Latest / Trend Watch / Episode 103: Revenge of the Tariffs & Economic D-Day

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Episode 103: Revenge of the Tariffs & Economic D-Day · Trend Watch

• 0:04
  SPEAKER_01: Ready to take a deeper look at where history, politics, and economics all intersect?
• 0:10
  SPEAKER_01: Well then, you've come to the right place.
• 0:13
  SPEAKER_01: Each week,
• 0:14
  SPEAKER_01: here's where we pull back the headlines and focus on the big trends,
• 0:18
  SPEAKER_01: the stuff that actually shapes our future.
• 0:21
  SPEAKER_01: Through the noise, we focus on the signal.
• 0:24
  SPEAKER_01: I'm your host, Neil Howe, and this is Trend Watch.
• 0:30
  SPEAKER_01: Today is August 27th, 2026, and this is Trend Watch.
• 0:35
  SPEAKER_01: Welcome back, everyone.
• 0:37
  SPEAKER_01: As usual, I have on my fellow analyst, Christian Ford.
• 0:41
  SPEAKER_01: Christian, how was your week?
• 0:42
  SPEAKER_00: It was pretty good, Neil.
• 0:43
  SPEAKER_00: I know you always like to know what millennial activity I've been up to.
• 0:47
  SPEAKER_00: And I got to tell you, I had my best game of bowling in my entire life.
• 0:52
  SPEAKER_00: I scored a 160, got a turkey.
• 0:54
  SPEAKER_00: I was on fire.
• 0:55
  SPEAKER_01: Yeah, but my question is, did you bowl alone?
• 0:59
  SPEAKER_00: No, no, I had friends.
• 1:01
  SPEAKER_00: We convinced them to go out.
• 1:03
  SPEAKER_01: Well, there you go.
• 1:04
  SPEAKER_01: You are the answer to Robert Putnam's dream.
• 1:10
  SPEAKER_01: He's been praying to the social science gods,
• 1:14
  SPEAKER_01: bring us a generation which will no longer boil alone.
• 1:19
  SPEAKER_01: Well, they may do that as well.
• 1:22
  SPEAKER_01: Referring to boomers, that is.
• 1:25
  SPEAKER_01: But a generation that bowls together, right?
• 1:28
  SPEAKER_01: In fact, that was his most recent book called something like Comeback or something.
• 1:34
  SPEAKER_01: He has long believed, by the way, in sort of a long-term cycle.
• 1:38
  SPEAKER_01: I actually talk about that a little bit in The Fourth Turning is here, right?
• 1:43
  SPEAKER_01: His belief that there's a long-term cycle to social engagement.
• 1:49
  SPEAKER_01: And he would be thrilled.
• 1:52
  SPEAKER_01: You want to send him a note?
• 1:54
  SPEAKER_01: I should.
• 1:57
  SPEAKER_01: Otherwise, with me, I've just been judging how many steps it is to get from here to there.
• 2:07
  SPEAKER_01: Still recovering from hip surgery every day, getting better and better.
• 2:14
  SPEAKER_01: But it is interesting.
• 2:17
  SPEAKER_01: I asked my wife, I said,
• 2:18
  SPEAKER_01: gee, was it this painful the first time I had the surgery and she didn't remember?
• 2:23
  SPEAKER_01: I couldn't remember.
• 2:25
  SPEAKER_01: I suddenly realized it's an interesting thing about pain, right?
• 2:29
  SPEAKER_01: We don't really have very good memory of pain.
• 2:32
  SPEAKER_01: And of course,
• 2:33
  SPEAKER_01: my wife's explanation immediately was,
• 2:35
  SPEAKER_01: why do you think any woman has a second child with?
• 2:39
  SPEAKER_01: They don't really remember.
• 2:42
  SPEAKER_01: But there is actually something about that.
• 2:45
  SPEAKER_01: Pain is a very interesting thing.
• 2:48
  SPEAKER_01: It's very vivid and right in your face when it's there.
• 2:53
  SPEAKER_01: But it's odd, isn't it?
• 2:55
  SPEAKER_01: Yeah.
• 2:56
  SPEAKER_01: You both remember, but you don't.
• 3:00
  SPEAKER_01: And all of that, I'm sure, has very deep-rooted evolutionary justification.
• 3:06
  SPEAKER_01: You certainly don't want creatures...
• 3:10
  SPEAKER_01: To remember all the hell they've been through.
• 3:13
  SPEAKER_01: After all, they wouldn't go out and do anything after a while.
• 3:18
  SPEAKER_01: Well, this is great.
• 3:20
  SPEAKER_01: We have plenty to talk about this week.
• 3:22
  SPEAKER_01: Why don't you just start in on the markets and we'll get into it.
• 3:29
  SPEAKER_00: All right, Neil.
• 3:29
  SPEAKER_00: It's been a good day in the markets.
• 3:31
  SPEAKER_00: The S&P closed up 0.72%.
• 3:34
  SPEAKER_00: And over the last five trading days is up 1.18%.
• 3:38
  SPEAKER_00: Not looking as good for the global Dow, though.
• 3:40
  SPEAKER_00: That closed down today 0.32%.
• 3:41
  SPEAKER_00: And over the last five...
• 3:43
  SPEAKER_00: Yeah.
• 3:44
  SPEAKER_00: You know, well, we've had a couple reports, right?
• 3:45
  SPEAKER_00: I know we have new PMIs out.
• 3:47
  SPEAKER_00: You might talk about those.
• 3:48
  SPEAKER_00: And I also know just...
• 4:15
  SPEAKER_01: Before we listen to Kevin Warsh,
• 4:17
  SPEAKER_01: I guess tomorrow from Jackson Hole, the PCE deflator came out, right?
• 4:22
  SPEAKER_01: So maybe we should talk about those.
• 4:25
  SPEAKER_00: Yeah.
• 4:25
  SPEAKER_00: So first I'll start with the, we have the S&P flash PMIs for August.
• 4:29
  SPEAKER_00: Manufacturing fell from 53.9 to 53.2, but still showing solid growth.
• 4:36
  SPEAKER_00: As for services, those rose from 54.6 to 56.7.
• 4:40
  SPEAKER_00: Yeah, 3.7%.
• 5:05
  SPEAKER_01: That's nowhere near our target, is it?
• 5:07
  SPEAKER_01: And with the economy expanding like it is,
• 5:11
  SPEAKER_01: and with people borrowing and investing around
• 5:17
  SPEAKER_01: the world to invest in U.S.
• 5:19
  SPEAKER_01: markets,
• 5:20
  SPEAKER_01: we saw that incredible quote-unquote blowout quarterly report
• 5:25
  SPEAKER_01: by NVIDIA this morning.
• 5:29
  SPEAKER_01: And on the earnings call, I think predicting 70% growth
• 5:34
  SPEAKER_01: Over the next year.
• 5:35
  SPEAKER_01: I mean, so look, I think the liquidity situation looks great.
• 5:42
  SPEAKER_01: The dollar is actually down a little bit.
• 5:44
  SPEAKER_01: So that leads to more global liquidity.
• 5:47
  SPEAKER_01: I think the administration is going to do everything it can to keep the market up.
• 5:53
  SPEAKER_01: Keep employment up, keep the PMIs going, at least through the midterms, right?
• 5:59
  SPEAKER_01: It probably won't help them much, but it's better than, you know, it's doing what they can.
• 6:07
  SPEAKER_01: And I think everyone else is trying to help.
• 6:12
  SPEAKER_01: Scott Besant,
• 6:13
  SPEAKER_01: who actually,
• 6:14
  SPEAKER_01: since we reported on this last week, right,
• 6:16
  SPEAKER_01: the new buyback program,
• 6:18
  SPEAKER_01: or I should say,
• 6:19
  SPEAKER_01: you know,
• 6:19
  SPEAKER_01: liquidity support and cash management program,
• 6:23
  SPEAKER_01: which was started under Janet Yellen as Treasury Secretary.
• 6:28
  SPEAKER_01: He's upped it again, right?
• 6:30
  SPEAKER_01: He now says we'll do two a month.
• 6:33
  SPEAKER_01: A minimum of $8 billion per month and possibly up to $15 billion or more per month buybacks.
• 6:41
  SPEAKER_01: And by the way,
• 6:42
  SPEAKER_01: you know,
• 6:44
  SPEAKER_01: people have asked me this,
• 6:46
  SPEAKER_01: you know, where does the money come from to do these buybacks?
• 6:48
  SPEAKER_01: Well, in the immediate term,
• 6:50
  SPEAKER_01: it just, you know, comes right out of the, you know, Treasury General account.
• 6:55
  SPEAKER_01: But it is made up for in, you know, new issues of debt.
• 7:01
  SPEAKER_01: Now, it's very interesting that if you look at the actual schedule of coupon issues,
• 7:06
  SPEAKER_01: all the long-term debt, there's been no increase scheduled.
• 7:11
  SPEAKER_01: So presumably at the margin, all the increase in raising money is going to be bills.
• 7:17
  SPEAKER_01: You see what I mean?
• 7:18
  SPEAKER_01: So this is what people fear.
• 7:20
  SPEAKER_01: And I think people fear,
• 7:22
  SPEAKER_01: meaning if it were done on a larger scale,
• 7:24
  SPEAKER_01: this is sort of maturity transformation, right?
• 7:27
  SPEAKER_01: You're taking You're basically shrinking the maturity of the federal debt, right?
• 7:33
  SPEAKER_01: You're buying the long-dated issues that are off the run.
• 7:41
  SPEAKER_01: You're buying up those,
• 7:43
  SPEAKER_01: and you're issuing bills to pay for it, which are generally very short-term.
• 7:50
  SPEAKER_01: But what really struck me is not just the fact that it hasn't had any obvious real effect.
• 7:57
  SPEAKER_01: Thus far, who knows?
• 7:59
  SPEAKER_01: So far, it's just a threat.
• 8:00
  SPEAKER_01: I don't know when he's going to actually start doing this, probably next week or the week after.
• 8:06
  SPEAKER_01: But it hasn't had any noticeable effect really on the 10-year, the 30-year yield.
• 8:12
  SPEAKER_01: But what really struck me,
• 8:13
  SPEAKER_01: I'm sure you saw this,
• 8:15
  SPEAKER_01: Was an op-ed in the Wall Street Journal this morning by Stanley Druckenmiller,
• 8:21
  SPEAKER_01: who's,
• 8:21
  SPEAKER_01: you know,
• 8:21
  SPEAKER_01: the famous Stanley Druckenmiller,
• 8:25
  SPEAKER_01: who was the portfolio manager of Quantum Fund,
• 8:30
  SPEAKER_01: which was managing money for George Soros from the late 1980s through the 1990s,
• 8:36
  SPEAKER_01: right?
• 8:37
  SPEAKER_01: And legendary and also the mentor of For Scott Besant, right?
• 8:45
  SPEAKER_01: I mean, that's where Scott Besant really learned about investing.
• 8:48
  SPEAKER_01: But here's what Stanley Druckenmiller said in the Wall Street Journal.
• 8:56
  SPEAKER_01: And I thought this was the choice quote, so I'll read it.
• 8:59
  SPEAKER_01: Every basis point of artificial yield suppression is a subsidy to procrastination.
• 9:06
  SPEAKER_01: Suppressed long rates sugarcoat the interest cost projections,
• 9:11
  SPEAKER_01: shrink the apparent urgency,
• 9:13
  SPEAKER_01: and let incumbents assure voters the debt is someone else's problem.
• 9:18
  SPEAKER_01: If Congress and the administration are unlikely to touch entitlements,
• 9:23
  SPEAKER_01: even with the market signal, They are certainly not going to touch them without one.
• 9:28
  SPEAKER_01: Whatever this operation saves in basis points, it will cost multiples in delay.
• 9:35
  SPEAKER_01: Well, those are, whoa, you know, that's kind of torching your protege, I would say, isn't it?
• 9:44
  SPEAKER_01: That's not what I taught you, Scott.
• 9:48
  SPEAKER_01: You know, and so- I wonder about this, and we may get into this a little later, right?
• 9:54
  SPEAKER_01: And I may have brought it up last week.
• 9:59
  SPEAKER_01: What is it why people of great ability take on a role in an administration
• 10:06
  SPEAKER_01: and will just justify anything on behalf of that administration?
• 10:11
  SPEAKER_01: I mean, at some point, don't you say, look, I will help you.
• 10:17
  SPEAKER_01: So if, right, you need to do at least this, you know, you need to kind of go along here.
• 10:24
  SPEAKER_01: Here's the minimum, right, you need to do to generate a product that I can sell.
• 10:31
  SPEAKER_01: You know what I mean?
• 10:33
  SPEAKER_01: Now we have an administration.
• 10:35
  SPEAKER_01: And I'm not saying,
• 10:36
  SPEAKER_01: you know, Trump, look,
• 10:38
  SPEAKER_01: all administrations really haven't done anything to To solve the deficit problem and
• 10:45
  SPEAKER_01: the chronic deficit problem.
• 10:47
  SPEAKER_01: But I think you can say that Trump has done less than most, right?
• 10:50
  SPEAKER_01: And in fact, he completely ignores it.
• 10:52
  SPEAKER_01: In fact, Trump brags about debt.
• 10:54
  SPEAKER_01: He thinks it's great.
• 10:55
  SPEAKER_01: Debt has always been good to me.
• 10:57
  SPEAKER_01: I've always gotten myself out of debt.
• 11:00
  SPEAKER_01: It's kind of like, you know, if we need to, we'll just declare bankruptcy and move on.
• 11:05
  SPEAKER_01: Hey, no problem.
• 11:06
  SPEAKER_01: I've done it a million times.
• 11:08
  SPEAKER_01: No.
• 11:08
  SPEAKER_01: No.
• 11:11
  SPEAKER_01: This isn't how you manage a great republic.
• 11:15
  SPEAKER_01: But don't you find that the star deputies,
• 11:21
  SPEAKER_01: and I think Scott Pesson is,
• 11:24
  SPEAKER_01: you know, we have a short list of kind of brainy people in the White House.
• 11:27
  SPEAKER_01: I think I've told you he's one.
• 11:29
  SPEAKER_01: Another one I think we'll talk about a little bit later is John Ratcliffe at the CIA.
• 11:34
  SPEAKER_01: Both of them, by the way, respected by Trump.
• 11:37
  SPEAKER_01: Trump listens to them.
• 11:39
  SPEAKER_01: Um, shouldn't they sort of stand up?
• 11:42
  SPEAKER_01: And God knows what they're saying behind the scenes.
• 11:44
  SPEAKER_01: I don't see any influence.
• 11:46
  SPEAKER_00: So anyway, um, I think people, Neil,
• 11:48
  SPEAKER_00: I think people just like being near power and they don't want to jeopardize it.
• 11:52
  SPEAKER_00: I think they fear if they stand up, they could be, uh, shown the door.
• 11:56
  SPEAKER_01: So cynical at a young age, but, but, but,
• 12:02
  SPEAKER_01: you know,
• 12:03
  SPEAKER_01: people who joined cabinets historically,
• 12:05
  SPEAKER_01: and certainly this is true, uh,
• 12:07
  SPEAKER_01: You know,
• 12:08
  SPEAKER_01: if you look at ministries in Britain,
• 12:11
  SPEAKER_01: right, they routinely, you know, put up minimum requirements, right?
• 12:17
  SPEAKER_01: In other words,
• 12:17
  SPEAKER_01: this ministry has to at least agree with this or I'm going to resign,
• 12:21
  SPEAKER_01: you know, respectfully.
• 12:23
  SPEAKER_01: Right.
• 12:25
  SPEAKER_01: Besant doesn't need the money, you know?
• 12:29
  SPEAKER_01: I mean, he doesn't, I don't know.
• 12:31
  SPEAKER_01: I just don't get it.
• 12:32
  SPEAKER_01: Why?
• 12:33
  SPEAKER_01: Just because you're Treasury Secretary and whatever you say will be followed.
• 12:37
  SPEAKER_01: But what if the fundamental product is contrary to your principles?
• 12:43
  SPEAKER_01: I mean, I actually believe that he has principles.
• 12:48
  SPEAKER_01: And anyway, I don't know.
• 12:53
  SPEAKER_01: It'll be interesting to see what happens.
• 12:55
  SPEAKER_01: By the way, I think some of these people will not stay on for a full four years.
• 13:01
  SPEAKER_01: We'll see.
• 13:02
  SPEAKER_01: In fact, I'd make a little bet with you, right?
• 13:06
  SPEAKER_01: The best one will not be there by the final year, the submission.