August 7, 2025 • 37 mins
Watch Tom and Paul LIVE every day on YouTube: http://bit.ly/3vTiACF.
Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyAugust 7th, 2025
Featuring:
1) Kelsey Berro, Executive Director: Fixed Income at JP Morgan Investment Management, joins to discuss fixed income markets and portfolio positioning as she asses Fed rate cuts and eco fundamentals. Three Fed policymakers voiced concerns about the US labor market Wednesday with remarks that pointed to a potential interest-rate cut in September. Fed San Francisco President Mary Daly said policymakers will probably need to adjust interest rates in “coming months” to prevent a further deterioration in hiring.
2) John Stoltzfus, Chief Investment Strategist at Oppenheimer & Co., discusses his bullish S&P stance and whether it could change amid policy uncertainty. Stocks gained in early trading after the Kremlin confirmed Presidents Vladimir Putin and Donald Trump will meet for summit talks, raising hopes of a truce in Russia’s war with Ukraine.
3) Mark Dowding, CIO at RBC BlueBay Asset Management, talks about how tariff rates could weigh on the global economy, risk appetite, and the US labor market. Market sentiment got a boost earlier after President Trump announced that companies producing goods in the US, such as Apple Inc., would be eligible for exemptions from his proposed 100% tariff on chip imports. Increasing speculation on a Federal Reserve interest-rate cut are also supporting optimism in stocks as sweeping new tariffs to reshape global trade officially took hold Thursday.
4) Joe Carson, former Chief Economist at AlllianceBernstein and publisher of The Carson Report, talks about the dismissal of the BLS chief and what it means for broader US economic policy and outlook.
5) Lisa Mateo joins with the latest headlines in newspapers across the US, including a New York Times story on how President Trump is weighing getting involved in NYC Mayors race to try to stop Zohran Mandani and a WSJ report on college kids using Google calendar for all sorts of things.
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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
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Listen on demand wherever you get your podcasts, or watch
(00:25):
us live on YouTube.
Speaker 2 (00:27):
Kelsey Beryl she joins us today from JP Morgan asset management. Tariffs.
Everybody's worried about substituting. I'm going to substitute for my
overpriced tomatoes from Mexico, I would suggest, and I'm seeing
it percolating that far more. Here is the income effect
of tariffs slowing economy, damp and wage growth. And that
(00:52):
what do bonds do? Bill's notes and bonds given a
slowing income effect, a dampened income.
Speaker 3 (00:59):
Effect, right, So, I mean, the data that we've been
seeing suggests that the US economy is moderating, and maybe
even slowing a little bit more aggressively than the term moderating.
So if I look at real consumption spending over the
first six months of the year, it's annualized negative for
the first time since twenty ten.
Speaker 2 (01:17):
Is that price up yield down?
Speaker 4 (01:19):
I would say, so?
Speaker 3 (01:20):
I mean, I think that is the reaction in the
bond market that you're seeing, which is that yields have
been somewhat range bound this year. But you know, when
data does come in weaker than expected, like the payrolls
report we got on Friday, you see an aggressive move
lower in yields. And that's been a function of this low, higher,
low fire labor market the way that we've been describing it,
(01:42):
which is not necessarily that companies are laying people off,
but they are having them work less hours, and they
are holding off on investment plans until they get more certainty.
And I think the question is going forward, we do
have a bit more clarity on the future outlook. We
have the one big beautiful Bell Act. We also have
(02:03):
some sense of tariffs, right, they're not going away.
Speaker 4 (02:06):
Maybe the average.
Speaker 3 (02:06):
Effective tariff rate is going to end up being around
fifteen percent, between fifteen and twenty percent. Yeah, it's not great,
but at least we know what it is. The question
is do you see a reacceleration in some of this
activity now that things are slightly more stable, or is
there actually more damage to come from the tariffs.
Speaker 4 (02:26):
And we've been complacent because.
Speaker 3 (02:27):
It's just a very or longer lag than people anticipated
between higher costs and slower demand and the impact on
the economy.
Speaker 5 (02:38):
You're right, I mean, I think some of the earnings
outlooks we've seen from some of these companies are there's
still cautiously optimistic, but that I think that's kind of
a win. I mean, because you don't really know what
a fifteen to twenty percent tariff's going to do to
your bound sheet.
Speaker 6 (02:53):
So do we take credit risk out there?
Speaker 5 (02:54):
Are you guys sensing that it's time to take some
credit risk or taking credit risk is okay?
Speaker 4 (02:59):
Yeah, I mean we have been taking credit risk.
Speaker 3 (03:01):
We have been stress testing all of the companies that
we own, assessing how they would handle ten percent tariffs
twenty percent tariffs, and the credit analysts have all come
back to us and they've said, you know, it's.
Speaker 4 (03:13):
Not great for earnings, it's not great for revenue.
Speaker 3 (03:16):
We're projecting a slowdown, but we're not projecting our earnings
or revenue turn negative, and we're not projecting that this
is necessarily going to cause a recession. And I will say,
at the same time, expectations have been lowered, and so
when Q two earnings have come out, it's been a
clear beat and now we're refocusing from the negative impacts
(03:37):
of tariffs to the potential positive impacts associated with one
big beautiful bill.
Speaker 4 (03:42):
So a lot more companies are talking about.
Speaker 3 (03:45):
Upgrading free cash flow estimates because of expensing of R
and D or interest deductibility, or lower emission standards for
auto companies.
Speaker 5 (03:56):
So, I mean, I guess one of the questions here is,
I'm how does that balance out because kind of maybe
the dampening effects of terrorists, but maybe the pro.
Speaker 2 (04:05):
Growth effects of some of this one big beautiful bill
that you mentioned.
Speaker 5 (04:10):
So net is you look at the twenty twenty six
kind of how's how's the outlook out there for you?
Speaker 3 (04:16):
Yeah, I mean, net net, our base case has been
subtrend growth, and I think that our confidence around that
sub trend base case has grown.
Speaker 4 (04:26):
Because of a lot of these offsets.
Speaker 2 (04:28):
Yep.
Speaker 4 (04:28):
You know, you have the tariffs, but you have the
one big beautiful bill.
Speaker 3 (04:32):
You know, you also think about the concerns earlier in
the year with the deficits, right, there was a lot
of concerns about expanding deficits. Now we have the trajectory
for debt growth based on the new tax legislation, but
we also know that we have a lot of tariff
revenue coming in.
Speaker 4 (04:49):
So what have we gotten and fixed incomes so far
this year?
Speaker 3 (04:52):
Well, stimulus maybe, but it's a it's a carry environment,
so one where we started with high all in yields
within fixed income at the start of the year, and
with yield range of bound and spreads range bound. I
look at returns you're to date on the USAG four
point seven percent. That's essentially that carry environment that we
(05:14):
were kind of expecting.
Speaker 2 (05:15):
When we went into hit your twelve months forward view
on IG paper, Then can you make six to seven
percent in fixed income?
Speaker 3 (05:22):
It will obviously depend how much risk free rates fall
and how much spreads narrow from here, But even if
we just stay range bound, you can expect the twelve
month board return on your investment grade portfolio to look
similar to your starting yield.
Speaker 2 (05:37):
I'm so glad I don't have a real job with
a real job Kelsey burrowchip a real job. This morning,
I just kicked the cross curds that my head's spinning.
Speaker 1 (05:47):
Folks, you're listening to the Bloomberg Surveillance podcast. Catch us
live weekday afternoons from seven to ten am Eastern Listen
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up or watch us live on YouTube.
Speaker 2 (06:05):
John stolf he's with Oppenheimer and Company. He is the
one who said you have courage stay in the market
in October two times ago, three times ago, four times ago,
April passed. Paul, I just framed it out. You can
do this on the Bloomberg terminal. Thank you, mister Secunda.
And it's simple. The Stolfus call from here is up
(06:28):
eleven point seven percent out one year, and that gets
you out to seventy one hundred. So I interpolated. That's
all we do that for John, I interpolated down forty
seven thousand plus on that. It's a double digit lift,
but not too double digity. You're seventy one hundred. People
think you're nuts. Explain why you're not nuts.
Speaker 6 (06:50):
Well, thanks Tom.
Speaker 7 (06:51):
It always great to be on Bloomberg Radio Surveillance with
you and.
Speaker 6 (06:56):
Paul and Lisa. I just want to say that where
we are, the fundamentals look good. You know, it's in
spite of everything. It would appear that when you think about.
Speaker 7 (07:06):
It, it's almost about it's about seventeen eighteen years ago
since the financial crisis, and corporations aided by technology significantly,
as well as the Federal Reserve, the ben bernanking legacy
as we call it, have been able to manage a
lot of situations, including so far this tariff regime as
(07:28):
it comes in.
Speaker 2 (07:29):
But the bear people, the guys that say stolefus is nuts,
They're going to say, Okay, it's great, but at some
point it ends, and we have a correction done ten percent,
a bear market down eighteen percent, or a normal collapse
down thirty five percent. Where is that emotion out there?
Speaker 6 (07:46):
Well, that's a good question, you know.
Speaker 7 (07:48):
I think what it is is that bearishness always exists.
There's a lot of people who feel that the Fed
has maintained rates too high, their benchmark rate too high
for too long. On the other hand, you know, when
we look at it, what we say is they raised
eleven times and they paused I think about fourteen or
fifteen times now and no recession, so remarkably sensitive to
(08:09):
their dual mandate, which is accessionally essentially giving us what
we would have to say is an economic growth at
a sustainable pace without untoward levels of inflation, with also
not disrupting the job market.
Speaker 6 (08:24):
Although we're seeing jobs slow, but you.
Speaker 7 (08:26):
Know, Tom, it just looks like it's it really is
a mid cycle.
Speaker 6 (08:30):
Extension by monetary.
Speaker 7 (08:33):
Policy that makes you know when you look at the
economic cycle, it's as wide as the Amazon, not the
outfit that delivers the boxes to your home, but rather
the Amazon river. And this has been going on for
quite a while.
Speaker 2 (08:47):
And this is the underestimation of American productivity an American.
Speaker 6 (08:52):
And we saw a nice pick up there today.
Speaker 7 (08:54):
You've got AI that appears to be and what we
would say is a watershed period in terms.
Speaker 2 (09:00):
Of two enthusiastic for the showing.
Speaker 5 (09:03):
John, reading through your notes, something jumped out of me.
Sometimes it seems to us that quite a few folks
probably don't know what the best performing SMP five sector
is year to date. I happen to know because I
have a Bloomberg terminine front.
Speaker 6 (09:15):
Me no industrials.
Speaker 5 (09:18):
What does that tell you about this market?
Speaker 7 (09:19):
Oh?
Speaker 2 (09:19):
What it tells us is.
Speaker 7 (09:21):
That you've got you've got a broadening in the rally,
which we began to look at and expect last year.
In the fourth quarter and even earlier in that we
were saying this rally is broadening.
Speaker 6 (09:32):
A lot of denial about that.
Speaker 7 (09:33):
Everyone, Oh it's just bag seven and it's just ooh,
it's just so narrow. But you've got if you look
at it on a year to date, industrials is up
fourteen point.
Speaker 6 (09:43):
Four percent, outperforming the benchmark. That's up seven.
Speaker 7 (09:46):
The underlying bench Wroin goes up seven point eight, communications
services up thirteen point nine, info Tech up thirteen point
seven eight.
Speaker 6 (09:54):
And then utilities up twelve point eight. That's a defensive.
Speaker 7 (09:58):
After that, you've got financials really quite a bit of
a value sector seven point three.
Speaker 6 (10:03):
Materials my gosh, five point it.
Speaker 7 (10:06):
Really this is Staples up five percent, real estate limpied
along up one point five seven.
Speaker 2 (10:12):
Energy's negative.
Speaker 7 (10:13):
Consumer discretionary is down nearly two percent, health tears down
five But those are understandable at least at this point.
With yet we think consumer discretionary is improving in performance considerably.
I mean, you look at this, you also think, has
this been a dramatic overbought kind of rally? And we
will say from the low of April eighth of this year,
(10:37):
you know, info tech is up fifty over fifty percent
as a sector, Communication services up thirty three point six,
but industrials up twenty nine point five four and consumer
discretionary up twenty seven. I won't belabor going.
Speaker 6 (10:51):
Through all of these, but my point is that looks wild.
Speaker 7 (10:54):
But then take it from the February nineteenth peak and
the S and p's own up three point twenty seven percent,
infotech's up eleven, and change industrials up eight point seven again.
Second best performed utilities, third best performing ZECHERP six.
Speaker 2 (11:11):
So what we.
Speaker 7 (11:11):
Say is you're beginning to see this broadening in the rally.
Small and mids are still pretty brutally traded. On a
given day when the traders are just getting taking some profits,
and large caps if things, if if the news flow
isn't worrying, they go into smalls and mids and bid
them up a little bit. We think that requires the
FED cut, and we think that's that's more likely than
(11:34):
not in September as a result of those jobs numbers
and Powell has talked about for a long time the
importance of the dual mandate and the sensitivity towards that
dual mandate would tell us, you know, probably about a
twenty five BIPs, maybe even a fifty BIPs.
Speaker 5 (11:50):
Got what have you seen from corporate American terms of
earnings so far this.
Speaker 7 (11:54):
Squad gosh when it comes to Ernie's I was just
I was just looking at the EA page and I
think it's up nearly twelve percent earnings growth.
Speaker 6 (12:03):
You've got three sectors that are double digit.
Speaker 7 (12:07):
Returns. That's off the top of my head. That's tech, communications, services.
Speaker 2 (12:12):
And financials.
Speaker 7 (12:13):
You've only got one negative, and I think that's a
negative double digit earnings growth. I think that's energy and
effectively You've got eight positive earnings growth, three negative.
Speaker 6 (12:25):
This is remarkably healthy.
Speaker 7 (12:27):
But we really think a lot of it has to
do like Jimi Hendrix used to say, are you experienced. Indeed,
managements of corporations and the US consumer are more experienced
to dealing with waters that need attention to navigate and
have the tools through technology.
Speaker 6 (12:46):
Just think of the communications. I've been to this business right.
Speaker 7 (12:49):
Since nineteen eighty three, So I remember when there wasn't
a Bloomberg, when there wasn't a Bloomberg News, there wasn't
all these different we have day people know, let.
Speaker 2 (13:01):
Me reintroduce John Stolphus with US. He has an acclaimed
bullmarket call. He has nailed what we've seen over the
last number of years. He's with the venerable Oppenheimer and
Company's chief investment strategists. You mentioned James Hendrix and all
of this. Were we better off when we were in
the office looking at the back section of the Wall
(13:21):
Street Journal in earnings's revenue, net income shares, and when
you went to get a cup of senka or post
him or escafe, you risk tripping over the value line
on the floor. Were we better back then in terms
of having the knowledge and conviction to stay in the market.
Speaker 6 (13:40):
I don't think so. And in fact, the change that
we have seen very.
Speaker 7 (13:44):
Much, especially amongst private investors, is private investors used to
get into the bullmarket usually after it was up. This
is just anecdotal ratecall, but probably ten or fifteen percent.
Speaker 6 (13:56):
Everybody's talking about it. If you don't own stocks.
Speaker 2 (13:58):
One day, okay. Let the bottom line is everybody's managing
their own retirement, got it? And that's the sea change here.
Speaker 6 (14:06):
I think that's what it is. It's serious investing by
the private investor.
Speaker 7 (14:10):
It doesn't mean they still don't have plays that they do,
whether it's a you know, the mag seven or God
helps the memes, But when you look at it, it
is it adds support to this bull market in that
you've got intermediate and long term investors who are looking
for the babies that get get tossed out with the
bathwater on pullbacks rather than buying dips blindly.
Speaker 6 (14:34):
And they're in it for the longer haul because multi.
Speaker 7 (14:37):
Generations now from from the boomers all the way to
the newer younger generations, have.
Speaker 6 (14:42):
A realization that social security.
Speaker 7 (14:46):
Is not likely to give anywhere near the retirement percentage
of income, and as it once did for their great grandparents,
their grandparents, and certainly for their and for their parents,
and so people need to provide for themselves, and the
market offers an opportunity.
Speaker 5 (15:04):
John Tom has his focus on the VIX and right
now it's pretty quiescent around sixteen times. But boy, this
year's been anything but. In the s and P five
hundred with it twenty percent declined there in April with
the terroriffs, but then boy, nearly a thirty percent rebound
off that low, all in seven months.
Speaker 6 (15:21):
We don't see that very often, do we No?
Speaker 7 (15:23):
And I think once again, I think that is the
It is the ability of the market to discount data
that crosses the proverbial transom on any given day, whether
it's it's economic data, whether it has to do with
a report related to the management of a corporation, or
policy change or considerations upont all this stuff happens relatively fast.
(15:48):
And if you look at the if you look at
the chart, it just looks like whenever the VIX gets
too sleepy, you know, you get your you become vulnerable
to see a bit of a spike somewhere along the line.
But the reality is the spikes have been lower of
late the pattern. I'm not a technical strategist and a
(16:10):
fundamental strategist, but we look at the vics because when
it gets too sleepy, get ready, you know, and then
be prepared to instead of running for the hills based
on the fundamentals, look for good quality stocks and cassis.
Speaker 2 (16:23):
To do with MAG seven now, I mean it, I
own MAG seven. I don't want to sell it. What
does John stolf To say, I don't own them? Should I?
I mean, what do you do with MEG seven for
the flavors of regret out there?
Speaker 7 (16:37):
Now? Well, we do say we think you do need
to own them because we think they are an intermediate
to longer term story because of the deeply embedded nature
of technology in the lives of both consumers and business.
But it also means if you look at just our
little box that we put every week at our piece,
where we look at the S and P five hundred,
(16:58):
we don't rate our sectors either overweight or underweight, but
we rate them outperform, market perform or a below or
you know, underperformed. Rather at when we look at technology itself,
what we say on infotech, it's about thirty percent waiting
(17:19):
I think in the benchmark, so we say twenty five percent.
Speaker 6 (17:23):
As a conversation point. For an advisor and their client,
they may want much less, they may have more. It
depends upon their tolerance to risk.
Speaker 2 (17:31):
One thing you mentioned the economist James Hendrix. Yes, okay,
I don't think people know his history that this guy
came up with foundational blues. I mean everybody knows what's
stock and all that, but he came up foundational blues.
Literally he was the opening band as a kid for
the Isisley Brothers a million years ago. I mean the
(17:51):
blues foundation.
Speaker 7 (17:52):
Was something oh spectacular. And when you consider his not
only his lead guitar playing, but the comping the.
Speaker 6 (17:59):
Cops O Rich, I mean it was.
Speaker 7 (18:01):
It was like very very central to what would be
the Memphis kind of sound.
Speaker 2 (18:06):
He was part of that.
Speaker 7 (18:07):
I mean the cross you know, whether you consider James
Burton or Jimmy Hendricks.
Speaker 6 (18:15):
The comping just fabulous, just fabulous.
Speaker 2 (18:19):
It's great. Is that enough? Guitar, John John Stolphus, thank
you so much. Congratulations and really one of the great calls.
I pull it in with Ralph and Kompora ed Yardnny
has been brilliant. Out of Bullmark, it's been. Bolski's been okay.
I mean I don't sun no, he's you know he
likes the Vikings well you know it's an asterisk, but okay,
(18:39):
he's been okay, and John storph has killed it. App
go as well.
Speaker 1 (18:43):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2 (19:00):
This is the conversation of the day for people worried
about Transatlantic confidence. Mark doubting is with Blue Bay Asset
Management in the heart of COVID. They did an agreement
with the Royal Bank of Canada. It is OURBC Blue
Bay asset Management. He has been a student of our
greater opinion, our economics, our finance, our investment around credit
(19:24):
for decades. Mark, what's the level of confidence in the
city this morning that we can get beyond this tariff?
This tariff Thursday? What's the confidence level forward?
Speaker 8 (19:39):
So I'd say that we're actually in a reasonable position
at the moment stateside, when we look towards the coming
year in twenty twenty six, I think in this respect
that there's a real sense that into the year ahead
we're probably going to see lower taxes, lower rates, less regulation,
and that's speaks to a better outcome for.
Speaker 9 (20:02):
The coming year. Albeit in the short term.
Speaker 8 (20:06):
We think that in the short term there could be
some softness in data, as we saw with the payrolls
numbers last week, as some of these sort of tariffs
and the past uncertainty impacts the data in the second
half of the year. So short term i'd say things
look a bit bumpy. Further out, it looks a lot better.
Right by and large, I'd say that markets are looking
(20:27):
pretty pretty cheerful.
Speaker 2 (20:28):
Yeah, part to the observation you had that all of
a sudden, August has a certain pace to it for
New York.
Speaker 5 (20:35):
M and A sure, and we're starting to see some
animal spirits a little bit, and also in the IPO market. So, Mark,
as you think about it, how are you surprised that
despite all the tariff headwinds, crosswinds, I'm not sure kind
of whip they are depending on what country you are,
that markets are performing relatively well here servely with the
stock markets hitting all time highs here.
Speaker 6 (20:58):
Yeah.
Speaker 8 (20:58):
Well, I think in terms of the US stop market,
it comes back to earnings and earnings growth have been solid,
hasn't it.
Speaker 9 (21:04):
I mean, it's looking pretty good.
Speaker 8 (21:07):
And from that perspective, it also feels like all through
the year the stock market has been climbing a wall
of worry. I think some of the fears that were
being expressed back in April have really melted into the background.
And having got the budget done, having got the tariffs
through without a big sort of pushback in a retaliatory sense, effectively,
(21:30):
what the US has done here is it's effectively managed
to raise taxes pretty materially. We think that the tax
take on revenues from tariffs will about four hundred and
fifty billion, which is up three hundred and seventy billion
year over year.
Speaker 9 (21:44):
That's around one point two percent of GDP.
Speaker 8 (21:47):
So this has been a decent outcome for the US
and so in many respects, I don't think it should
be a big surprise that US stops have been performing
reasonably well.
Speaker 2 (21:57):
I can see you in your class with Skidelski at work.
I can just see it right now. What does this
do to the income generation of our trade allies? I mean,
do we see slowness in Europe, the United Kingdom, in
Asia off of these trade agreements?
Speaker 8 (22:18):
So ostensibly yes, we should see a bit of a
I mean, in as much as the US is having
a win, here is a relatively speaking, a trade war
loss for other countries elsewhere in the world. I think
the big question though, and this is the big question
that the FED is also asking, is that if you've
raised tariffs by one point two percent of GDP, who's
(22:39):
footing the bill than Are you going to be US
consumers or is it going to see overseas producers? And
the mix of that, I think is really going to
determine where Mark is go in the months ahead.
Speaker 2 (22:50):
We're going to continue here with Mark Dodding, RBC Blue
Bay thrillly could be with us today with just wonderful
Transatlantic perspective, really gets perspective on economics right now. A
productivity series coming out unit labor costs has my attention.
And also we see claims that two two two is
a survey two hundred twenty two thousand. Of course a
(23:13):
revision will be important, made more important by the jobs
report that we saw today. Further data at ten o'clock
this morning. Let's go to it. The economic data coming
out right now. We use e CEO go, which is
a good thing to do. Unit labor costs come in
and tick higher than the survey one point five percent
is one point six percent non firm productivity shows a
(23:36):
productive America. Two percent statistic comes in at two point
four percent. Revisions on claims flat in a more difficult
claims slightly, ever so slightly. Two two two comes in
with a two twenty six claims as well. I don't
see a lot of you know, a lot of meat
(23:56):
there for anybody, Paul, No, I don't.
Speaker 5 (23:59):
Know any initial jobas claims a little bit higher than
expectations and a little bit of a vision higher last time.
We'll keep an eye on that. Continuing claims a little
bit higher than expectations, but we had a revision downward
last month.
Speaker 2 (24:10):
So there surveillance data check audible gold up twenty five
dollars three four five sixty dollars to a record ee
on gold. Had no idea what that has to do
with economics Commonwealth going, Tom, why are you doing gold
during our economics? Commonwealth? We thank them for our for
(24:30):
all of Bloomberg's surveillance. Bloomberg surveillance. This morning brought you
by Commonwealth, supporting more than two thousand independent financial advisors
with a two to one advisor to staff ratio, small
firm Attenatus, big Advisor Impact. Go to Commonwealth dot com
Commonwealth dot com to learn about their consultative support and technology. Paul,
(24:53):
why don't you bring in mister Dowding in London?
Speaker 5 (24:55):
Sure absolutely, Marked Outing stays with the CIO of RBC
Blue Bay Asset Management. Hey Mark, The Bank of England
cut interest rates to the lowest level today in over
two years. What do you make of that and how
do you think that may or may not influence the
US Federal Reserve.
Speaker 8 (25:15):
So I think the picture in the UK is rather
different to that in the US. The economy here is
rather limping along. We've really been sort of struggling for
a few years in economic terms.
Speaker 9 (25:26):
It's interesting just hearing that sort.
Speaker 8 (25:27):
Of productivity data that we hear in the US productivity
at two point four, because we see strong investment in
the US, because we see those productivity gains in technology.
By contrasts, in the UK we have next to no
productivity growth whatsoever. So that's why UK rates are coming
down because the economy is slow. At the same time
(25:49):
here in the UK actually our worries that inflation is
too high. I think in the US it's a very
different situation. We've actually gone an economy that has been
very healthy for an extended period of time. Is more
question of whether the FED ease rates, because the economy
could go faster than it currently is if there isn't
(26:10):
any inflation to worry about.
Speaker 2 (26:12):
Mark, when you were at Warwick and I don't know
if you you know you served under Skadelski and work economics,
did you actually read the one twenty one pages of Skidelski,
John Maynard Keynes.
Speaker 8 (26:26):
Oh, hell, no, I mean I was an active a
student right hetos to anyone he did.
Speaker 9 (26:32):
He made it through all of that.
Speaker 8 (26:34):
I think my back in the days when I had
hair on my head, I was probably too interested in
the parties more than the elections, but it certainly gave me.
Speaker 9 (26:43):
A good grounding that pace. It's a fine institution.
Speaker 2 (26:45):
Mark Downing, thank you so much. I bring that up
for Lord Skadelski was just hugely supportive of the advent
of all of this, and we thank him in the
University of Work for their support in our early years.
Markdowning see Blue Bay at Capitol.
Speaker 1 (27:07):
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 (27:21):
Joining us now foundational. You know it's Stolfhsen. It's sort
of the same thing as John Stolfus. Joe Carson has
pretty much seen it all. He's a former chief economist
Alliance Bernstein, publisher of The Carson Report. I don't, Joe,
are you retired? You're not retired, are you?
Speaker 10 (27:38):
Uh? Semi retired.
Speaker 2 (27:40):
Semi he's only working seventy hours a week. He's cut
it back from eighty. Joe, let's do this with you.
You're the first one I've talked to. I got an
inflation report next week, Okay, I got a labor economy struggling.
The consensus is inflation is I think you called his persistent.
Which is more important the inflation report next week or
(28:03):
the next claims number on labor.
Speaker 10 (28:08):
Well, they're both connected in some ways. Certainly, the terriff
related the impact on goods prices are starting to come through,
and it'll come through even more over the next seven months.
It takes time to show up on the shelves and
what people pay and what companies pay. But the I
think the labor data that you've seen recently, particularly the
(28:32):
small job gains, as a reflection that companies are very
hard having a hard time to plan how to operate
in this environment where tariffs go in and out or
up and down, and they're not knowing where they're going
to go next.
Speaker 5 (28:47):
So putting it all together here, I mean Tom likes
to talk about the resilience of the US consumer, the
resilience of companies in general, is are these tariffs something
that we all can kind of deal with and get
through and get past without seeing any significant economic slowdown
or pick up an inflation.
Speaker 10 (29:09):
Well, that's very unlikely. I think you've already seen a
significant slowdown in hiring. That means companies are not investing
or planning to grow their companies because they increased costs.
You know, one thing that's being missed is that in
the first nine months of this fiscal year, corporate tax
collections were off thirty billion from a year ago based
(29:31):
on higher expenses, and that's tied to the tariffs. The
inflation rate will pick up and that's going to hurt
consumer spending and make consumers more cautious on what they do.
So it's not a zero sum game. When you raise terraffts,
it's like putting the tax on the consumer and businesses.
(29:53):
And also keep in mind the initial intent of terrafts
was to bring back many factoring or increased manufacturing relative
to where it was before. But the problem is that
many of our companies operate on a global basis, not
with a national footprint. So putting cost increases on a
(30:15):
lot of materials and supply raises the cost of production
for them. It makes them uncompetitive in the world. So
it's it's a really odd policy and I think it's
going to have bad consequences down the road.
Speaker 5 (30:28):
We had some week labor data last week, and then
we had the year of labor systics as commissioner effectively
fired by the president. What did you make of all
that noise last week?
Speaker 10 (30:42):
Well, let me say three things in this The politics
around labor market data or economic data has been around
a long time. Presidents have always complained about the interpretation
of data, but never the actual data itself. Okay, one thing. Second,
(31:02):
the fact that the Treasurer Secretary Vesent and the National
Economic Council Director Hassett did not defend the BLS and
this is shocking, Okay, I've never seen that before in
my long career. And the third point is what the
administration was able to do is flip the switch.
Speaker 2 (31:24):
Here.
Speaker 10 (31:25):
How many reports have been on the firing of the
BLS commissioner and how many reports on what the actual
data says. They don't want you to talk about the
data because the data shows labor markets are struggling and
companies are struggling. That was a message there, But it's
been blunted, so the financial press, you guys in particular,
have a big job to tell the truth going forward.
Speaker 2 (31:47):
Joe, thank you so much, Joe Carson with us formula
with the Lions Bernstein there and the comments that mister
Hassett are clearly out in the zeitgeist. We'll be addressing
that on the coming days. Here.
Speaker 1 (31:57):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Atto 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 (32:14):
Right now to the newspapers, Lisa Matteo, Okay, I.
Speaker 11 (32:16):
Want to start with the New York Times, because sorcerer
saying that President Trump weighing getting involved in the New
York City mayor's race to help try and stop Zora Mundami.
So what he's reportedly done, this is according to the
Times who've spoke to people. They said, he's picked the
brain of a Republican congressman, New York businessman about the
crowded field, right, who has the best chance of beating Mamdami.
(32:38):
He also was briefed by Mark Penn. He's a poster
who worked with Alexa Bill and Hillary Clinton.
Speaker 2 (32:43):
Right.
Speaker 11 (32:43):
He also Andrew Stein, a former New York City Council president,
a range of polling that's showing that actually for former
Governor Cuomo could still be a competitive factor as an independent.
Speaker 6 (32:55):
So what the article does.
Speaker 11 (32:57):
It really raises questions about what the president's involvement in
the race would do, saying it could bring like this
new element of unpredictability to something that's already wild, crazy chromo.
Speaker 2 (33:09):
And then the last seventy two hours he established the
timeline and he was heated that nothing happens till after
Labor Day. Everybody now is jockeying positioning. It's gonna be fascinating.
I'll make it up, Paul. The second week of September, Yeah,
when this thing really gets serious.
Speaker 5 (33:26):
Yeah, and you know, we kind of keep hearing that
either Mayor Adams or former Governor Cuomo, somebody needs to
maybe bow out so called les the Democratic Party around
that remaining candidate. So say how that plays out?
Speaker 2 (33:41):
What do you got next?
Speaker 11 (33:42):
Okay, this is kind of thinking about what's in your cupboards,
what's in your refrigerator. What's in all that stuff?
Speaker 5 (33:47):
Captain crunches.
Speaker 6 (33:48):
No, see, that's the problem.
Speaker 11 (33:50):
So this is according to the CDC's Nutrition Survey, sixty
two percent of childhood diets come from highly processed foods.
So we're talking about burgers, pastry, snack, pizza, thing like that.
For adults it was fifty three percent, not as much
but still high. It's it's it's still a dip though
from about five years ago when the survey was taken.
(34:10):
But what they're saying is that how you can avoid
these highly processed food is you go to the store
and you look at the label. If there are ingredients
there that are not in your kitchen, then it's probably
highly processed. This is what I do when I go
to the supermarket.
Speaker 2 (34:23):
Yes you do.
Speaker 11 (34:24):
People hate me in the supermarket.
Speaker 9 (34:25):
Because I'm the one.
Speaker 5 (34:26):
I think we're crowding hate at home. I mean people
are like mom brought home. Some more like are we
supposed to eat this stuff?
Speaker 2 (34:32):
Kind of thing?
Speaker 11 (34:32):
But some of the okay, so what are some of
like the top ultra process foods? They don't think of sandwiches. Actually,
I love cold cuts, followed by sweet bake goods. Savory snacks.
Those were some of the high things. But it's you know,
it's a serious because doctor's link those ultra processed food
and modern diabetes and stuff. Right, I'm waking. So that's
the story of this still coming out. No, this next
(34:54):
one's a good one.
Speaker 6 (34:55):
Okay.
Speaker 11 (34:56):
College kids they love their Google calendar, right, they call it,
that's the slang for it. Okay, So they're using it
to schedule everything like what time to go to sleep,
what time they eat, if they want.
Speaker 6 (35:07):
To go for a walk.
Speaker 11 (35:08):
But what they're also scheduling is to do is asking
someone on a date. That's actually a new thing hooking up.
You send someone a Google calendar invite. That's the way
the kids are doing it nowadays.
Speaker 4 (35:20):
Who knew.
Speaker 11 (35:20):
I mean, they're sending screenshots of their entire calendar, you know,
color coded and everything, and they're saying, well, if you
can fit into my schedule, then then maybe we can
make something work.
Speaker 2 (35:29):
Again, just go to a bar.
Speaker 9 (35:31):
That's how you do it, kids.
Speaker 11 (35:33):
But I mean it's kind of impressive or how organized
they are, but it's a bit much. Quickly, Okay, Top Golf,
callaway brands, they came out with earnings, right, It was
an earnings beat.
Speaker 4 (35:51):
You know what was a big.
Speaker 11 (35:52):
Thing for them. The big thing was their promotions. They
had frozen margaritas and half off golf during the week,
so half price during the week. People love that. They
come out, they have a margarita, they're happy.
Speaker 5 (36:03):
Yeah, I'm working for them, I mean, but I've heard
great things about it.
Speaker 6 (36:07):
Top Golf.
Speaker 5 (36:08):
I love it.
Speaker 2 (36:08):
Yeah.
Speaker 8 (36:09):
It's a fun.
Speaker 11 (36:09):
Yeah, I have it's very fun. You have food, drinks.
Speaker 6 (36:16):
If you're like sas Hour and you need No I'm
not a Gulf.
Speaker 2 (36:22):
Top Golf.
Speaker 5 (36:23):
Oh yeah, but it's a fun time.
Speaker 2 (36:27):
Thank you, Alsato, thank you, Thank you so much for
the newspapers. Greatly appreciated.
Speaker 1 (36:31):
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
(36:52):
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):
Kelsey Beryl she joins us today from JP Morgan asset management. Tariffs.
Everybody's worried about substituting. I'm going to substitute for my
overpriced tomatoes from Mexico, I would suggest, and I'm seeing
it percolating that far more. Here is the income effect
of tariffs slowing economy, damp and wage growth. And that
(00:52):
what do bonds do? Bill's notes and bonds given a
slowing income effect, a dampened income.
Speaker 3 (00:59):
Effect, right, So, I mean, the data that we've been
seeing suggests that the US economy is moderating, and maybe
even slowing a little bit more aggressively than the term moderating.
So if I look at real consumption spending over the
first six months of the year, it's annualized negative for
the first time since twenty ten.
Speaker 2 (01:17):
Is that price up yield down?
Speaker 4 (01:19):
I would say, so?
Speaker 3 (01:20):
I mean, I think that is the reaction in the
bond market that you're seeing, which is that yields have
been somewhat range bound this year. But you know, when
data does come in weaker than expected, like the payrolls
report we got on Friday, you see an aggressive move
lower in yields. And that's been a function of this low, higher,
low fire labor market the way that we've been describing it,
(01:42):
which is not necessarily that companies are laying people off,
but they are having them work less hours, and they
are holding off on investment plans until they get more certainty.
And I think the question is going forward, we do
have a bit more clarity on the future outlook. We
have the one big beautiful Bell Act. We also have
(02:03):
some sense of tariffs, right, they're not going away.
Speaker 4 (02:06):
Maybe the average.
Speaker 3 (02:06):
Effective tariff rate is going to end up being around
fifteen percent, between fifteen and twenty percent. Yeah, it's not great,
but at least we know what it is. The question
is do you see a reacceleration in some of this
activity now that things are slightly more stable, or is
there actually more damage to come from the tariffs.
Speaker 4 (02:26):
And we've been complacent because.
Speaker 3 (02:27):
It's just a very or longer lag than people anticipated
between higher costs and slower demand and the impact on
the economy.
Speaker 5 (02:38):
You're right, I mean, I think some of the earnings
outlooks we've seen from some of these companies are there's
still cautiously optimistic, but that I think that's kind of
a win. I mean, because you don't really know what
a fifteen to twenty percent tariff's going to do to
your bound sheet.
Speaker 6 (02:53):
So do we take credit risk out there?
Speaker 5 (02:54):
Are you guys sensing that it's time to take some
credit risk or taking credit risk is okay?
Speaker 4 (02:59):
Yeah, I mean we have been taking credit risk.
Speaker 3 (03:01):
We have been stress testing all of the companies that
we own, assessing how they would handle ten percent tariffs
twenty percent tariffs, and the credit analysts have all come
back to us and they've said, you know, it's.
Speaker 4 (03:13):
Not great for earnings, it's not great for revenue.
Speaker 3 (03:16):
We're projecting a slowdown, but we're not projecting our earnings
or revenue turn negative, and we're not projecting that this
is necessarily going to cause a recession. And I will say,
at the same time, expectations have been lowered, and so
when Q two earnings have come out, it's been a
clear beat and now we're refocusing from the negative impacts
(03:37):
of tariffs to the potential positive impacts associated with one
big beautiful bill.
Speaker 4 (03:42):
So a lot more companies are talking about.
Speaker 3 (03:45):
Upgrading free cash flow estimates because of expensing of R
and D or interest deductibility, or lower emission standards for
auto companies.
Speaker 5 (03:56):
So, I mean, I guess one of the questions here is,
I'm how does that balance out because kind of maybe
the dampening effects of terrorists, but maybe the pro.
Speaker 2 (04:05):
Growth effects of some of this one big beautiful bill
that you mentioned.
Speaker 5 (04:10):
So net is you look at the twenty twenty six
kind of how's how's the outlook out there for you?
Speaker 3 (04:16):
Yeah, I mean, net net, our base case has been
subtrend growth, and I think that our confidence around that
sub trend base case has grown.
Speaker 4 (04:26):
Because of a lot of these offsets.
Speaker 2 (04:28):
Yep.
Speaker 4 (04:28):
You know, you have the tariffs, but you have the
one big beautiful bill.
Speaker 3 (04:32):
You know, you also think about the concerns earlier in
the year with the deficits, right, there was a lot
of concerns about expanding deficits. Now we have the trajectory
for debt growth based on the new tax legislation, but
we also know that we have a lot of tariff
revenue coming in.
Speaker 4 (04:49):
So what have we gotten and fixed incomes so far
this year?
Speaker 3 (04:52):
Well, stimulus maybe, but it's a it's a carry environment,
so one where we started with high all in yields
within fixed income at the start of the year, and
with yield range of bound and spreads range bound. I
look at returns you're to date on the USAG four
point seven percent. That's essentially that carry environment that we
(05:14):
were kind of expecting.
Speaker 2 (05:15):
When we went into hit your twelve months forward view
on IG paper, Then can you make six to seven
percent in fixed income?
Speaker 3 (05:22):
It will obviously depend how much risk free rates fall
and how much spreads narrow from here, But even if
we just stay range bound, you can expect the twelve
month board return on your investment grade portfolio to look
similar to your starting yield.
Speaker 2 (05:37):
I'm so glad I don't have a real job with
a real job Kelsey burrowchip a real job. This morning,
I just kicked the cross curds that my head's spinning.
Speaker 1 (05:47):
Folks, you're listening to the Bloomberg Surveillance podcast. Catch us
live weekday afternoons from seven to ten am Eastern Listen
on Apple, Karplay and Android Otto with the Bloomberg Business
up or watch us live on YouTube.
Speaker 2 (06:05):
John stolf he's with Oppenheimer and Company. He is the
one who said you have courage stay in the market
in October two times ago, three times ago, four times ago,
April passed. Paul, I just framed it out. You can
do this on the Bloomberg terminal. Thank you, mister Secunda.
And it's simple. The Stolfus call from here is up
(06:28):
eleven point seven percent out one year, and that gets
you out to seventy one hundred. So I interpolated. That's
all we do that for John, I interpolated down forty
seven thousand plus on that. It's a double digit lift,
but not too double digity. You're seventy one hundred. People
think you're nuts. Explain why you're not nuts.
Speaker 6 (06:50):
Well, thanks Tom.
Speaker 7 (06:51):
It always great to be on Bloomberg Radio Surveillance with
you and.
Speaker 6 (06:56):
Paul and Lisa. I just want to say that where
we are, the fundamentals look good. You know, it's in
spite of everything. It would appear that when you think about.
Speaker 7 (07:06):
It, it's almost about it's about seventeen eighteen years ago
since the financial crisis, and corporations aided by technology significantly,
as well as the Federal Reserve, the ben bernanking legacy
as we call it, have been able to manage a
lot of situations, including so far this tariff regime as
(07:28):
it comes in.
Speaker 2 (07:29):
But the bear people, the guys that say stolefus is nuts,
They're going to say, Okay, it's great, but at some
point it ends, and we have a correction done ten percent,
a bear market down eighteen percent, or a normal collapse
down thirty five percent. Where is that emotion out there?
Speaker 6 (07:46):
Well, that's a good question, you know.
Speaker 7 (07:48):
I think what it is is that bearishness always exists.
There's a lot of people who feel that the Fed
has maintained rates too high, their benchmark rate too high
for too long. On the other hand, you know, when
we look at it, what we say is they raised
eleven times and they paused I think about fourteen or
fifteen times now and no recession, so remarkably sensitive to
(08:09):
their dual mandate, which is accessionally essentially giving us what
we would have to say is an economic growth at
a sustainable pace without untoward levels of inflation, with also
not disrupting the job market.
Speaker 6 (08:24):
Although we're seeing jobs slow, but you.
Speaker 7 (08:26):
Know, Tom, it just looks like it's it really is
a mid cycle.
Speaker 6 (08:30):
Extension by monetary.
Speaker 7 (08:33):
Policy that makes you know when you look at the
economic cycle, it's as wide as the Amazon, not the
outfit that delivers the boxes to your home, but rather
the Amazon river. And this has been going on for
quite a while.
Speaker 2 (08:47):
And this is the underestimation of American productivity an American.
Speaker 6 (08:52):
And we saw a nice pick up there today.
Speaker 7 (08:54):
You've got AI that appears to be and what we
would say is a watershed period in terms.
Speaker 2 (09:00):
Of two enthusiastic for the showing.
Speaker 5 (09:03):
John, reading through your notes, something jumped out of me.
Sometimes it seems to us that quite a few folks
probably don't know what the best performing SMP five sector
is year to date. I happen to know because I
have a Bloomberg terminine front.
Speaker 6 (09:15):
Me no industrials.
Speaker 5 (09:18):
What does that tell you about this market?
Speaker 7 (09:19):
Oh?
Speaker 2 (09:19):
What it tells us is.
Speaker 7 (09:21):
That you've got you've got a broadening in the rally,
which we began to look at and expect last year.
In the fourth quarter and even earlier in that we
were saying this rally is broadening.
Speaker 6 (09:32):
A lot of denial about that.
Speaker 7 (09:33):
Everyone, Oh it's just bag seven and it's just ooh,
it's just so narrow. But you've got if you look
at it on a year to date, industrials is up
fourteen point.
Speaker 6 (09:43):
Four percent, outperforming the benchmark. That's up seven.
Speaker 7 (09:46):
The underlying bench Wroin goes up seven point eight, communications
services up thirteen point nine, info Tech up thirteen point
seven eight.
Speaker 6 (09:54):
And then utilities up twelve point eight. That's a defensive.
Speaker 7 (09:58):
After that, you've got financials really quite a bit of
a value sector seven point three.
Speaker 6 (10:03):
Materials my gosh, five point it.
Speaker 7 (10:06):
Really this is Staples up five percent, real estate limpied
along up one point five seven.
Speaker 2 (10:12):
Energy's negative.
Speaker 7 (10:13):
Consumer discretionary is down nearly two percent, health tears down
five But those are understandable at least at this point.
With yet we think consumer discretionary is improving in performance considerably.
I mean, you look at this, you also think, has
this been a dramatic overbought kind of rally? And we
will say from the low of April eighth of this year,
(10:37):
you know, info tech is up fifty over fifty percent
as a sector, Communication services up thirty three point six,
but industrials up twenty nine point five four and consumer
discretionary up twenty seven. I won't belabor going.
Speaker 6 (10:51):
Through all of these, but my point is that looks wild.
Speaker 7 (10:54):
But then take it from the February nineteenth peak and
the S and p's own up three point twenty seven percent,
infotech's up eleven, and change industrials up eight point seven again.
Second best performed utilities, third best performing ZECHERP six.
Speaker 2 (11:11):
So what we.
Speaker 7 (11:11):
Say is you're beginning to see this broadening in the rally.
Small and mids are still pretty brutally traded. On a
given day when the traders are just getting taking some profits,
and large caps if things, if if the news flow
isn't worrying, they go into smalls and mids and bid
them up a little bit. We think that requires the
FED cut, and we think that's that's more likely than
(11:34):
not in September as a result of those jobs numbers
and Powell has talked about for a long time the
importance of the dual mandate and the sensitivity towards that
dual mandate would tell us, you know, probably about a
twenty five BIPs, maybe even a fifty BIPs.
Speaker 5 (11:50):
Got what have you seen from corporate American terms of
earnings so far this.
Speaker 7 (11:54):
Squad gosh when it comes to Ernie's I was just
I was just looking at the EA page and I
think it's up nearly twelve percent earnings growth.
Speaker 6 (12:03):
You've got three sectors that are double digit.
Speaker 7 (12:07):
Returns. That's off the top of my head. That's tech, communications, services.
Speaker 2 (12:12):
And financials.
Speaker 7 (12:13):
You've only got one negative, and I think that's a
negative double digit earnings growth. I think that's energy and
effectively You've got eight positive earnings growth, three negative.
Speaker 6 (12:25):
This is remarkably healthy.
Speaker 7 (12:27):
But we really think a lot of it has to
do like Jimi Hendrix used to say, are you experienced. Indeed,
managements of corporations and the US consumer are more experienced
to dealing with waters that need attention to navigate and
have the tools through technology.
Speaker 6 (12:46):
Just think of the communications. I've been to this business right.
Speaker 7 (12:49):
Since nineteen eighty three, So I remember when there wasn't
a Bloomberg, when there wasn't a Bloomberg News, there wasn't
all these different we have day people know, let.
Speaker 2 (13:01):
Me reintroduce John Stolphus with US. He has an acclaimed
bullmarket call. He has nailed what we've seen over the
last number of years. He's with the venerable Oppenheimer and
Company's chief investment strategists. You mentioned James Hendrix and all
of this. Were we better off when we were in
the office looking at the back section of the Wall
(13:21):
Street Journal in earnings's revenue, net income shares, and when
you went to get a cup of senka or post
him or escafe, you risk tripping over the value line
on the floor. Were we better back then in terms
of having the knowledge and conviction to stay in the market.
Speaker 6 (13:40):
I don't think so. And in fact, the change that
we have seen very.
Speaker 7 (13:44):
Much, especially amongst private investors, is private investors used to
get into the bullmarket usually after it was up. This
is just anecdotal ratecall, but probably ten or fifteen percent.
Speaker 6 (13:56):
Everybody's talking about it. If you don't own stocks.
Speaker 2 (13:58):
One day, okay. Let the bottom line is everybody's managing
their own retirement, got it? And that's the sea change here.
Speaker 6 (14:06):
I think that's what it is. It's serious investing by
the private investor.
Speaker 7 (14:10):
It doesn't mean they still don't have plays that they do,
whether it's a you know, the mag seven or God
helps the memes, But when you look at it, it
is it adds support to this bull market in that
you've got intermediate and long term investors who are looking
for the babies that get get tossed out with the
bathwater on pullbacks rather than buying dips blindly.
Speaker 6 (14:34):
And they're in it for the longer haul because multi.
Speaker 7 (14:37):
Generations now from from the boomers all the way to
the newer younger generations, have.
Speaker 6 (14:42):
A realization that social security.
Speaker 7 (14:46):
Is not likely to give anywhere near the retirement percentage
of income, and as it once did for their great grandparents,
their grandparents, and certainly for their and for their parents,
and so people need to provide for themselves, and the
market offers an opportunity.
Speaker 5 (15:04):
John Tom has his focus on the VIX and right
now it's pretty quiescent around sixteen times. But boy, this
year's been anything but. In the s and P five
hundred with it twenty percent declined there in April with
the terroriffs, but then boy, nearly a thirty percent rebound
off that low, all in seven months.
Speaker 6 (15:21):
We don't see that very often, do we No?
Speaker 7 (15:23):
And I think once again, I think that is the
It is the ability of the market to discount data
that crosses the proverbial transom on any given day, whether
it's it's economic data, whether it has to do with
a report related to the management of a corporation, or
policy change or considerations upont all this stuff happens relatively fast.
(15:48):
And if you look at the if you look at
the chart, it just looks like whenever the VIX gets
too sleepy, you know, you get your you become vulnerable
to see a bit of a spike somewhere along the line.
But the reality is the spikes have been lower of
late the pattern. I'm not a technical strategist and a
(16:10):
fundamental strategist, but we look at the vics because when
it gets too sleepy, get ready, you know, and then
be prepared to instead of running for the hills based
on the fundamentals, look for good quality stocks and cassis.
Speaker 2 (16:23):
To do with MAG seven now, I mean it, I
own MAG seven. I don't want to sell it. What
does John stolf To say, I don't own them? Should I?
I mean, what do you do with MEG seven for
the flavors of regret out there?
Speaker 7 (16:37):
Now? Well, we do say we think you do need
to own them because we think they are an intermediate
to longer term story because of the deeply embedded nature
of technology in the lives of both consumers and business.
But it also means if you look at just our
little box that we put every week at our piece,
where we look at the S and P five hundred,
(16:58):
we don't rate our sectors either overweight or underweight, but
we rate them outperform, market perform or a below or
you know, underperformed. Rather at when we look at technology itself,
what we say on infotech, it's about thirty percent waiting
(17:19):
I think in the benchmark, so we say twenty five percent.
Speaker 6 (17:23):
As a conversation point. For an advisor and their client,
they may want much less, they may have more. It
depends upon their tolerance to risk.
Speaker 2 (17:31):
One thing you mentioned the economist James Hendrix. Yes, okay,
I don't think people know his history that this guy
came up with foundational blues. I mean everybody knows what's
stock and all that, but he came up foundational blues.
Literally he was the opening band as a kid for
the Isisley Brothers a million years ago. I mean the
(17:51):
blues foundation.
Speaker 7 (17:52):
Was something oh spectacular. And when you consider his not
only his lead guitar playing, but the comping the.
Speaker 6 (17:59):
Cops O Rich, I mean it was.
Speaker 7 (18:01):
It was like very very central to what would be
the Memphis kind of sound.
Speaker 2 (18:06):
He was part of that.
Speaker 7 (18:07):
I mean the cross you know, whether you consider James
Burton or Jimmy Hendricks.
Speaker 6 (18:15):
The comping just fabulous, just fabulous.
Speaker 2 (18:19):
It's great. Is that enough? Guitar, John John Stolphus, thank
you so much. Congratulations and really one of the great calls.
I pull it in with Ralph and Kompora ed Yardnny
has been brilliant. Out of Bullmark, it's been. Bolski's been okay.
I mean I don't sun no, he's you know he
likes the Vikings well you know it's an asterisk, but okay,
(18:39):
he's been okay, and John storph has killed it. App
go as well.
Speaker 1 (18:43):
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 (19:00):
This is the conversation of the day for people worried
about Transatlantic confidence. Mark doubting is with Blue Bay Asset
Management in the heart of COVID. They did an agreement
with the Royal Bank of Canada. It is OURBC Blue
Bay asset Management. He has been a student of our
greater opinion, our economics, our finance, our investment around credit
(19:24):
for decades. Mark, what's the level of confidence in the
city this morning that we can get beyond this tariff?
This tariff Thursday? What's the confidence level forward?
Speaker 8 (19:39):
So I'd say that we're actually in a reasonable position
at the moment stateside, when we look towards the coming
year in twenty twenty six, I think in this respect
that there's a real sense that into the year ahead
we're probably going to see lower taxes, lower rates, less regulation,
and that's speaks to a better outcome for.
Speaker 9 (20:02):
The coming year. Albeit in the short term.
Speaker 8 (20:06):
We think that in the short term there could be
some softness in data, as we saw with the payrolls
numbers last week, as some of these sort of tariffs
and the past uncertainty impacts the data in the second
half of the year. So short term i'd say things
look a bit bumpy. Further out, it looks a lot better.
Right by and large, I'd say that markets are looking
(20:27):
pretty pretty cheerful.
Speaker 2 (20:28):
Yeah, part to the observation you had that all of
a sudden, August has a certain pace to it for
New York.
Speaker 5 (20:35):
M and A sure, and we're starting to see some
animal spirits a little bit, and also in the IPO market. So, Mark,
as you think about it, how are you surprised that
despite all the tariff headwinds, crosswinds, I'm not sure kind
of whip they are depending on what country you are,
that markets are performing relatively well here servely with the
stock markets hitting all time highs here.
Speaker 6 (20:58):
Yeah.
Speaker 8 (20:58):
Well, I think in terms of the US stop market,
it comes back to earnings and earnings growth have been solid,
hasn't it.
Speaker 9 (21:04):
I mean, it's looking pretty good.
Speaker 8 (21:07):
And from that perspective, it also feels like all through
the year the stock market has been climbing a wall
of worry. I think some of the fears that were
being expressed back in April have really melted into the background.
And having got the budget done, having got the tariffs
through without a big sort of pushback in a retaliatory sense, effectively,
(21:30):
what the US has done here is it's effectively managed
to raise taxes pretty materially. We think that the tax
take on revenues from tariffs will about four hundred and
fifty billion, which is up three hundred and seventy billion
year over year.
Speaker 9 (21:44):
That's around one point two percent of GDP.
Speaker 8 (21:47):
So this has been a decent outcome for the US
and so in many respects, I don't think it should
be a big surprise that US stops have been performing
reasonably well.
Speaker 2 (21:57):
I can see you in your class with Skidelski at work.
I can just see it right now. What does this
do to the income generation of our trade allies? I mean,
do we see slowness in Europe, the United Kingdom, in
Asia off of these trade agreements?
Speaker 8 (22:18):
So ostensibly yes, we should see a bit of a
I mean, in as much as the US is having
a win, here is a relatively speaking, a trade war
loss for other countries elsewhere in the world. I think
the big question though, and this is the big question
that the FED is also asking, is that if you've
raised tariffs by one point two percent of GDP, who's
(22:39):
footing the bill than Are you going to be US
consumers or is it going to see overseas producers? And
the mix of that, I think is really going to
determine where Mark is go in the months ahead.
Speaker 2 (22:50):
We're going to continue here with Mark Dodding, RBC Blue
Bay thrillly could be with us today with just wonderful
Transatlantic perspective, really gets perspective on economics right now. A
productivity series coming out unit labor costs has my attention.
And also we see claims that two two two is
a survey two hundred twenty two thousand. Of course a
(23:13):
revision will be important, made more important by the jobs
report that we saw today. Further data at ten o'clock
this morning. Let's go to it. The economic data coming
out right now. We use e CEO go, which is
a good thing to do. Unit labor costs come in
and tick higher than the survey one point five percent
is one point six percent non firm productivity shows a
(23:36):
productive America. Two percent statistic comes in at two point
four percent. Revisions on claims flat in a more difficult
claims slightly, ever so slightly. Two two two comes in
with a two twenty six claims as well. I don't
see a lot of you know, a lot of meat
(23:56):
there for anybody, Paul, No, I don't.
Speaker 5 (23:59):
Know any initial jobas claims a little bit higher than
expectations and a little bit of a vision higher last time.
We'll keep an eye on that. Continuing claims a little
bit higher than expectations, but we had a revision downward
last month.
Speaker 2 (24:10):
So there surveillance data check audible gold up twenty five
dollars three four five sixty dollars to a record ee
on gold. Had no idea what that has to do
with economics Commonwealth going, Tom, why are you doing gold
during our economics? Commonwealth? We thank them for our for
(24:30):
all of Bloomberg's surveillance. Bloomberg surveillance. This morning brought you
by Commonwealth, supporting more than two thousand independent financial advisors
with a two to one advisor to staff ratio, small
firm Attenatus, big Advisor Impact. Go to Commonwealth dot com
Commonwealth dot com to learn about their consultative support and technology. Paul,
(24:53):
why don't you bring in mister Dowding in London?
Speaker 5 (24:55):
Sure absolutely, Marked Outing stays with the CIO of RBC
Blue Bay Asset Management. Hey Mark, The Bank of England
cut interest rates to the lowest level today in over
two years. What do you make of that and how
do you think that may or may not influence the
US Federal Reserve.
Speaker 8 (25:15):
So I think the picture in the UK is rather
different to that in the US. The economy here is
rather limping along. We've really been sort of struggling for
a few years in economic terms.
Speaker 9 (25:26):
It's interesting just hearing that sort.
Speaker 8 (25:27):
Of productivity data that we hear in the US productivity
at two point four, because we see strong investment in
the US, because we see those productivity gains in technology.
By contrasts, in the UK we have next to no
productivity growth whatsoever. So that's why UK rates are coming
down because the economy is slow. At the same time
(25:49):
here in the UK actually our worries that inflation is
too high. I think in the US it's a very
different situation. We've actually gone an economy that has been
very healthy for an extended period of time. Is more
question of whether the FED ease rates, because the economy
could go faster than it currently is if there isn't
(26:10):
any inflation to worry about.
Speaker 2 (26:12):
Mark, when you were at Warwick and I don't know
if you you know you served under Skadelski and work economics,
did you actually read the one twenty one pages of Skidelski,
John Maynard Keynes.
Speaker 8 (26:26):
Oh, hell, no, I mean I was an active a
student right hetos to anyone he did.
Speaker 9 (26:32):
He made it through all of that.
Speaker 8 (26:34):
I think my back in the days when I had
hair on my head, I was probably too interested in
the parties more than the elections, but it certainly gave me.
Speaker 9 (26:43):
A good grounding that pace. It's a fine institution.
Speaker 2 (26:45):
Mark Downing, thank you so much. I bring that up
for Lord Skadelski was just hugely supportive of the advent
of all of this, and we thank him in the
University of Work for their support in our early years.
Markdowning see Blue Bay at Capitol.
Speaker 1 (27:07):
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 (27:21):
Joining us now foundational. You know it's Stolfhsen. It's sort
of the same thing as John Stolfus. Joe Carson has
pretty much seen it all. He's a former chief economist
Alliance Bernstein, publisher of The Carson Report. I don't, Joe,
are you retired? You're not retired, are you?
Speaker 10 (27:38):
Uh? Semi retired.
Speaker 2 (27:40):
Semi he's only working seventy hours a week. He's cut
it back from eighty. Joe, let's do this with you.
You're the first one I've talked to. I got an
inflation report next week, Okay, I got a labor economy struggling.
The consensus is inflation is I think you called his persistent.
Which is more important the inflation report next week or
(28:03):
the next claims number on labor.
Speaker 10 (28:08):
Well, they're both connected in some ways. Certainly, the terriff
related the impact on goods prices are starting to come through,
and it'll come through even more over the next seven months.
It takes time to show up on the shelves and
what people pay and what companies pay. But the I
think the labor data that you've seen recently, particularly the
(28:32):
small job gains, as a reflection that companies are very
hard having a hard time to plan how to operate
in this environment where tariffs go in and out or
up and down, and they're not knowing where they're going
to go next.
Speaker 5 (28:47):
So putting it all together here, I mean Tom likes
to talk about the resilience of the US consumer, the
resilience of companies in general, is are these tariffs something
that we all can kind of deal with and get
through and get past without seeing any significant economic slowdown
or pick up an inflation.
Speaker 10 (29:09):
Well, that's very unlikely. I think you've already seen a
significant slowdown in hiring. That means companies are not investing
or planning to grow their companies because they increased costs.
You know, one thing that's being missed is that in
the first nine months of this fiscal year, corporate tax
collections were off thirty billion from a year ago based
(29:31):
on higher expenses, and that's tied to the tariffs. The
inflation rate will pick up and that's going to hurt
consumer spending and make consumers more cautious on what they do.
So it's not a zero sum game. When you raise terraffts,
it's like putting the tax on the consumer and businesses.
(29:53):
And also keep in mind the initial intent of terrafts
was to bring back many factoring or increased manufacturing relative
to where it was before. But the problem is that
many of our companies operate on a global basis, not
with a national footprint. So putting cost increases on a
(30:15):
lot of materials and supply raises the cost of production
for them. It makes them uncompetitive in the world. So
it's it's a really odd policy and I think it's
going to have bad consequences down the road.
Speaker 5 (30:28):
We had some week labor data last week, and then
we had the year of labor systics as commissioner effectively
fired by the president. What did you make of all
that noise last week?
Speaker 10 (30:42):
Well, let me say three things in this The politics
around labor market data or economic data has been around
a long time. Presidents have always complained about the interpretation
of data, but never the actual data itself. Okay, one thing. Second,
(31:02):
the fact that the Treasurer Secretary Vesent and the National
Economic Council Director Hassett did not defend the BLS and
this is shocking, Okay, I've never seen that before in
my long career. And the third point is what the
administration was able to do is flip the switch.
Speaker 2 (31:24):
Here.
Speaker 10 (31:25):
How many reports have been on the firing of the
BLS commissioner and how many reports on what the actual
data says. They don't want you to talk about the
data because the data shows labor markets are struggling and
companies are struggling. That was a message there, But it's
been blunted, so the financial press, you guys in particular,
have a big job to tell the truth going forward.
Speaker 2 (31:47):
Joe, thank you so much, Joe Carson with us formula
with the Lions Bernstein there and the comments that mister
Hassett are clearly out in the zeitgeist. We'll be addressing
that on the coming days. Here.
Speaker 1 (31:57):
This is the Bloomberg Surveillance Podcast. Listen live each weekday
starting at seven am Eastern on Apple Corplay and Android
Atto 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 (32:14):
Right now to the newspapers, Lisa Matteo, Okay, I.
Speaker 11 (32:16):
Want to start with the New York Times, because sorcerer
saying that President Trump weighing getting involved in the New
York City mayor's race to help try and stop Zora Mundami.
So what he's reportedly done, this is according to the
Times who've spoke to people. They said, he's picked the
brain of a Republican congressman, New York businessman about the
crowded field, right, who has the best chance of beating Mamdami.
(32:38):
He also was briefed by Mark Penn. He's a poster
who worked with Alexa Bill and Hillary Clinton.
Speaker 2 (32:43):
Right.
Speaker 11 (32:43):
He also Andrew Stein, a former New York City Council president,
a range of polling that's showing that actually for former
Governor Cuomo could still be a competitive factor as an independent.
Speaker 6 (32:55):
So what the article does.
Speaker 11 (32:57):
It really raises questions about what the president's involvement in
the race would do, saying it could bring like this
new element of unpredictability to something that's already wild, crazy chromo.
Speaker 2 (33:09):
And then the last seventy two hours he established the
timeline and he was heated that nothing happens till after
Labor Day. Everybody now is jockeying positioning. It's gonna be fascinating.
I'll make it up, Paul. The second week of September, Yeah,
when this thing really gets serious.
Speaker 5 (33:26):
Yeah, and you know, we kind of keep hearing that
either Mayor Adams or former Governor Cuomo, somebody needs to
maybe bow out so called les the Democratic Party around
that remaining candidate. So say how that plays out?
Speaker 2 (33:41):
What do you got next?
Speaker 11 (33:42):
Okay, this is kind of thinking about what's in your cupboards,
what's in your refrigerator. What's in all that stuff?
Speaker 5 (33:47):
Captain crunches.
Speaker 6 (33:48):
No, see, that's the problem.
Speaker 11 (33:50):
So this is according to the CDC's Nutrition Survey, sixty
two percent of childhood diets come from highly processed foods.
So we're talking about burgers, pastry, snack, pizza, thing like that.
For adults it was fifty three percent, not as much
but still high. It's it's it's still a dip though
from about five years ago when the survey was taken.
(34:10):
But what they're saying is that how you can avoid
these highly processed food is you go to the store
and you look at the label. If there are ingredients
there that are not in your kitchen, then it's probably
highly processed. This is what I do when I go
to the supermarket.
Speaker 2 (34:23):
Yes you do.
Speaker 11 (34:24):
People hate me in the supermarket.
Speaker 9 (34:25):
Because I'm the one.
Speaker 5 (34:26):
I think we're crowding hate at home. I mean people
are like mom brought home. Some more like are we
supposed to eat this stuff?
Speaker 2 (34:32):
Kind of thing?
Speaker 11 (34:32):
But some of the okay, so what are some of
like the top ultra process foods? They don't think of sandwiches. Actually,
I love cold cuts, followed by sweet bake goods. Savory snacks.
Those were some of the high things. But it's you know,
it's a serious because doctor's link those ultra processed food
and modern diabetes and stuff. Right, I'm waking. So that's
the story of this still coming out. No, this next
(34:54):
one's a good one.
Speaker 6 (34:55):
Okay.
Speaker 11 (34:56):
College kids they love their Google calendar, right, they call it,
that's the slang for it. Okay, So they're using it
to schedule everything like what time to go to sleep,
what time they eat, if they want.
Speaker 6 (35:07):
To go for a walk.
Speaker 11 (35:08):
But what they're also scheduling is to do is asking
someone on a date. That's actually a new thing hooking up.
You send someone a Google calendar invite. That's the way
the kids are doing it nowadays.
Speaker 4 (35:20):
Who knew.
Speaker 11 (35:20):
I mean, they're sending screenshots of their entire calendar, you know,
color coded and everything, and they're saying, well, if you
can fit into my schedule, then then maybe we can
make something work.
Speaker 2 (35:29):
Again, just go to a bar.
Speaker 9 (35:31):
That's how you do it, kids.
Speaker 11 (35:33):
But I mean it's kind of impressive or how organized
they are, but it's a bit much. Quickly, Okay, Top Golf,
callaway brands, they came out with earnings, right, It was
an earnings beat.
Speaker 4 (35:51):
You know what was a big.
Speaker 11 (35:52):
Thing for them. The big thing was their promotions. They
had frozen margaritas and half off golf during the week,
so half price during the week. People love that. They
come out, they have a margarita, they're happy.
Speaker 5 (36:03):
Yeah, I'm working for them, I mean, but I've heard
great things about it.
Speaker 6 (36:07):
Top Golf.
Speaker 5 (36:08):
I love it.
Speaker 2 (36:08):
Yeah.
Speaker 8 (36:09):
It's a fun.
Speaker 11 (36:09):
Yeah, I have it's very fun. You have food, drinks.
Speaker 6 (36:16):
If you're like sas Hour and you need No I'm
not a Gulf.
Speaker 2 (36:22):
Top Golf.
Speaker 5 (36:23):
Oh yeah, but it's a fun time.
Speaker 2 (36:27):
Thank you, Alsato, thank you, Thank you so much for
the newspapers. Greatly appreciated.
Speaker 1 (36:31):
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
(36:52):
and always on the Bloomberg terminal.
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