Single Best Idea with Tom Keene: Jim Caron & Peter Tchir
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Bloomberg Audio Studios. Podcasts. Radio. News. Single best idea. A really interesting, dare I say, twisted show today. We had a real focus on fixed income. My major complaint with the bond market is the media focuses on yield, and then they focus on spreads, the difference in yield between two yields, like a 10-year yield, a two-year yield. You calculate the spread, and it's like half a percentage point.

The answer is in times of emotion, in times of crisis, all of a sudden you focus on price. And we're there right now where it's about price down. What does that do to your portfolio? So it was good to talk to a lot of different fixed income people today. Major shout out to Neil Sutherland of Schroeders and Hartford of Connecticut and Wayne, Pennsylvania.

Neil Sutherland, I should say. And Neil was really quite good about full faith and credit and finding comfort in a coupon. We talked to Jim Caron at Morgan Stanley with all of his fixed income expertise. He linked in the fixed income market to tough GDP numbers. I think the risk is that the number could even be weaker.

So there's a lot of adjustments that really took place as of yesterday just because of the trade data that came in, the deficit came in at record levels. So that forced all the Wall Street analysts to reduce or downgrade their GDP estimates for today. And essentially what we have to understand is that a lot of this is coming from imports, meaning that companies

have pulled forward purchases so their imports have actually gone up. When you have high imports versus exports, that actually subtracts. That's a negative. That's what we call the net number is actually subtracting from GDP. But there's a problem, Tom. The problem is that what's also not being calculated is that these things should balance out, not only if you

really big imports, you should then start to see inventory build and you should also start to see spending and consumption on those imports. That's not yet coming into the equation yet. There's a quirk in the timing here. So it's almost like you're going to get the negative aspects, but you're going to miss some of the positive. And that's what's giving it

big negative number. Jim Caron at Morgan Stanley. Let me walk through that right now. I had a lot of interest on this. Thank you for a smart tweet out there that said, explain it exactly. There's domestic economic might, and then there's what we do abroad. Abroad is the exports we send out, a lot of it's services.

And a lot of it is the imports coming in. Think of the stereotype of Mercedes-Benz from Germany or all the stuff, stuff, stuff we bring in from China. That's imports coming in. It's way more complicated than what I just said.

But the answer is, what is the economy doing without export dynamics, without import dynamics? There's a few other things they throw in as well. So you try to pass the exam. And the answer is there's the domestic economy may be measured by domestic final sales. Other ways to do it, too.

And then there's export imports. And the answer is imports were so ginormous, stuff coming in to get it in front of the trade war, that Charles Schwab quickly said, look, it's almost a 5% crater. Negative 4.8%, 4.6%, negative 4.6% just off imports. So pushing against that was a pretty good U.S. economy. And the answer is it was about 3%.

GDP for the regular old boring domestic economy. It comes out to a number, then it'll be revised over the next two looks. But it was a negative statistic today for GDP, but all sorts of asterisks around that. What to focus on is the market took it in a challenging way. Joining us then on the linkage of this trade war and our economic data and our international relations, Peter Cheer,

of Academy securities. I can tell you quite safely that when we talk to our retired generals and admirals, one of whom is going to be under secretary of state or sorry, under secretary of defense for personnel and readiness, they've never seen a more trying period of their lifetime, right? They've, they've served. There are so much risk across the globe. And recently too, you've had India and Pakistan flare up a little bit.

It does feel like there's this real risk that everyone's going to push the envelope a little bit, whether there's this perception, whether it's real or not, but a perception that Trump is less focused on global, you know, protecting global interests. Peter Scheer of Academy Securities this morning. Lots coming up here. It's an incredibly busy week. Lots of economic data today. And then we go on to claims tomorrow. I think that could be a surprise. We'll see.

And then the jobs report, boy, the analysis right now, I would love to get a cup of coffee or a long lunch with Anna Wong right now just to get an update on Bloomberg Economics on a survey number of 135,000 nonfarm payrolls.

and a real mystery that it could be marked down lower. On your commute across the nation, Android Auto is seeing more and more talk about what Google and Android are doing in cars. On Apple CarPlay as well. And on YouTube, subscribe to Bloomberg Podcasts. At YouTube Podcasts, this is Single Best Idea.