Analysis of the April Jobs Report
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is someone who's been much maligned and has been fearless in her academics of saying, you know what, I'm associated with the dreaded R word recession, but I don't see it out there. Claudia Somm has nailed that call. She's chief economist at New Century Advisors, and she joins us here this morning. Claudia, my distant memory is Jeffrey Frankel.

at Harvard saying, okay, there's a jobs mandate, there's an interest rate inflation mandate, but real GDP and maybe distant nominal GDP really matter. Can a dearth of GDP shift the labor market and shift the Fed?

Well, absolutely. I mean, these are all growth and employment are absolutely tied together, not necessarily quarter by quarter. And I think, you know, if you're referring to the first quarter, the small decline in GDP, like there is a lesson from that. But it is not that we are falling into a recession. It's that we are facing a major cost shock with an increase in tariffs and businesses were responding to that and consumers that caused a lot of disruption in the numbers. So that's one example where, you know,

That first quarter GDP decline is giving us a sense of where we're headed, but it's more about where we're headed working through these tariffs, which eventually will have some effects on employment, even if we're not seeing them today. Okay, away from the SOM recession mania, are you modeling out 4% year-over-year CPI? Is that in the new century advisor's realm of thinking?

- So I think that's absolutely in the realm of possibility. And certainly feel very confident that we have, we are facing slowing growth, rising unemployment and faster inflation. Now, magnitudes are going to be absolutely crucial. And I think a really big question for the Fed in particular, as they think about their policy is the duration.

Right. If this is if we're just seeing a kind of a blip, a move up in inflation that recedes as we adjust to the tariffs or maybe the tariffs go away. But that that's like a key question that we are far from having the answers to. See this. You see how she does this at the University of Michigan and they get on the X axis. She's looking at the duration. Yeah. She's looking at the length of this, the lengthiness of the magnitude.

Claudia, can this economy avoid a recession? I mean, again, I see a jobs number today. I think about Tom's theory that companies and people adapt. Can this economy avoid a recession?

Absolutely. I mean, we have all the ingredients of a recession. We have the tariffs, we have the slow immigration, we have the federal cuts and other factors. We have massive uncertainty. Like really, I mean, we are pointed towards a recession, and yet we are in the very early stages. And we see some attempts by businesses to build some buffers, like a big inventory bill, getting ahead of the tariffs. I mean, we're

Nobody wants to lay off workers. Nobody wants to cut back on their spending, right? Like people are trying to make adjustments. So, but what needs to happen is these aggressive policies have been put in place. These cost shocks, they have got to be dialed back and really quickly. I mean, there's some damage done already that we're going to deal with costs

as this year goes on, but magnitudes matter and avoiding the recession, in particular, the recession dynamic is when that shock, it just spreads through the whole economy. And we really have got to nip this in the bud before you have those feedback effects take hold. When you see a lot of companies, again, we're probably 70% away through the earning cycle here. A lot of companies are, as you said, either pulling their guidance

or if they still have guidance they're saying we're concerned here we've got a lot of variability around our businesses what do you take away from some what you heard from corporate america so far okay so

Clearly, these are big shocks. There's a lot of uncertainty. I think the other place I found pretty interesting reading this time was going through the Fed's Beige Book, which has a similar kind of talking to business contacts, talking to nonprofits and the communities. And you just hear over and over again, contingency planning, getting ready, like potentially cutting hours, but not there yet.

But it is so clear that a massive amount of time and energy is being spent on this. What do we do when it hits? - Well, Claudia, you've sat in the offices at the Fed. Folks, this is not the romance of some big fancy table in the Eccles building. This is the meat and potatoes of doing PhD work

at the greatest central bank in the world? And the answer is you guys like smooth curves, gradual change. We just had Gene Soroka in of the Port of Los Angeles, flew in just to talk to John Tucker. Claudia, he sees a jump condition, a discontinuous event at his port. How do fancy people like you fold in the reality of longshoremen and truckers in Los Angeles?

It's a moment where to some extent you have to look at the models, but put them to the side. There's no macroeconomic model that's going to give you the kind of discontinuities, the kind of very sharp turns that you're seeing in the data. I mean, that's why we should expect we had this massive surge in imports that had a big effect on the composition of GDP in the first quarter.

we're going to probably see a snapback because i mean we from that shipping those imports are going to the floor so don't come to me and say oh gdp is three percent in the second quarter all's great like that could be under the hood telling us we've got a big problem in the second half of this year so you have to like you you have to respond to those discontinuities particularly when you can tie them back to a story there's noise all the time that you want to look through

this isn't noise, right? Like we're responding to something big. And then that's why that outlook is important in the judgment. Claudia, with great respect for your impact on American economics. I think everybody wants to know this.

Unfair question, but I'm going there on this strange Friday. What is your counsel to Hassett of Pennsylvania, Besant of Yale, and Greer, our trade representative, as they counsel the president? These guys are legit academics. What should they do with this unique presidency? They need to slow it down.

Right. I, you know, I disagree with the policies they're pursuing, but I'm strong. I'm very concerned about the way in which they're being pursued. This is very aggressive. This is very fast and it can potentially cause a lot of damage. So even if you're in the spirit of having more industrial policy, having higher tariffs, a smaller government, like there's a way to do this that doesn't cause maximal damage. Right. And I'm very concerned. And I think the White House and you hear some messaging from them that, you know,

tariff rates aren't sustainable with China and we're doing negotiations, but like we need to see some action that actually pulls back these costs before it's too late. Dr. Sam, thank you so much. Claudia Sam joins us, New Century Advisors here. Trading at Schwab is now powered by Ameritrade, unlocking the power of think or swim. The award-winning trading platforms loaded with features that let you dive deeper into the market. Visualize your trades in a

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or watch us live on YouTube. Gene Sirocco, where the Garcetti appointment in 2014 has the most important job in America right now. Everyone on global Wall Street wants his view. We're honored off the red eye that the gentlemen of Los Angeles and Long Beach ports joined us this morning. Just to thank you so much for joining Bloomberg this morning. As simple as I can make it,

What is the single thing you would say today to the long Charmin of Long Beach in Los Angeles? We're going to get through this, even though we're going to be down by 35% next week on cargo volume coming into the port compared to last year. 35%. 35%. Wow.

Major retailers, big importers have said at 145% tariffs, I'm not shipping out of China. I don't know if this could change in two hours, two days, two weeks, so let's hit the pause button. But to the longshoremen, we've had a great fiscal policy in place for a decade. We're going to keep investing. We're going to get through this. Every four containers mean a job at the port. What would you say to 1600 Pennsylvania Avenue when you observe their press moments, their managed messaging?

We're talking about the ground truth. Cargo's down, jobs are down, and this is the dock workers, the truckers, warehouse folks, but also the manufacturing people. This is Los Angeles County. Almost 400,000 people go to work every day in manufacturing jobs. Just in Los Angeles County? In L.A. County. It is the biggest in the nation. Those are the folks that we've got to keep going to.

So tell us how a tariff works. When does it get assessed? How does it get assessed? Who pays it? How does that work? There's a start date that's announced. If your cargo is ingated to that port overseas after the date of announcement, the tariff is applied. It's assessed when it gets off the ship in Los Angeles and assessed by U.S. Customs. Who pays it? The importer of record. Walmart. Walmart.

Big retailer, big manufacturer bringing in parts. They pay for it. And what the CEOs and board members have been telling me is they're going to pass it on to the next in the supply chain. Consumers from the retail guys, the parts are going straight to the factory. Somebody just emails in, what's the COVID equivalent? Is this like, oh, I'm recalling March of 2020. Am I wrong, Paul? May? Yeah.

Yeah, it was March and our business was cut in half that month. We only did like 450,000 containers, but it made a quick return as we all started buying online and curbside pickup. I don't know when the return date is going to be just yet. So what are the Walmarts of the world telling you in terms of kind of what they think they're going, how they're going to behave going forward?

Again, hit the pause button. I'm not hiring. Open positions are shelved for the time being. Capital investments are on pause and I'm waiting and seeing. Guys like Walmart and others of the large big box variety started bringing in inventory back last summertime.

campaign trail folks were talking about different trade policy tariffs Etc these guys saw through that a little bit knowing that this day would come where I'm concerned right now Paul are the small to middle-sized importers that didn't have the ability to bring an inventory warehouse and Etc now they're faced with a dilemma of do I buy at these super exorbitant prices

Can I pass it on and still compete with the big guys or do I just sit and wait? I've got to make payroll next month. With your harbors and with the Queen Mary over on Long Beach, you know, the tourist thing, the fact is the stuff comes off and they get to get on Highway 710 or whatever. What happens on the interstate highways given this crisis? You're going to see truckers who have been hauling four and five containers up till now per day move maybe two or three starting next week.

You'll see less traffic on the roads. The warehouses with their vacancy rate at 6%, 7%, that's probably going to dip too. Retailers have told me that they've got about five to seven weeks left of normal inventory. Then we'll start seeing spot shortages. Give us an example of that.

You may go to the store and you're looking for that blue shirt. Duke, perfect. Duke merchandise. Right? You want a nice blue shirt in your size and your style with the right kind of collar. You may see 11 purple ones on the shelf and one blue one that just doesn't match your taste. Right. And the price for that blue one is likely up a lot.

more than the others. Our interview of the day here, we welcome all of you across the nation, particularly early in the morning on the left coast. Gene Sirocco with us here of the ports of Los Angeles, Long Beach, and the rest. Paul? Hey, Gene, again, we've got a president whose situation is very fluid in terms of his policy pronouncements. If we were to have a president that's maybe dialed back some of the tariff situation, what's the timeframe for

your whole process your whole world to start kicking in again yeah Paul if we reached a deal today as we're speaking with China whatever that deal may look like a framework Etc it would take the shipping lines about two weeks to reposition their vessels to the major ports Qingdao Xiamen Shanghai

Then it takes another two weeks after they load up to steam over to LA. So we've got a month once we push the button to say, hey, we're back in business. And that's why this inventory level at the retail folks are telling me about we're starting to get a little tight here. You're maybe the one person in America that can answer this with great respect for Ambassador Burns, Nicholas Burns, with his public service to China here in the recent years.

we all understand there's going to be retail shortages here empty the 400 000 manufacturing types in los angeles those chinese names you pronounce correctly that i butcher what's this going to be like for the people in those chinese cities of manufacturing and export yeah tom as you remember i worked in china for about four and a half years they still maintain very close ties there to the business community

I'm on the phone with guys and friends overnight, every night. And basically, manufacturing has slowed to levels they have not seen before since the COVID times. And if folks are out of work, the government's going to help them out. They have a social safety net. Yes. So what are you telling, I guess...

your workers at the uh at the port i mean you've got i remember from you you were so kind to us during the pandemic to explain how this whole supply chain thing works it's not just the people unloading the cargo it's the truckers it's the it just it's the warehouse employees it's everybody right right it's one in nine jobs in the five county southern california area a million people go to work every day based on what we do at the ports of la and long beach

And so what we're trying to do is just keep morale up. Again, let's not blink here. We still got a lot of work to do. The longshoremen, as an example, they can start doing preventative maintenance on the machinery when volume dies down a little bit. The mechanics can get out there in force and make sure that all this equipment is ready when that surge comes back. We're going to be humming with the truckers. Let's move around some domestic freight as well. So we're just trying to keep the morale up, keep the people focused.

on the job as best we can but knowing that we've got a preparation we've got preparation here now right when that cargo picks up we're gonna see it 40 days before it actually arrives on our shores right we're gonna be ready do you sleep on the red eye or do you work in the red eye you know i got a couple of winks um but you know i mean just getting here to manhattan seeing you guys the energy here and with all that's going on in our industry we're moving you're getting energy from this

This is a success, John. I sure am. That's how bad things are. Greatly appreciate it. Thrilled to have him with us. That's a gentleman of Los Angeles and all of this important discussion. Gene Sirocco, chief executive officer, the port of Los Angeles. This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple Podcasts.

Good

Good morning, everyone. Paul Sweeney, Tom Keen, this job. So I digress right now to the earnings that we've seen, the digestment of Amazon, Apple and the others. And when you do that, you look at the cloud. I looked at a given cloud ETF. I went back 10 years. I did for Anurag Rana a log regression. And I see the reason for the shaving of the beard. For those of you on radio, you can see this.

But on YouTube, it's fine cinema. When we go down 1.4 standard deviations off the 10-year trend, Rana shaves. He's not coming back till we tick Cosi on the trend. What's your timeline, Anurag, on getting that beard back on the face? Is it going to be a recovery of quarters or years? I don't know. It depends on the weather mostly.

Anurag, what'd you learn last night from Amazon? And they put an operating income guidance range out there that you could drive fleet of Amazon trucks through. What's going on?

But would you would expect that because the tariff uncertainty is so high, you do not know whether the goods coming in at what price they would be, what customers would buy. I mean, there's a lot going on their retail business. But frankly speaking, the Amazon Web Services margins were spectacular yesterday at 39.5 percent. Now, that's going to drop down a little bit in the next quarter because of compensation reasons. But other than that, you know, the operating income is largely dependent on the retail business right now.

And quite frankly, I think, are we at the point now, Anurag, where we don't even care about Amazon.com? Is it all just AWS? That's a really important question.

But if you think about it, the rest of the businesses do have an impact on their margin structure. So you do have to care about it because all the benefit that you're getting from the Amazon Web Services profit, some of the other businesses can negate that. I had an interrogged, Lizanne Saunders was in yesterday and I trotted out Graham, Dodd and Cottle, 700 pages of securities analysis.

In the heart of the matter is a timeline to terminal value. When you look at the cloud, do you have a three-year view, seven-year view, decade view? What's the RANA terminal value in analysis of cloud cash flow?

So when you look at something like a cloud business, I rate them as one of the best businesses out there, right next to one could say Visa and MasterCard payment processors. The reason for that is because once you develop an application in the cloud, you're not going back and developing it in-house. This is, in our view, one of the most durable businesses out there. So my terminal value actually is well above 10 years on this one.

What's the electricity story? Paul and I see all this gloom and doom. Retail's going to pay for so-and-so's next cloud thing in Texas or whatever. Just a quick brief here. Should we fear that our utility bills will pay for fancy billionaires in the Rana cloud space?

I'll take you back to around 2008, 2009, when everybody thought that because of China, the oil prices will go super cycle to 150 to 200 bucks. And we haven't seen that happen. So I firmly believe that people in the power industry will figure out how to take care of this shortage of demand that will come from all the data center build up. I'm not sweating that it's going to have a big impact on the AI boom that we are seeing right now.

hey honor we just had gene soroka in who runs the port of los angeles he says his shipments next week look to be down 30 year on year is that just what's amazon saying about what they're doing in terms of stocking their shelves

See, one of the things you will see is, for Amazon, both on the 1P business and the 3P business, you will see a decline in volume. I mean, it has to be. If something that you're paying $10 for, you're not going to pay substantially more for that. So you will see a lull. Another thing we learned from Apple last night was they actually brought in a lot more or basically built up their inventory before the tariff hikes.

at least in the June quarter, they can fulfill that demand that's going to show up. So you could see a lot of companies stocking up ahead of this particular tariff raise. Now, the question is, if it continues for another three to six months, then there's a bigger problem. And I think that's what all of us are trying to figure out is whether this thing gets solved in three months or six months or longer.

Anurag, thank you so much. Anurag Rana with us here with much more publishing and Bloomberg Intelligence here on the cloud. Trading as Schwab is now powered by Ameritrade, bringing you an expanding library of education with even more ways to sharpen your trading skills. Access new online courses, insightful webcasts, articles, engaging videos, and more, all curated just for traders. Plus, guided learning paths with content designed to fit your unique interests.

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The Peterson Institute for International Economics, this is like 12 years ago, had to fill awfully big shoes of Fred Bergsten. And they chose Adam Posen, truly one of the nation's great economists, his tour duty at the Bank of England years ago as an outside member. We're thrilled Dr. Posen could join us because of all the readable noise of the trade war.

His essay, Trade Wars Are Easy to Lose, this on April 9th, has been the definitive essay. That along at the Peterson Institute with Olivier Blanchard's work, David Wilcox and the Fed, and I'd mentioned from Berkeley, Maurice Obstfeld on King Dollar's shaky ground. Dr. Posen, thank you so much for joining Bloomberg Surveillance. What did you learn, Adam, at the IMF meetings? How scared are the fancy people like you?

Thanks so much, Tom. The partnership with you, Paul, and Surveillance gets our analysis out to your audience, which we really appreciate. The IMF World Bank meetings were the most blank IMF World Bank meetings I've ever been involved with. Nothing was talked about in any serious way that I'm aware of because everybody was just on tenterhooks.

The Treasury Secretary and the Fed chair in the G7 and G20 meetings tried to reassure people, and it didn't go very well. The statements made by the Treasury Secretary to a private banking group, which then leaked intentionally, were seen as false.

not that reassuring either. And as covered in the Financial Times and Bloomberg and elsewhere, the CEA chair just made people more nervous. So what does that leave you with? Basically a very uncertain outlook. And

Bottom line, a bunch of central banks who are not the Fed who are going to be cutting rates. One day, Adam, I was in Edinburgh and I did a radio interview back to America to Bloomberg on the economy from the porch of Adam Smith's house. You gave the original Adam Smith lecture at the University of Glasgow. Would Adam Smith, would David Ricardo, would Adam Posen, would they call this a new mercantilism?

Absolutely. What Adam Smith and David Ricardo outlined, the law of comparative advantage, the advantages of specialization, and most of all, the idea that government's trying to stack up cash at the expense of other countries betrays their people's well-being. They'd be all on that. And then there's more sophisticated, more narrow points, more recently, less profound, but still important that you

You've cited my article and many others that you can't win a trade war, at least not with a large economy you're heavily dependent on. And you can't win by creating uncertainty. So this is just bad. I mean, I realize the stock market has recovered and I realize that some companies are just getting on with it, whether it's corruption or investment or paying fealty fees. But it's bad.

Adam, as we think about the US and China in a trade dispute here, does either side have an inherent advantage here? To me, Paul, I think the starting point is both sides are better off if you don't play. It's like that old movie, War Games, better not to play the game.

But if you come right down to it, China, if push comes to shove, has advantages over the U.S. It is dependent on the U.S. for a few things which it wasn't already getting in terms of technology and otherwise as a source of money. Money's good, but you can find many ways to make money. And if you have to cut back on money, you can deal with it.

u.s is dependent on china for a whole bunch of things ranging from pharmaceuticals to air conditioning systems to low-end chips that populate our electronics and our autos to rare earths processing some of which over time we can substitute for but in the short run we can't get elsewhere and that to me is the real problem here if the trump administration had undertaken a major effort which would have taken years

to wean the US away from dependence on China and work with other countries and gotten alternative sources and subsidized production, a whole bunch of things to make us less dependent, that would be one thing. But starting the trade war when you're totally dependent just leads to the kinds of shortages you were talking about or John was talking about in the Port of Los Angeles. Adam, are trade deficits inherently a bad thing for a country?

No. I mean, the US ran trade deficits through much of the 19th century and grew very quickly. Australia has been running trade deficits for years and has grown well with great equality. Trade deficits can be bad if it turns out you're either A, on a fixed exchange rate system and you don't generate enough currency to keep the exchange rate fixed, which is why most countries aren't on a fixed exchange rate system.

or B, if you're just basically selling off all the family China or just to keep yourself alive. But for the US, over the last 50 years, 100 years, 150 years, we've been running trade deficits because people find investing here more valuable than investing in other places. And when that capital comes in, they're paying us to buy more stuff than we have of opportunities, which is great, at least until now.

Adam Posen with us. We'll continue with the Peterson Institute on this Jobs Day, 20 minutes away from an important report. Claudia Somm will lead our coverage, our conversation at the bottom of the hour. Equities, as Dr. Posen mentioned, lift. It's been 400 days in a row, I think. It's like April didn't occur. Up 24 on futures, Dow futures up 201. Paul? Adam, what do you think the economic impact of

The tariffs, the uncertainty surrounding the tariffs. What do you think the economic impact will be on the U.S. economy over the next, I don't know, six to 12 months maybe?

Well, Paul, I think there's three things going on. I mean, you can list a dozen, but the three big things are first, again, where you started the reporting that Port of L.A. is a great source of information, but it's not just Port of L.A., it's Port of Seattle, it's other places that we're going to have shortages. We're going to have interruptions. And it's not just going to be, as President Trump dismissively put it, fewer doll choices at Christmas for rich kids. It's going to be

things that companies need, small businesses need in order to produce what they produce. And so that's going to be big. That's going to be stagflationary. It may not turn the whole economy into stagflation, but it's a stagflationary force, meaning inflation and contraction.

The second thing the uncertainty does is it paralyzes investment. So essentially, the only way you get corporate investment, CapEx in this country when this is going on, is under forced measure from the U.S. government, meaning either a company or country is arm twisted into putting up some money or huge amounts of money and protection is thrown at it. Otherwise, investment grinds to a halt, basically, because people don't know what's worth it or not.

And then the third thing, sorry, go ahead. No, please give us the third thing, please. Sorry, sorry. The last point about uncertainty is it means that there's no deal. So if you told me that you were going to go to Japan and Korea first to try to make a deal, I was totally believing that that made sense. But even Japan officials who love being good with the U.S. are walking out saying we can't make a deal because we don't know what the heck's going on.

And even if we make a deal, they'll just renege like they did on the previous one. So those are the big things. One of the great, great memories, Dr. Posen, that we have is we got the intelligence on the Soviet Union wrong. I remember Jeff Sachs out of Columbia going over as a young kid out of Harvard, I should say.

say, and all of us getting humbled on the new capitalism post Gorbachev and such. Your Nicholas Lardy is absolutely definitive on the mood of China. A year ago, he writes, I am a skeptic on the idea that consumer confidence in China is very weak. From the land of Frank Burstyn and the Peterson Institute, do we have good intelligence on what's really going on in the Chinese view of the trade war?

I'm glad you made the analogy to Eastern Europe. I mean, I remember going to East Germany for my dissertation research starting in 1990 and, you know, and the reports where they were a third of our or two thirds of our per capita income. And it turns out they were less than a third.

I don't think we have that big an intelligence gap with China, not because they're not secretive, but just because it's a different world, more permeable, more information is out there. But there are things in China that are hanging on over that. The threat, as I argued a couple of years ago now in foreign affairs of China,

the Chinese Communist Party taking away property rights from normal, so to speak, Chinese people, which wasn't seen as a big threat for the last few decades. And that has continued to be a drag on the economy. You got, obviously, the real estate hangover, which they can cope with, but they're not doing much. And they're choosing, they've been keeping their powder dry on doing stimulus, in part because they were worried what the U.S. might do. But now that's the time, and they don't seem to be doing it. So,

but I want to go back to link you back to Paul. All the weaknesses in China don't mean that China can't win the trade war. The two don't contradict each other. They might explain why China wouldn't have entered the trade war if the U.S. hadn't provoked it.

But once we're in it, all these miseries just don't do anything about the relative strength of China for winning a trade war. Adam, you have so much experience as well in the United Kingdom here. How do our friends in the UK and in Europe, from an economic trade perspective, how are they viewing what's happening these days? It's a good question, Paul. And I think the UK has a very different view than Europe, but not because of Brexit and not because of some of the other things that used to go on. I think...

His Majesty's current government, the Labour government, really feels much like Tony Blair and Jordan Brown did 30 or 25 years ago, 30 years ago, that the future for the UK is in the security alliance and the economic alliance with the US. And so whereas in Europe, just like in Canada and to a lesser degree in Korea, Japan, Australia,

certainly Mexico, there is a reconsideration, a very fundamental level about how much you can depend on the US, the US government, US ability to make deals, US ability to be open. So I think there's a genuine divergence between the way the UK is approaching this, which is Trump has some points,

I mean, not like all of it, but we're going to make it work and it's good for us to make it work. And given our security relationship, there isn't that much we don't like here. Whereas for a German led Europe or French led Europe,

on environmental issues, on foreign policy issues, on defense of Ukraine, on industrial subsidies, on standards. There's a huge set of disagreement. So I think you have to separate the two. - To go to Kudan, this dangerous word paradigm, Adam Posen, if we get post-Trump, whatever anybody's politics listening or watching now on YouTube, Adam Posen, post-Trump, is there a reversion

to some form of post-Trump Washington consensus, globalization, business as usual? Or is there a permanence to this upset? It's the big question, Tom, and I'm not trying to stall. I think the answer is it's still to play for. I think it depends partly how badly things go over the next couple of years.

that you could get a real blow up economically as well as politically, and that would lead to a repudiation of Trump.

But even then, it's still to play for whether that means a different form of populism or a return to rule of law and mainstream economics. That's why I'm out here talking with you, and your program's important. Adam, one final question, if we could. Paul Sweeney grew up on the lawns of Princeton in all of middle New Jersey. You darkened the door of Cambridge. I mentioned, Adam, I don't know if you mentioned it. How many times, Adam, have you been in the Tasty in Harvard Square a few years back?

I mean, you know, you were in there on one of the stools. - I liked Elsie's much better than the Tasty's. So I was only, and I was an early night person. So I was only in the Tasty a couple of times. I was in Elsie probably once every week or two. - This president is going after our universities that gave us people like Maurice Obstfeld, gave us Ken Rogoff, gave us Adam Posen. How do we get beyond this threat to higher education? Or is some of the president's criticisms valid?

It's insane, no matter how valid the criticisms may or may not be. And I'm not going to touch that because I'm not an academic, thank God. But destroying the research capacity of the greatest research complex in human history that has been the source of American advantage and well-being and defense capacity for generations.

80 years is possibly the most destructive thing the Trump administration is doing. And I don't mean just Harvard and I don't mean

worrying about supposed anti-Semitism, although I think that's not what really motivates them, but who the heck knows. I think you're destroying the National Institute of Health. You're destroying biomedical research across the board. You're undercutting standards for research by having an HHS secretary who makes stuff up in contrast to all known research. I mean, I could just spew on this

sputtering for hours. This is the golden goose for the U.S. economy, for the world's well-being, and we are destroying it. And that's where the U.K. and a few other countries, including Japan, Singapore, Australia, Germany, we have to help step up and find a home for talent and find the money because this is something we can't replace. I got 22 seconds left. I'm sorry. It's May 1st. Red Sox. Season's over.

Thank you. Adam Posen, thank you for the brevity of that answer. Adam Posen forever from Brookline, Massachusetts. This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple Podcasts.

carplay 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 11 30. constance hunter with his chief economist eiu claudia begged them to slow down on policy talk about the degrees of freedom you get

taking our economics over to policy if you just go slower without being too slow? Well, I think it's not just a matter of going slow, although that would certainly help. I think it's being more predictable.

Having a trajectory and being more predictable. And I'm working on a piece that will probably come out early next week, which is about the fallacy of trade negotiations, right? Clinton gets credit for NAFTA. Well, that was started under George W. Bush and mostly negotiated by Carla Hills, who is his USTR, right? These take years. Mercosur has been underway for 20 years with Europe.

And so the idea that we can rip up these trade agreements and just put them back together in 90 days is very inconsistent with the way the world has worked heretofore. We had Gene Sirocco on at the Port of Los Angeles, and he says his scheduled sailings are going to be down 30% next week. So, I mean, the ships are already, you know, turning around. How does that impact the economy? I mean, even Apple, even Amazon are calling out

expected economic disruptions, goods and services disruptions. That's in their forecast. How does everybody else deal with it? - Well, and Paul, this is a great point, right? If they're calling it out and calling it about out in the amounts that they are, and they have huge amounts of cash, and if they didn't have cash, they could just go to the capital markets and raise some cash.

to front load imports. You think of small businesses, they don't have that ability. We're talking about cash flow is at best one month of spare cash flow. One month operating. This goes back to the definition of anarchy, which is we're all nine meals from anarchy.

I mean, on a trade basis, you know, you wonder where it falls apart. And, you know, we know that civil unrest happens when people can't get food, when prices of food goes up. Do you think that would actually happen? No, I think we're going to have more, a shortage of goods, right? So if you cannot get the Barbies for your children at Christmas, metaphorically speaking. Justin Wolf is just brilliant on that.

Seriously, both Justin Wolfers of Michigan was brilliant with Stephanie Ruhle. I think it was last night or the night before on this. You know, we take it for granted that the kids got multiple Barbies under the Christmas tree, rich or poor in this nation. Well, let's bring it back to summer's about to be here. Maybe your kids need new clothing and sports equipment to go to camp in the summer and to do their summer activities. That's not going to necessarily be on the shelves. Right.

We've got to get the market open. Constance Hunter will stay with us. Chief Economist at EIU. Again, futures up 20-something. Tech angst. Great jobs report. Futures up 63 into the opening. Dow futures up 422 in the VIX.

A 22 handle, 22.75. Please stay with us. A really good conversation coming up. This is Bloomberg Surveillance. John Tucker. All right. There you have it. The opening bell at the New York Stock Exchange. Right out of the gate, the S&P 500.

climbing 1% up 54 points right now, 56.58 on the index. The Dow Jones Industrial Average up 422 points. That's a 1% pop right now. Tech heavy NASDAQ, 101% higher. That is up 200 points. After their earnings after the close yesterday, shares have outperformed.

Apple, 4% lower, and shares of Amazon right now in the early going, down about a tenth of a percent. S&P 500 on the verge of its longest winning streak since 2004. I should tell you, this report is being brought to you by ShipStation. Calm the chaos with the shipping software that delivers. Use code Bloomberg for a free trial at ShipStation.com. That's ShipStation.com with the code Bloomberg.

Bloomberg and that is your opening bill report Paul and Tom John Tucker thanks so much Constance Hunter with us I'm gonna go through this quickly it's a tweet from the president in the last 20 minutes gasoline just broke a dollar 98 a gallon lowest of years groceries and eggs down energy down mortgage rates down employment strong he goes on to say just like I said we're only in a transition stage

just getting started, no inflation, the Fed should lower its rate, DJT. Is there inflation, Constance Hunter? Well, there is always some inflation. Inflation is above the Fed's target now. I think they're concerned that it will, instead of continuing to move towards target, will begin to U-turn away from target, right? At the

At the same time, we know that labor market data is a lagging indicator. So they're in a tough place. I don't think given this labor market data that they can really cut rates in May credibly. They're on their way. And by the way, if the tariffs weren't happening-- let's say you took a world where none of this was happening and we were status quo on that.

And all we had was fewer border crossings and some labor supply constraints and the other policies that the administration is putting into place. Would the Fed...

cut rates in May. Absolutely, they wouldn't. Inflation is on the way to their trajectory, but they would like to see it get there before they cut rates. So they would likely wait to June or July. Right now we have the tariff tariffs in train. They're about to impact. And what is their impact going to be? Supply, supply shock and inflation. There's no way the Fed can cut into that.

We've seen the stock market rebound and we retrace maybe a little bit more than half of the losses we saw earlier. What has not rebounded is the dollar, continued pressure on the dollar. What's going on there?

Yeah, I mean, I think you're seeing several things. You're seeing a reallocation out of U.S. assets, and you have a stated policy by the administration that they want less trade activity and therefore less demand for dollars. And you had Adam Pozen on earlier this morning as well. I was listening on my way here, and Adam brought up a really great point. Our financial account surplus is a wonderful thing. It's the opposite of the trade deficit, and it means that

Now investors overseas want to bring money to the U.S. They want to put in FDI. They want to invest in our equities. They want to invest in our stocks. They want to invest in our treasuries, all fixed income, private equity, you name it. They want to invest in it. And now we have an administration that's saying we want the dollar to be weaker. We want there to be less activity all around. And so...

I think that's the crux of why you don't see the dollar appreciating in the face of tariffs, which would be the normal economic reaction. All the markets appreciate it. Constance Hunter, thank you so much with EIU. This is the Bloomberg Surveillance Podcast, available on Apple, Spotify, and anywhere else you get your podcasts.

Listen live each weekday, 7 to 10 a.m. Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg Terminal.

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