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US Consumer Sentiment Declines for First Time in Six Months · Bloomberg Intelligence

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  Speaker 2: With your data dependent And we got that you mission number,
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  Speaker 2: that final rease.
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  Speaker 3: So let's go to Jorana Shue, Surveys of Consumers, Director
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  Speaker 3: for the University of Michigan. University of Michigan sentiment came
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  Speaker 3: out seventy one point one. The consensus was seventy three
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  Speaker 3: point two. Joanne, what does the data tell you here?
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  Speaker 4: The consumers are really not sure about what's going to
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  Speaker 4: be going on in the future, particularly with this administration change.
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  Speaker 4: We're of course.
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  Speaker 5: Seeing partisan differences.
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  Speaker 4: Republicans are feeling pretty optimistic about the future, Democrats less so.
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  Speaker 4: And this is really coming down to a difference in
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  Speaker 4: opinion about what Trump's anticipated policies are going to result
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  Speaker 4: in for the economy.
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  Speaker 2: What about the inflation expectations? Like which kind of changes
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  Speaker 2: do we see there? Because of course we're all waiting
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  Speaker 2: to see if tariffs do come down, will they wind
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  Speaker 2: up being inflationary.
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  Speaker 4: So inflation expectations for the short run they surged quite
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  Speaker 4: a bit between December and January, and they went up
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  Speaker 4: as well for the long run three point zero in December,
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  Speaker 4: three point two this month. Consumers are really quite concerned
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  Speaker 4: about tariffs, and actually concerned in different ways.
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  Speaker 5: Democrats.
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  Speaker 4: People who believe that tariffs are better for the economy,
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  Speaker 4: they think that inflation is going to plummet. People who
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  Speaker 4: think that tariffs are bad for the economy, they think
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  Speaker 4: that inflation is going to come surging back. So overall,
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  Speaker 4: consumers have already incorporated expected tariffs into their economic attitudes.
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  Speaker 6: All right, Joanne, thank you so much. We appreciate that.
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  Speaker 3: Joan Shue Surveys of Consumers, Director for the University of
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  Speaker 3: Michigan and University of Michigan headline number came out. Sentiment
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  Speaker 3: number seventy one point one was the actual. The consensus
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  Speaker 3: was seventy three point two, and was seventy three point
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  Speaker 3: two in the prior period. So, as Joanne was saying,
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  Speaker 3: some concerning out there, perhaps about some changes in economic policies,
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  Speaker 3: at least initially.
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  Speaker 6: And it comes right up. So how tough is that?
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  Speaker 3: It is Friday, which means we talked to one be
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  Speaker 3: Ridholt's barrier. Ridolts, he does this podcast thing. I think
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  Speaker 3: it's kind of popular. The host of Masters and Business
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  Speaker 3: on Bloomberg Radio is also the founder of Erdtholt's wealth
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  Speaker 3: management Barry Make America great Again. One could look at
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  Speaker 3: the economic data and say, country's doing pretty well.
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  Speaker 6: How do you think about it?
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  Speaker 7: Yeah, you know, this is the second time President Trump,
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  Speaker 7: first in twenty seventeen, now in twenty twenty five, inherited
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  Speaker 7: a really robust economy. So we'll just look at the
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  Speaker 7: previous year and when you look at his first term,
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  Speaker 7: the worst effects of the financial crisis had faded. Things
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  Speaker 7: had been on the upswing, at least enough for President
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  Speaker 7: Obama to get re elected in twenty twelve. By twenty sixteen,
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  Speaker 7: you know, we were really flying. Market was at a
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  Speaker 7: new all time high, and the economy is doing pretty well.
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  Speaker 7: Here we are twenty twenty five, twenty twenty four, GDP
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  Speaker 7: is going to be pretty close to three percent for
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  Speaker 7: the year. Unemployment is at four point one percent, that's
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  Speaker 7: close to full employment. Inflation is back under three percent
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  Speaker 7: heading towards two. We can argue if two percent is
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  Speaker 7: a credible inflation target in a fiscal stimulus environment, but
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  Speaker 7: two point seven percent headline CPI wages are higher, markets
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  Speaker 7: are at record highs, corporate profits are record highs. I
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  Speaker 7: could make the case that America is already, at least
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  Speaker 7: economically speaking, pretty great.
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  Speaker 5: Right. So that makes me feel two things.
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  Speaker 2: One either freaked out that there's only room to you
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  Speaker 2: for downside or two, well, then you add on, say deregulation,
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  Speaker 2: and you add on lower taxes, and we're going to
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  Speaker 2: see some better times too.
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  Speaker 7: So first, you know, it's very hard to say the
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  Speaker 7: economy is doing really well, and like a person who's
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  Speaker 7: enjoyed a great, healthy, long life lifespan. They don't just
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  Speaker 7: suddenly roll over and die. The economies don't just trip
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  Speaker 7: and face plants, at least not develop large ecout He's
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  Speaker 7: like the US. So you know, I had to I
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  Speaker 7: have coming up in a week or so Torsten Slock
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  Speaker 7: from Apollo Global Management, and he puts the risk of
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  Speaker 7: recession at zero percent. Listen, I don't put anything at
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  Speaker 7: zero percent, but that get you know, we could a
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  Speaker 7: meteor that killed the dinosaurs. There's more than a zero
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  Speaker 7: percent chance that that happens this weekend. It's close to
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  Speaker 7: zero percent. So I think what he's trying to say
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  Speaker 7: is this economy is firing on all cylinders. Wherever you look,
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  Speaker 7: there is strength. And if you look at how poorly
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  Speaker 7: the rest of the economists world have done over the
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  Speaker 7: past few years, consistently forecasting recession, slow down this, I
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  Speaker 7: think they underestimate the strength of the US economy. The
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  Speaker 7: if you look around we have are suffering from labor shortages,
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  Speaker 7: is housing shortages, automobile shortages. That's a big driving factor
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  Speaker 7: in preventing any sort of softness to happen, because anytime
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  Speaker 7: you know, a new house gets built, it gets bought
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  Speaker 7: up right away. Anytime there are qualified people in a
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  Speaker 7: labor pool, they get hired right away. And so it's
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  Speaker 7: to say nothing of all of the positive activity activity
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  Speaker 7: we've seen over the past few years, not just AI,
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  Speaker 7: but data centers and software and technology. Those things tend
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  Speaker 7: to have momentum and they tend to persist. That's not
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  Speaker 7: a week to week or month to month economic factor.
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  Speaker 7: Those are drivers that can last years and years, almost
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  Speaker 7: a decade. So we just have a lot of economic
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  Speaker 7: tailwinds behind us, and people have just been way too negative.
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  Speaker 7: That's before we get to the positives. And this administration
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  Speaker 7: is potentially a mixed bag the risks and opportunities.
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  Speaker 6: But from a market.
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  Speaker 7: Perspective, there certainly are a lot of opportunities coming.
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  Speaker 3: Barry, Are you concerned at all about potential headwinds coming
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  Speaker 3: from either tariffs or material changes to immigration policy that
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  Speaker 3: may be inflationary, that may harm the labor market, any
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  Speaker 3: of those types of things.
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  Speaker 7: Yeah, everything comes down to interest rates all the risk
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  Speaker 7: So there are risky policies from the Trump administration, and
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  Speaker 7: there are opportunistic policies from Trump two point zero. The
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  Speaker 7: risky policies all come down to interest rates. The wildcard
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  Speaker 7: factor of geopolitics. I have no idea what he's going
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  Speaker 7: to do with China, Russia, in the Middle East. You know,
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  Speaker 7: risk of let's not even talk about war, just disruption
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  Speaker 7: is problematic. I don't know how else to describe tariffs
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  Speaker 7: other than a price increase paid for by domestic consumers.
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  Speaker 7: You know, the FED has talked about tariffs as inflationary
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  Speaker 7: and potent preventing even more rate decreases. When Trump actually
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  Speaker 7: made his presentation at Davos, he not only called on
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  Speaker 7: lower oil prices from Opek, he called for lower rates
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  Speaker 7: from all the central banks around the world. Well, we
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  Speaker 7: import a ton of oil and petroleum products from Canada.
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  Speaker 7: If you're going to slap a ten or a twenty
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  Speaker 7: percent level rate on that, guess what That's going to
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  Speaker 7: be inflationary. So I'm a little concerned about this. My
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  Speaker 7: wishful thinking is, hey, this is a negotiating tactic, and
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  Speaker 7: to be fair, much of the tariffs around the world
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  Speaker 7: are not even handed. You cannot have a ten twenty
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  Speaker 7: thirty percent tariff on US goods and it's less manufactured
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  Speaker 7: goods than it is agricultural or all the energy we're
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  Speaker 7: exporting liquefied natural gas as well as various forms of petroleum.
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  Speaker 7: There needs to be some fairness and parody. So while
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  Speaker 7: many of my friends on the left scream about, oh,
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  Speaker 7: this is going to be terrible, Hey, there's a case
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  Speaker 7: to be made. There's a reasonable negotiation to get some fairness.
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  Speaker 7: It has to be a two way street. It can't
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  Speaker 7: just be American consumers wealthy as though they are paying
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  Speaker 7: most of the tariffs in the world. That doesn't seem
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  Speaker 7: to be fair. Hopefully we can get some positive resolution
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  Speaker 7: to the tariff question.
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  Speaker 2: So and then it all brings back to sequencing, right,
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  Speaker 2: Like tariffs will probably hit faster than maybe deregulation and
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  Speaker 2: corporate taxes, but the sequencing may not matter if we
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  Speaker 2: know that, say, deregulation and corporate taxes are coming.
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  Speaker 5: Is that a fair assessment.
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  Speaker 6: You know?
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  Speaker 7: I that's a really interesting question because I have no
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  Speaker 7: idea of what the sequencing sequencing is going to be. Like,
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  Speaker 7: anything that's going to require Congress is going to take longer.
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  Speaker 7: But a perfect example, the FTC on President Biden was
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  Speaker 7: pretty aggressive in restraining.
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  Speaker 6: M and A activity.
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  Speaker 7: I mean, to be fair, the FTC has been asleep
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  Speaker 7: at the switch for three decades and have allowed an
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  Speaker 7: intense concentration of corporate power. Anyone who's bought a concert
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  Speaker 7: ticket knows how ridiculous the Live Nation Ticketmaster merger was allowed,
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  Speaker 7: and you could say the same thing about You could
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  Speaker 7: say the same thing about a lot of other technology
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  Speaker 7: mergers that have been allowed. There's far fewer healthcare companies,
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  Speaker 7: far fewer energy companies. It's it's really become a little
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  Speaker 7: bit of a corporatetocracy. But you know, a defanged FTC
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  Speaker 7: is going to allow more m and a activity generally
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  Speaker 7: that supportive of higher market prices. There'll be no scrutiny
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  Speaker 7: on stock buy backs, so that tends to support higher prices.
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  Speaker 7: You know, the IPO market's been pretty dead for a
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  Speaker 7: few years. That's gonna start coming back to life, as
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  Speaker 7: well as secondaries, to say nothing of the deregulation to
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  Speaker 7: specific sectors. So think about healthcare and energy. I can't
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  Speaker 7: it's hard to imagine. We've been producing record amounts of
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  Speaker 7: oil in the United States the past few years. They're
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  Speaker 7: going to open up even more areas.
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  Speaker 8: Now.
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  Speaker 7: The politics of that is a little bit divisive, but
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  Speaker 7: just being cold blooded and looking at it from an
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  Speaker 7: economic perspective. Hey, more energy means lower more petroleum means
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  Speaker 7: lower oil prices, which is anti inflationary. Same with materials.
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  Speaker 7: Energy and materials were two of the worst sectors last year.
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  Speaker 7: Maybe they catch.
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  Speaker 6: A bit Barry, real quick, what are you driving this
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  Speaker 6: weekend in this weather?
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  Speaker 7: The truck, I'm gonna be out in something with heated
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  Speaker 7: seats and a heated steering wheel, and I don't really
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  Speaker 7: care about hand or I'm looking out my home office window.
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  Speaker 7: Everything is still snowed over, still iced over, and the
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  Speaker 7: thermostat says we're still in the teens. Hopefully by Sunday. Well,
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  Speaker 7: we'll get out of this deep freeze and I could
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  Speaker 7: take something out like any of the fun cars. Their
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  Speaker 7: tires are just terrible in twenty degree weather. They have
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  Speaker 7: no grip.
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  Speaker 4: Well.
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  Speaker 5: Also, though teens is kind of a heat wave, so
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  Speaker 5: at this point.
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  Speaker 6: Yeah, look at that one. Get them to thirties on Sundays.
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  Speaker 5: I mean that's like bathing suit weather. Barry. We appreciate you,
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  Speaker 5: Thank you very much.
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  Speaker 2: Barry Red Holts, founder and CEO of Holt's Wealth Management.
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  Speaker 3: Let's get it right to our next guest. Macunda, has
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  Speaker 3: been kind enough to chat with us over the last
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  Speaker 3: several months give us his thoughts on what's happening down
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  Speaker 3: in Washington, DC. He's a professor at the Yale School
• 13:08
  Speaker 3: of Management. Qualtam, Thanks so much for joining us here.
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  Speaker 3: You just know you listen to President Trump makes some
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  Speaker 3: comments here. What are your initial thoughts here of these
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  Speaker 3: first several days of President Trump's second administration.
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  Speaker 6: Here, as he hits the ground seemingly for running, Yeah.
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  Speaker 8: I mean it's a mixture. He's definitely hitting the ground
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  Speaker 8: running in some ways. So there's some element of the
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  Speaker 8: rhetorical gestures that don't kind of mean a lot and
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  Speaker 8: are characteristically Trumpian. Right, He's renaming the Gulf of Mexico
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  Speaker 8: and the Mount Mount Mount Denali and things like that.
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  Speaker 9: Okay, fine, I mean whatever.
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  Speaker 8: There are a bunch of executive orders, some of which
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  Speaker 8: are pretty standard, some of which are not necessarily what
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  Speaker 8: they seem. The one on tariffs, for examples, basically says
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  Speaker 8: that the Secretary of Commerce will consult, which isn't.
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  Speaker 9: The same thing as levying them massively.
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  Speaker 8: So we'll see what happens on that next And then
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  Speaker 8: there's a bunch of stuff that is going to do
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  Speaker 8: a lot of long term damage, but the effects may
• 14:06
  Speaker 8: not be seen right away. The United States withdrawing from
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  Speaker 8: the World Health Organization. I think we had a pretty
• 14:11
  Speaker 8: dramatic example quite recently about the importance of global public health.
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  Speaker 8: So you know, we might worry about the effects of that,
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  Speaker 8: the US pulling out of climate change agreements. Those things
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  Speaker 8: are going to do a lot of harm, but it
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  Speaker 8: may not be perceptible in the next year or two,
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  Speaker 8: or even the next four or five years. That might
• 14:25
  Speaker 8: be a problem for the.
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  Speaker 5: Successor exactly, which brought me to mind.
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  Speaker 2: It brings me to my next question, and we were
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  Speaker 2: talking about this earlier, is what is a sequencing because
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  Speaker 2: that matters, right if you have deregulation and you have
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  Speaker 2: tax cuts, that's obviously going to be positive. It feels
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  Speaker 2: like the equity market's really focused on that versus say,
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  Speaker 2: the tariff issue, which could come actually earlier maybe than
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  Speaker 2: we think, but it has doesn't have a lot of
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  Speaker 2: clarity what's your sequencing modeling.
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  Speaker 8: So the sequencing a lot depends on the Republican Congress
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  Speaker 8: and the Republican Caucus in the House, which at the
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  Speaker 8: moment is sitting on a one seat margin. So the
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  Speaker 8: you know, herting cats is easy compared to what they're
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  Speaker 8: going to try to do here, and in particular, the
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  Speaker 8: tax cussings like all that is also going to get
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  Speaker 8: revolve around the debt ceiling increase, which will almost certainly
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  Speaker 8: need democratic health. So there are going to be some
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  Speaker 8: significant tax cuts that will be slanted towards corporations the wealthy.
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  Speaker 8: There's going to be massive regulation deregulation in ways that
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  Speaker 8: will be very, very favorable to corporate interest, like that
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  Speaker 8: is an inevitability with Trump. But the sequencing is completely
• 15:21
  Speaker 8: got in the air and depends on you know, getting
• 15:24
  Speaker 8: every essentially every single Republican member of Congress degree on
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  Speaker 8: a policy agenda.
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  Speaker 9: Good luck.
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  Speaker 8: I'd rather know if somebody offered me that job, I
• 15:31
  Speaker 8: wouldn't want to take it.
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  Speaker 3: Well, I'm one of the I guess one of the
• 15:35
  Speaker 3: more near term issues that needs to be addressed by
• 15:38
  Speaker 3: the Trump administrations getting some of their cabinet nominees confirmed
• 15:42
  Speaker 3: They've made some major headway with Secretary Rubio, but still
• 15:47
  Speaker 3: some contentious ones to come with mister Hegseth, RFK Junior,
• 15:52
  Speaker 3: Tolca Gabbard to name three.
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  Speaker 6: How do you expect this to play out?
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  Speaker 8: Yeah, So Susan Collins and Lisa Murkowski have said that
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  Speaker 8: they're not voting for Pete Haggseth, so we're basically down
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  Speaker 8: to they'd have to lose two more Republican senators. The
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  Speaker 8: most likely person to flip at this point is Mitch McConnell.
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  Speaker 8: After that, I don't really see a fourth. So my
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  Speaker 8: guess is he's going to get all of these people through.
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  Speaker 9: And that I mean.
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  Speaker 8: In particular you think about Hegseth governed to a lesser extent,
• 16:24
  Speaker 8: but Cash Battel of the FBI. These are people for
• 16:28
  Speaker 8: whom there is no argument that these are people who
• 16:30
  Speaker 8: should be running the use agencies right.
• 16:32
  Speaker 9: That there is no sense that they're qualified to do so.
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  Speaker 8: There is nothing in their background that makes it seem
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  Speaker 8: like they'll be stuff the idea that Pete Hegseth, who
• 16:39
  Speaker 8: was fired for mismanagement at two different tiny nonprofits, is
• 16:44
  Speaker 8: capable of running the largest bureaucracy on the face of
• 16:47
  Speaker 8: the planet. I mean, if you actually right, if you
• 16:50
  Speaker 8: said that you actually care about the qualifications, people that
• 16:52
  Speaker 8: start laughing, right, Like the idea, it's just absurd. And
• 16:55
  Speaker 8: so putting these people in seems a lot more about
• 16:58
  Speaker 8: being willing to use the organs of the felt government
• 17:00
  Speaker 8: to in, you know, for domestic political purposes, or even
• 17:04
  Speaker 8: to go after Trump's enemies than it is some sense
• 17:06
  Speaker 8: that like cash, fattel of all people on earth is
• 17:09
  Speaker 8: when you can make the FBI a lean, mean crime
• 17:12
  Speaker 8: fighting machine.
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  Speaker 6: Well, I mean, yeah, the counter argument is new blood.
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  Speaker 3: Maybe that's let's get some of the you know, get
• 17:18
  Speaker 3: some new blood downwashed in dc new ways of thinking.
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  Speaker 9: So I really.
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  Speaker 8: Appreciate you saying that, because that is what both my
• 17:23
  Speaker 8: first two books were about, right, the virtues of new
• 17:25
  Speaker 8: blood and the advantages of bringing people in. So you
• 17:28
  Speaker 8: will find no one on earth who's more positive about
• 17:31
  Speaker 8: the ideas that you can bring in new thinking and
• 17:33
  Speaker 8: make new changes than me.
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  Speaker 9: I believe that. But right, not all changes are good.
• 17:39
  Speaker 8: There's a famous the famous thing soldiers and politicians logic,
• 17:43
  Speaker 8: you know, we must do something, this is something, therefore
• 17:47
  Speaker 8: we must do this right, And that's not right, there
• 17:51
  Speaker 8: are many, many more ways to break an institution than
• 17:53
  Speaker 8: to fix it. And if you look at the Pentagon,
• 17:55
  Speaker 8: no institution needs massive reform more than the Pentagon. And
• 17:59
  Speaker 8: if you need it to do that, you would ask, say,
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  Speaker 8: you know, I'm someone who had deep expertise and running
• 18:04
  Speaker 8: a major procurement program or someone.
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  Speaker 9: Who had really understood the federal bureaucracy.
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  Speaker 8: You would not get someone who had, you know, essentially
• 18:12
  Speaker 8: was fired for mismanagement from their for last two joints. Right,
• 18:16
  Speaker 8: if you were running if Apple, if Apple said they
• 18:19
  Speaker 8: were going to replace Tim Cook with someone like that,
• 18:21
  Speaker 8: you might say, well, Apple could use some fresh thinking,
• 18:23
  Speaker 8: but I'm not sure that's where the fresh thinking.
• 18:25
  Speaker 9: Is likely to come from.
• 18:26
  Speaker 2: Okay, well fresh me decide. Doge is obviously front and
• 18:30
  Speaker 2: center too. We saw the Vekwamaswami leaving Doge to maybe
• 18:34
  Speaker 2: govern for governor, the lawyer apparently leaving dough She was
• 18:38
  Speaker 2: there for like what seventy two hours? What are you
• 18:40
  Speaker 2: making on all of these headlines?
• 18:42
  Speaker 8: So the real thing that it was that happened, and
• 18:46
  Speaker 8: you know, and it is a real distinction between the
• 18:47
  Speaker 8: first Trump administration the second Trump administration is the second
• 18:50
  Speaker 8: one seems to be a lot more bureaucratically competent. And
• 18:53
  Speaker 8: so what they essentially did was repurpose the Federal Digital Service,
• 18:57
  Speaker 8: which was created in response to the you know, the
• 18:59
  Speaker 8: Obama Care web page fiasco, to improve the technical capabilities
• 19:03
  Speaker 8: of the federal government. They repurpose that into DOGE, which
• 19:06
  Speaker 8: gives DOGE access to essentially all the non classified information
• 19:10
  Speaker 8: in the federal government, gives it in every It is
• 19:12
  Speaker 8: a brilliant bureaucratic move, and it suggests that DOGE may
• 19:17
  Speaker 8: actually have a lot more impact on the government than
• 19:20
  Speaker 8: we had originally thought it would when it first started
• 19:23
  Speaker 8: looking like kind of a you know, essentially a committee
• 19:25
  Speaker 8: that was an issue a report.
• 19:27
  Speaker 9: The problem there again is.
• 19:29
  Speaker 8: Going back is what we just saw, for example, is
• 19:30
  Speaker 8: a communications freeze. For example at NIH, so NIHS stopped
• 19:35
  Speaker 8: reviewing all grants, they've stopped working with all scientists. NIH
• 19:39
  Speaker 8: is the foundation for basically all biomedical research, not just
• 19:42
  Speaker 8: in the United States, but really in the entire world.
• 19:44
  Speaker 9: It spends forty seven and.
• 19:45
  Speaker 8: A half billion dollars a year, and biomedical research in
• 19:48
  Speaker 8: the world, things that we rely on to cure diseases
• 19:50
  Speaker 8: just doesn't happen without anih. That kind of a freeze
• 19:54
  Speaker 8: does real meaningful harm to scientific research for every day
• 19:58
  Speaker 8: that it goes on, and it seems to have an
• 19:59
  Speaker 8: is quite propriciously without even any sort of explanation as
• 20:03
  Speaker 8: to why we're doing this or how it makes sense.
• 20:05
  Speaker 8: So that kind of thing is where if those does
• 20:07
  Speaker 8: things like that, I'd be pretty concerned, as opposed to,
• 20:10
  Speaker 8: you know, optimistic where the massive federal government reforms will
• 20:13
  Speaker 8: all overview.
• 20:13
  Speaker 6: Yep, all right, wewtam, thank you so much. We appreciate it.
• 20:15
  Speaker 3: Gout Themconda, Professor at the Yale School of Management.
• 20:20
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