consumers are worried
about now. The wealth effect matters, particularly for higher income consumers,
and the overall balance sheet matters too in terms of
debt levels.
Speaker 7 (23:06):
But yes, I think you hit it.
Speaker 6 (23:09):
Exactly right, which is that it's a function of purchasing power,
which is driven by the labor market.
Speaker 4 (23:15):
You know, you see a lot of the survey data,
whether it's University of Michigan or others, and it indicates
that the consumers is a little uncertain as turfs and
so on, and you know, all that kind of stuff.
How does that do we see that in retail sales?
I'm not sure we saw it necessarily today.
Speaker 6 (23:30):
Well, look, I mean, consumers have a lot of reasons
to be uncerted in The headlines have been scary and
they've been changing rapidly. So if you're trying to plan
for the future, I do think there's some.
Speaker 7 (23:41):
Concern right now.
Speaker 6 (23:42):
But you need what you need when you need it,
and if you have the purchasing power to purchase it.
Speaker 1 (23:47):
You do.
Speaker 7 (23:48):
And that's what the data shows.
Speaker 2 (23:49):
I get hate mail, Lisa gets the love notes, Paul
gets the love notes. I get down.
Speaker 7 (23:53):
I can't imagine.
Speaker 2 (23:54):
And the hate mail is Tom, we're flat on our back.
And this is what you're expert at. You invent this
a few years ago. How concentrated is our buoyant consumer?
Are we down to ten percent of the country's driving consumption?
Is it twenty? Is it? What's that number in your head?
Speaker 7 (24:14):
Yeah? So yes.
Speaker 6 (24:16):
The upper income cohort drive spending disproportionally, of course, because
they have the most amount of income, and they have
that wealth and they.
Speaker 2 (24:24):
Have the confidence people are I look at the delinquency
rates and all that. I know you don't want to
talk about it. What percentage of America is doing our consumption?
It's teen sweens, right, Lisa, that's a technical.
Speaker 7 (24:37):
Phrase, teen sweens?
Speaker 2 (24:40):
How much is it?
Speaker 3 (24:41):
So?
Speaker 7 (24:41):
Yeah?
Speaker 6 (24:41):
I mean if you look at the consumer expenditure survey
from the Federal Reserve, it will give you a good
indication something along the lines of forty percent of spending
is driven by the top twenty percent of the income distribution.
That and they also have more consistent spending because they
can smooth through shocks. Right, You talked about the confidence
that is part of it. They they have the ability
to navigate economic cycles a lot easier because they.
Speaker 7 (25:04):
Have a cushion.
Speaker 6 (25:05):
But the incremental movement in spending is very much driven
by not the upper income but the lower income consumers,
and we saw a lot of that during the post
pandemic period. We're spending largely exceeded expectations because you had
very healthy labor market conditions, stimulus had flowed through, they
had a low level of interest rates, deleveraging on household
(25:28):
balance sheets, and lower income consumers were much much more active.
Speaker 4 (25:32):
What are the leading indicators that you look at for
the consumer here?
Speaker 6 (25:37):
So I would say, I love the fact that the
data is hitting right now because you have a combination
of amazing data sets, but initial jobless claims, so just
out I think are extremely important right every Thursday morning,
eight thirt Eastern, paying attention to see if jobless claims
are moving from the trend.
Speaker 2 (25:53):
They're not commercial free for this half hour with two
important conversations. Michelle Meyer with US with master Card Economics Institute,
scheduled to be with US Elizabeth Economy from Stanford in
the Hoover Institution in the Pacific rim as well. Okay,
I have to ask because they ruined your weekend. I
Michelle was like, you know, working from home three days
(26:14):
a week, the whole thing, and they MasterCard ruined your
weekend the tariff impact that MasterCard sees, what's it going
to be.
Speaker 7 (26:23):
My weekend was not ruined.
Speaker 6 (26:24):
I had a lovely weekend on baseball fields for my children.
But no, I think the headlines are obviously essential to follow,
and we're doing a very close job doing that in
the Economics Institute. But we're also really trying to be
careful about swinging around our views and our forecast at
the Institute too rapidly, given how quickly the situation is evolving.
(26:47):
So we're living in a world of scenarios like I
think many others are, and we're responding as we see
the data change if it changes. And frankly the moment,
when you look again at consumer spending, you're not significant ships.
Speaker 4 (27:02):
What's the key thing here for you know, mastercro when
you think about the economic outlook here is the recession.
Is the risk of a recession less today than maybe
it was three four weeks ago? Has it changed that much?
Or again? Are we kind of trying to look through
all that stuff.
Speaker 6 (27:16):
So I think one of the differences in my seat
now at the Economics Institute is that relative to my
prior life on Wall Street and most recently a Bank
of America, is I think we has a lot more
flexibility in terms of the forecasting process, right in the
sense that we have the ability now to look longer term.
We're trying to guide our clients and our partners around
(27:38):
the business cycle. Right, where are we going generally in
the business, likele what are the big themes, what are
the big trends Versus When I was in my prior role,
it was it was more markets driven, So you had
to have a view at that moment is there going
to be a recession or not?
Speaker 7 (27:51):
And when is that going to be?
Speaker 6 (27:52):
And that's a difficult place to live in an environment
that we that we that were coming out of.
Speaker 7 (27:57):
So we've been very consistent and I think pretty.
Speaker 6 (28:00):
Relative to other economists in saying we're going to monitor
the risks, we're going to adapt, we're going to adjust
our forecast in our views, and we'll talk about scenarios.
But the modal forecast, frankly, it hasn't moved all that much.
Speaker 2 (28:13):
Mischell Meyer, Thank you so much, Great Brie, Chief Economists
MasterCard Economics at Institute. Can't say enough about her visceral
feel for the American consumer.
Speaker 1 (28:29):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Applecarplay and Android Auto
with the Bloomberg Business app. You can also watch us
live every weekday on YouTube and always on the Bloomberg terminal.
Speaker 2 (28:43):
She's absolutely definitive, and not only China, but this odd
relationship of Beijing with Washington. Elizabeth Economy Hargrove, Senior Fellow,
co director of the US China and World Program at
the Hoover Instatution at Stanford University, and any series of books,
including Books of the Summer for Me and Books of
(29:06):
the Year, were thrilled that doctor Economy could join us
this morning. Liz, I'm not trying to be snarky, but
what's next for China? I think they got a victory.
We lowered terriffs, we lowered the import text into America.
What is next for Beijing?
Speaker 8 (29:24):
I mean, so, let me say, I know that the
narrative has been that China won.
Speaker 3 (29:31):
I'm not sure there was any real winner in this.
Speaker 8 (29:34):
I think China demonstrated that yes, it could go toe
to toe with the United States, but both sides, you know,
reduce the tariffs. You know, China had called for the
United States to completely erase the tariffs before it even
sat down at the table. I think people have forgotten
that an administration didn't do that. They did come to
(29:55):
the table with, you know, a pretty concrete proposal on
how to you control the feedenol precursor exports that has
been so central to the Trump administration, and they took
off all of the non tariff sort of punishments that
they had put on the administration, things like the export
controls on critical minerals and rare earths. So I just
(30:17):
want to I want to level set a little bit
just because I think, you know, let's understand the full
sort of scope of this negotiation in terms of where
China goes next. I think what we've seen already is
that China is going to move very aggressively to diversify
their exports away from the United States. You know, in
(30:37):
part there was a twenty percent drop in Chinese exports
to the US. There was a twenty percent increase in
Chinese exports to Southeast Asia over the past month or so,
and even I think in the sort of low margin
you know, factories, apparel, boys, et cetera. They're all talking
about how to move how to reduce their dependence on
(30:58):
the US market.
Speaker 3 (30:59):
So I think we've really.
Speaker 8 (31:00):
Introduced a pretty significant new factor into the Chinese thinking
about the dependence of the United I mean, about the
liability of the United States. I think that's the big
next thing for China.
Speaker 4 (31:14):
So, Elizabeth, if you're China, are they looking to really
kind of go it alone visa VI the West or
do they feel like it's in the best long term
interest to have a stronger relationship with the West strong
broadly defined.
Speaker 2 (31:31):
No.
Speaker 8 (31:31):
I think they're definitely not looking to go it alone
and move away from the West.
Speaker 3 (31:36):
I mean they've made a big play.
Speaker 8 (31:38):
Over the past couple of months, you know, because of
the sort of overall chaos that the Trump administration has
induced globally with these global tariffs, They've made a big
play to try to assert themselves as the global stabilizing force.
You know, They've gone to Australia and said please join hands.
They've gone to Europe. I think they would love to
(32:01):
revive the Comprehensive Agreement on investment that you know sunk
about eight years ago. Now they love to bring that back.
I don't think the Europeans are interested, but the Chinese
would like to do that. So I think, you know,
their strategy is to try to present themselves as a
responsible and reliable trade and investment partner where the.
Speaker 3 (32:22):
US is not.
Speaker 8 (32:23):
And they'll do that, you know, with the dance market
economies and with the global South.
Speaker 2 (32:28):
Well, as we were talking and this goes back, I can't.
This is like when she was at Michigan as a freshman.
This is ten years ago. Elizabeth Economy here on China's
rise in Southeast Asia. One of the teams we're addressing
Elizabeth Economy is that China has other outros. It's not
a bilateral outcome or dare I say unilateral for mister Trump.
(32:48):
And that you can funnel China trade through Vietnam, through Malaysia,
through other nations as well. Is that just a given
for you?
Speaker 8 (32:58):
I mean, I think certainly we know that we've seen that,
and frankly, in the Biden administration, we became aware of
that when I served with Secretary Mundo in the Commerce
Department in sort of some of the critical technologies, like
advanced chips. That became a real problem because this was
a good way for the you know, to avoid the
export controls. Actually was US chips going through Southeast Asia
(33:21):
and to China. So that corridor, which you know works
both ways, can be problematic, and I do think that's
something that the Trump administration negotiations with countries in Southeast Asia,
with Mexico, with others, They're trying to plug that hole
to prevent China from doing that sort of third party
shipping through to the US to avoid any kind of
(33:42):
restrictions or tariffs or other controls that the US might
be placing on Chinese products. So to their credit, I
think the Trump administration is trying to manage that process.
Speaker 4 (33:53):
Elizabeth, in the world of global technology, that appears to be,
you know, a cold war that has developed is developing
between China and the West. A. Do you agree with
that and be how do you think that might play
out going forward?
Speaker 3 (34:11):
Yeah, I mean, I think.
Speaker 8 (34:12):
It's important to recognize that China began the process of
sort of technological decoupling around Made in China twenty twenty five.
Back in twenty fifteen, and we've talked about that before
on this show. Basically China's effort to ensure that its
companies dominated in the manufacturing of components and ten critical
(34:33):
cutting edge areas of technology like new materials and AI
and evs, and that then they become became these Louisville champions.
So they started, you know, by trying to close off
their market in many areas so that Chinese companies would dominate.
I think the US has been more concerned about the
strategic and security ramifications of some of these technologies, and
(34:55):
so we saw, you know, beginning with the first Trump administration,
through Biden and now Trump again, you know, a dramatic
increase in the use of our economic tools like export
controls in an outbound investment screening, trying to move supply chains,
you know, out of any sort of soul source dependency,
but particularly in a country like China where we feel
that they're not a reliable partner, where they do use
(35:18):
their economic leverage in coercive ways. So there's been I
think this this pull in this you know, a way
between China and the advanced market democracies. Whether that continues,
I think is going to remains to be seen. I
mean President Trump, you know, has sort of thrown a
rentional plan. He talked about this massive reset in the
US China relationship as a result of these talks, you know,
(35:40):
in Geneva's not clear what that means, but he did
say we are going to open our market to them.
They're going to open their market to US. I don't
know what he means by that, but one possibility would
be to permit some of those companies, Chinese companies like
c at L, which produce batteries, to actually manufacture.
Speaker 2 (36:01):
In the US.
Speaker 8 (36:02):
So we may see some rethinking about that technology balance.
Speaker 2 (36:07):
Liz thirty seconds. Should we let China evs into America?
Speaker 8 (36:12):
I have to say this is an area where I
think we need to protect our market and or we
need to find a way to, I think, thoughtfully address
the subsidies that China puts in not only EVS, all
of those made in China twenty twenty five products. I
think until we do that, the tariffs are probably a
good move.
Speaker 2 (36:30):
See how she goes British. There she goes right back
to infant industry theory. Elizabeth economy, thank you, thank you
so much. Out of Michigan and how it stands for
the Hoover Institution. And I can't say enough about her books.
I'll do something out on Twitter and LinkedIn and today
with some of her brilliant books on Beijing and their politics.
Speaker 1 (36:50):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Auto with the Bloomberg Business app. You can also listen
live on Amazon Alexa from our flagship New York station.
Just say Alexa, play Bloomberg eleven thirty.
Speaker 2 (37:07):
Sign for the newspaper. It's going to get right to it.
She had a choice of like fourteen really crazy stories
today she would have down to eight. What do you got, Lisa?
What do you have this?
Speaker 4 (37:17):
Okay?
Speaker 9 (37:17):
I want to start with some tech news. This was
a good one from Mark German. He says Apple plants
to add this eye scrolling feature to that nearly thirty
five hundred dollars vision pro headset. Okay, So side I scroll, Okay,
not ie roll that your teenagers give you my scroll? Okay,
Like if you're looking on YouTube, it's when your eyes
kind of up and down and you can change the apps. Okay,
(37:39):
So how it works? Yes, you scroll through the software
with your eyes on the vision Pro headset. Okay, works
across all their apps. What users are doing now is
that they're scrolling with their eyes, but then they select
by pinching their fingers, So now you don't need the
fingers apparently you'll just do the eyes.
Speaker 5 (37:59):
But it works.
Speaker 2 (38:02):
Is all this stuff remotely successful? Not only Apple, but
Facebook and the others. I just I get the whole
dream of it. I don't want to be an old
you know, fogy boring born. But the future are your
kids using it? My kids have no.
Speaker 9 (38:18):
Interest in My kids have no interest in it, but
they they've tried the eck. They've tried the eye tracking
feature before with the iPhone. I mean it was for
like people with disabilities and things like that, and other
people have tried it. But they're just trying anything to
get this Vision Pro like you know, the.
Speaker 3 (38:34):
Pro starts at.
Speaker 2 (38:38):
Yeah, there you go, there you go?
Speaker 9 (38:39):
Enough said next, they're trying to get some spark behind it. Okay,
So what does it mean to be a reader? We're
talking about eyes right reading a book. So the Financial
Time says that gen z could be changing the definition
of what it means to be a reader because a
lot of these are early teens to late twenties. Just
to give you an idea, A lot of reports show
that they're not reading for pleasure, They're not doing this,
(39:01):
but what Financial Times it says they are. Readers are
just shifting in how they read. So for example, they
like audio books, they like online reading communities, they like
heading to YouTube, social media, following book influencers. So it's
changing how reading is by books less.
Speaker 4 (39:19):
And I'm really just said about that. I used to
be a very good reader, not a very good okay,
but I I'm not. And I say this summer, I'm
going to be reading on the beach. That's but I
said that last summer.
Speaker 9 (39:29):
Is it because you're on your phone?
Speaker 4 (39:31):
Yes, yes, okay, yeah it's Joe wasn't.
Speaker 2 (39:34):
All about this. And we're both actively reading at home
just as almost as a symbol. Again it's a protest.
I would say, yeah, and I'm going I'm failing at
home every day with the kids. It's like we could
see why look at that.
Speaker 4 (39:50):
You know, university campuses at one of the market centerpieces
of Loemost, every campus is the library. My question is
what function does A lot I very served today, I don't.
Speaker 2 (40:03):
Know, you know, to me.
Speaker 9 (40:07):
Next that was terriblest Sorry, I knew you would get
under your skin.
Speaker 2 (40:10):
That's why I picked these.
Speaker 1 (40:11):
Come on.
Speaker 9 (40:12):
Okay, So if you haven't decided on your summer vacation yet,
trip Advisor has their annual summer Summer Travel Index, so
here you go.
Speaker 7 (40:19):
When it comes to.
Speaker 9 (40:20):
Top global sum summer travel destinations for Americans, number one
is actually Cancun, Mexico. If you want to be on
the beach, you can't coun Mexico. Apparently that's the number
one on spot Paris, France. Second, there you go, Tom Third, London.
Speaker 3 (40:34):
So that's the order.
Speaker 9 (40:35):
Now when you talk domestic like here in the US,
lots of vacant yes, yes, yes, Number two, Hey, we
don't have to go far. It's New York City, So
there you go. And then number three is Myrtle Beach.
But they say they also want yes, I do do,
and we'll do, we'll get the drive.
Speaker 4 (40:56):
You can do everything there, Yes.
Speaker 9 (40:57):
And you can, and it's beautiful. But would be they're
saying too, is they want more experiences. So I don't
know if when you go on vacation, if you do
the whole excursion thing, and like they're saying more people
want that rather than just sit on the beach.
Speaker 2 (41:09):
That's the whole travel thing is turned upside down. And
I noticed in the inflation report yesterday airlines actually at
a negative statistic. Yeah, it was down.
Speaker 4 (41:19):
All the airlines kind of hould their guidance, lower their guidance.
Speaker 2 (41:22):
Yeah, yeah, newspapers. Lisa Mateo, thank you so much, greatly
appreciate that.
Speaker 1 (41:27):
This is the Bloomberg Surveillance podcast, available on Apple, Spotify,
and anywhere else you get your podcasts. Listen live each weekday,
seven to ten am Easter and on Bloomberg dot Com,
the iHeartRadio app, tune In, and the Bloomberg Business app.
You can also watch us live every weekday on YouTube
(41:47):
and always on the Bloomberg terminal
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