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This is the Bloomberg Surveillance Podcast. Catch us live weekdays at 7 a.m. Eastern on Apple CarPlay or Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts or watch us live on YouTube. He's had a huge impact on American economics. Tour of duty at Deutsche Bank of great acclaim and then wandered over to Apollo Global Management to
to brief the troops there on not even a daily basis, almost an hourly basis. His morning short three paragraph note is a must read on global Wall Street. Torsten Slack joins us this morning. What did you write this morning?
So what was this morning? Oh, this was about what has happened after Liberation Day. And two things have happened after Liberation Day. This is just an observation, namely that if you look at the weekly data for consensus earnings expectations, they have come down quite significantly, both for Q2 and Q3 for the S&P 500. So the first thing that has happened is a downward revision to earnings. The second thing that has happened is that we normally have a very tight correlation between interest rates and the dollar.
And that correlation actually also broke down after Liberation Day. So now the dollar is trading not so much on interest rates, but on other factors. Yeah, and Pacific Rim dynamics. We'll get into that later on the show, folks. Some of those currencies continue painful this morning. Jan Hatsias at Goldman Sachs.
publishes out on an inventory dynamic of 2% plus Q2 GDP. Do you see like a normal growth for this second quarter? What is very unusual about the second quarter is that we're coming from a place where we had significant front loading of purchases among consumers and we had significant inventory build among corporates simply because
People were preparing for April the 2nd, which happens to be the second day in the second quarter, namely when tariff, of course, began to kick in. So the conclusion is there are some fairly significant bumps when it comes especially to the inventory part of GDP and to the import part of GDP in the first and the second quarter. On the consumer confidence basis, we're seeing consumer confidence get hit as a result of tariff policy. Still, though, in the hard data,
We're not necessarily seeing it hit there. When do we see it hit? So Barclays yesterday had a very important note that looked just like several others at the high frequency data. And what they are seeing in the daily data is that we're beginning to see a slowdown for high-end consumers, especially when it comes to airline bookings, hotel reservation, recreational travel more broadly, and also higher-end durable goods. So one way of looking at this is that you should
ultimately expect to see, especially those that are now impacted by the stock market correcting, you should begin to see them begin to slow down the consumer spending. And that is exactly what the data is beginning to show. So yes, it is still early in terms of when tariffs were implemented. We're still only a few weeks in.
But the longer this shock persists, the higher is the risk, of course, that this is going to drag down also hard data. What is the risk there? I mean, contextualize this for us, because the president, yesterday we heard from Bill Ackman, he said, OK, I want to see 180 day pause. Now I want to see this 90 day pause extended to 180 days. At what point in your view do you see the damage from the
these policies actually becoming something that's entrenched rather than temporary? Well, that's a very important question, Tim, because what I think is going on is that companies are actually already responding to tariffs. And what do I mean by that? Well, if you look at the surveys from the regional Feds, they are showing the new orders is collapsing. Excuse me. They're showing that CapEx plans are collapsing and they're showing that prices paid are going up.
This is the definition of stagflation. That means that there's going to be slower sales. There's going to be more increase in prices. And this is happening on the corporate side. Consumers have not quite yet seen this, but it is coming, especially with the significant slowdown in the number of containers coming from China to the US. That means that the inventory will, in the next few weeks, in my view, we will begin to see empty shelves. I don't even know how we're having this discussion. Of course, if we get normally 30,000 containers from China coming in and we no longer get 30,000,
30,000 containers from China coming in. Of course, we'll begin to see empty shelves in stores. As Tim mentioned, Tim Senevic folks, and for Paul Sweeney today, Tim mentioned there's a rationalization going on among elites over tariff theory. You and I read Ricardo cover to cover. There's no rationalization. Either tariff theory of a pseudo McKinley doesn't work or you believe it's going to work.
There's no in-betweeny, right? And that's why, and in some sense, you could think exactly of this as in the model that you and I would have talked about for years, Tom, that...
If this shock is temporary and if it lasts a week, we would all say, okay, this was a week. Now we go back to normal. But given this shock is 145% and so far it feels quite permanent, we would say, well, it's permanent. You've got to adjust to a new equilibrium. And that new equilibrium, it will have the consequence that prices are higher and sales are lower. And it's a shift. Can I go nerd right now? Please go nerd. For Paul Krugman, we're going wonk right now. There's a deadweight loss in this Euclidean calculus. Exactly. There's a shift.
who allocates the deadweight loss? Policy or brute economics? - Yeah, so exactly when that deadweight loss has to be allocated, the very important, simple way of thinking about that is that does that have to be allocated to firms taking a decline in their earnings?
or does it have to be instead allocated to consumers basically facing higher prices? So put in very plain English, the container arrives in Los Angeles, someone needs to pay the tariff. Is that tariff now passed 100% onto consumers? Is it passed 50% onto consumers? Is it only passed 25% onto consumers? So companies will take a hit on their earnings if it's not passed on 100% to consumers. So that deadweight loss,
That cost of higher tariffs has to be borne by someone. And if it is not corporates, it will ultimately be the consumer. I mean, it seems politically companies don't want to be public about increasing prices as a result of these tariffs. So would you argue that at this point it looks like
companies are going to absorb this or they're going to try to pass it along to consumers in a way that's not necessarily prominent? So that's why one way of answering that question is to simply look at what a company is actually doing. And for example, from the Dallas Fed, the Philadelphia Fed, the New York Fed, the Kansas City Fed,
the prices paid component. In other words, what a company is saying in terms of what is the price that I'm paying for goods that are inputs in my production. And if the answer is prices paid is going up and that the moment prices paying is skyrocketing because companies are saying I'm paying more. And if I'm paying more than I'm saying in this survey from the Fed, the prices are going up. So that's not a
political discussion or political statement. It's just the facts that companies are saying they're paying more. So as a result of that, we should expect it happens to be the case when you overlay that together with CPI inflation, that that will be lifting inflation eventually. Let's shift to the Fed meeting. For those of you on your commute across the nation, what a joy with Apollo Global Management. Torsten Slack with us. Good morning on YouTube. Thank you so much.
for the interest in youtube really really appreciate it it's sort of like a new media for me and it's uh winning it means for stanivik it was like you know yeah we can do youtube right oh youtube yeah 20 years old at this point what does a cappuccino cost in brooklyn probably about five bucks five bucks and maybe you stretch out to eight bucks for something we earnest right torsten knows he's a brooklyn guy are you a brooklyn guy absolutely brooklyn heights
You know, Lisa, we are just so... You guys are outnumbered. Don't have your bench in Brooklyn? They don't have the cappuccino in Brooklyn. They have the flat white. Is that not correct? Oh, that is correct. We got to get to the Fed meeting because we have to talk to Torsten about the parliamentary crisis in Germany as well. I'm calling this Fed meeting the Expo Squared meeting in that I got two Expo's. I got a massive weight
to see what inflation will do. And at the same time, I got a separate discrete massive weight to see what labor will do. Are they summed? Are they discrete? Or is one more important than the other? - Absolutely, because if you look back, including on the employment report last Friday,
things are not that bad in the hard data. It looks like things are still okay, so hey, why should the Fed change anything? But when you look forward and you begin to worry about containers coming in, collapsing, if you look at also all the stresses in trucking earnings in this earnings season,
If you look across the board in the anecdotes coming from Southwest Airlines saying we're already in a recession, Chipotle is saying that traffic is weaker, PepsiCo saying that snack sales are weaker. Across the board, a lot of the forward-looking indicators, including the fact that companies are not providing forward guidance, are telling you a very different story. So to your point, Tom, if you begin to think about
What this means for the Fed, it does imply that the backward looking and the rear mirror picture here is looking very different from if we look through the front mirror here where things look much weaker. So from a policy perspective, or at least from a communications perspective, how does Jay Powell thread that needle tomorrow for the American public?
I think he will continue to look backwards and say, hey, the data is actually still OK. The economy is still performing fine. The employment report was actually OK. Inflation has not really started moving up. So we are still in wait and see mode. The biggest risk, of course, is that if corporate America really is frozen as a result of uncertainty, then the quick question is, what comes after frozen? And of course, the fear is that after frozen comes recession. So then Jay Powell is caught in this difficult dilemma of saying, hey, if I look back, everything looks fine.
But if I look ahead and I know that things have frozen on the corporate side, the risk that it's frozen is going to create a drop off in the economy. People don't know this because we cut away from it at the end of the press conference. But at the end of the press conference, they always sing Kumbaya. Do they? And this year they're going to sing, this meeting they're going to sing Let It Go. Is that why I see Michael McKee practicing? He's practicing. This week it's going to be Let It Go. Let It Go.
- Please, one more. - Frozen. The Frozen reference for everybody in the cheap seats. Hey, Torsten, okay, if we think about the Fed moving forward, from a policy perspective, stagflation is sort of the worst case scenario here. And what we've learned is they essentially have to say, okay, when it comes to the dual mandate, we have to decide what's more important. Is more important attacking prices
or is it attacking employment? What do you see moving forward if we do enter a stagflationary environment? That's absolutely right Tim and we are absolutely in stagflation. If you look at the quantifications from the Yale Budget Lab, from the Penn Wharton Budget Model, from the Tax Foundation, from the Peterson Institute, they find that inflation over the next 12 months will go up by one percentage point. So if we have inflation going up, the Fed should be hiking
But if at the same time we have less economic activity, the Fed should be cutting. So exactly to your point, which one is it? What's really most interesting also about this discussion is that the dot plot is actually revealing that they're leaning towards looking at growth because the dot plot is saying that the next move is a cut. So if that's the case, we have our answer right there, that the Fed thinks that in a stagflation scenario, the focus should be on growth. And that's, of course, where the Arthur Burns and the Paul Volcker discussions will come in, because is that a mistake?
if inflation is about to go remember co pce today is 2.8 and if we add one percent to that we get to 3.8 can you be cutting if inflation is moved up to t4 to 3.8 that gets a really really complex decision can we do a surveillance audible let's do a surveillance we're now doing audible for those of you good afternoon in europe i was flabbergasted towards the slack i could take log nominal gdp in italy and make the statement italy's gone nowhere in a decade or 15 years i was thunderstruck
at the household net worth not poverty but lassitude of germany and that they don't own equities they don't own this they don't own real estate i was i don't think our listeners in america understand the lack of wealth creation in germany am i right no as you know i'm from denmark originally i did work for a german bank for 15 years but you're absolutely right there's some very very important differences between household net worth in germany and
and in the US. In the US, there's a significant allocation, of course, to your home and also to your stock market portfolio, either through your 401k or through direct holdings of equities. In Germany, that's really different. All your equities and all your fixed income is held by an institution, namely a pension fund. So that means that there is a different relationship to financial markets. There's a different relationship to interest rates. And likewise, in the housing market, a lot of people in the housing market are renters, so they don't own their homes.
So that's why the way you think about assets, both financial assets and housing assets, is very different in Germany relative to what it is in the US. - Tim, jump in here, please. - I wanna know about an economic indicator that I think we should invent here, Tom. I get a text message last Friday morning from a friend of mine, former colleague, works at a mainstream publication. It's not a business publication. It says, "Do you have Torsten Slocke's contact information?"
Where are we in the economic cycle when these are the guys who are looking for Torsten? They are. They are looking for Torsten's love. It's a crisis and into the Fed meeting. Let's remember the VIX is on a 25 level as well. Post-Miracle.
Is there a new Germany or just a Germany that doesn't know itself? There is absolutely a new Germany. It is very, very important. The decision that was made now about a month or two ago where the German government decided to spend 500 billion on infrastructure and unlimited on defense. I mean, unlimited, that's a pretty big amount. That's a very significant tailwind to growth for the next several years. I got to get this in. Fokker's Landau, the morning after Putin, I called him up, I begged him to come on. Fokker's Landau led...
with the fiscal stimulus of europe that had to come he stated europe finally has to grow up and start popping nominal gdp is it there now and in that sense it's very very important that because we both have the us now slowing down for a number of different reasons but partly because
of the way the trade war has been implemented. But at the same time, we now have Europe beginning to accelerate. Normally in FX, there's only one part of the leg of the trade that's moving. But here you actually have both parts moving at the same time. So that's why the tailwind coming to European growth at the same time while the US is slowing down. - This is great. - It's a very important development. - It's like Peter Fisher years ago. For those of you on radio, Torsten's land in a Lufthansa airplane in Frankfurt.
Here, he's got his hands out and all that. You see it on YouTube. On radio, it doesn't play, but we'll just make it up as we go. Torsten Slack, thank you so much for joining us today. Thank you. Extended conversation to get things going as well. He is with Apollo Global Management.
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CarPlay and Android Auto with the Bloomberg Business app. Or watch us live on YouTube. Jeffrey Rosenberg joins us out of Tepper, Carnegie Mellon. Of course, all of his great work at BlackRock. We're thrilled we could get a pre-fred brief here this morning. I guess it's gospel out of Carnegie Mellon, this distinction between risk
and uncertainty. Jeff Rosenberg, explain the difference between risk, and I'm trying to measure it, and the unmeasurable uncertainty. Discuss that.
Yeah, I mean, it's Frank Knight uncertainty and the difference is risk, which we study a lot, proxy with standard deviation of returns is some way of measuring it. And Frank Knight uncertainty is just unmeasurable uncertainty. And I think that's what we're dealing with, with the policy uncertainty trade and tariff uncertainty. It's really unmeasurable.
And so we're having a nice little rebound from the April Liberation Day surprises. And we're not out of the woods in terms of the uncertainty here. And it's tough to measure. And that's what that kind of academic concept captures. Jeff Rosenberg, you and I have an acclaim for Ian Lingen and BMO Capital Market. He has a vector after all of this towards disinflation for a 10-year full faith in credit that goes from a 430-ish...
to a 365-ish. Do you agree that a disinflation vector's in place, or is that just, there's just not enough information to come up with that call?
You know, I think there's just a lot of confounding factors there when you try to map disinflation into yield movements and which yield movements are we talking about? Because, you know, if we're talking about kind of a growth scare in the context of tariffs, it's tough to see the initial disinflationary bout. It's more looking inflationary. And I think that's part of this kind of unmeasurable gap.
uncertainty here. And if it is measurable, it's really about this. And I think we're going to hear about this tomorrow. It's about the tension between kind of the growth slowdown impact from tariff and uncertainty.
and the inflationary impact. And yes, it may be transitory. It'll be interesting to see if he uses that word, quite a loaded word, given our history, to describe the tariff impact on inflation. But you could get through the first order round of price increases and come out the back of it with more of
an economic slowdown that becomes kind of overall disinflationary. I think that would be actually an easier playbook because it's a more familiar playbook and it doesn't press on the conflict between the dual mandate that is so much more
in focus today and I think it'll be the focus of tomorrow's Q&A about you know there's a very on Millier situation where the Fed is is navigating between conflicting objectives inflation and growth that's why Tim I'm calling it X post squared that's like two strands of X post which do we weigh down and conflicted really captures so let's add that to the econ 101 textbook I would Rosenberg will use it in a meeting this week hey Jeff I'm
I'm wondering about what's priced in right now. From your view, do you think the uncertainty of the situation is actually priced in, given that we saw, at least on the equity side, nine days of gains in a row interrupted yesterday? Yeah, it's really an interesting question because what was priced in at the beginning of April, right after the first round of announcements, was obviously a very negative reaction
And we've unwound that and we've more than unwound it and equities across many indices and measures have kind of rebounded and they're above their April lows. The dollar is not, so that's kind of interesting. That's the piece that is kind of hung out here with a little bit of risk premium in it. But you can't really look at this rebound in markets and say, well, we're really pricing anything.
And that's in the initial kind of reaction. If you take a little bit longer framework and you look at what's priced in, go back to kind of the pre-election market pricing
pricing in a trump win and what you had was basically from kind of september all the way through to about mid-february a real trump growth premium that was priced in yeah and and what we unwound effectively is we kind of unwound the trump growth premium you know we we priced in a a lot more kind of
bad left tail outcomes in terms of recession that we've kind of priced out. So now you look at where we're sitting and it's kind of like we've just unwound the Trump growth premium, but we haven't priced in anything in terms of what you've seen in economic forecasts and, and, and recession odds going up, not really priced into anything in the capital market.
Jeffrey Rosenberg with us and continues with us. He is with BlackRock this morning. Good morning on your commute across the nation. Android Auto, good morning. Hearing more and more about the Google technology that they're using every day. Good morning on Apple CarPlay as well. And SiriusXM, thank you for listening. And Spotify, much more around the world than I ever could think. Tim? Jeffrey Rosenberg, we spoke, as Tom said earlier, to Torsten Slaka over at Apollo earlier today. And we asked him specifically about...
What the Federal Reserve is going to be considering today and then tomorrow when we hear from Jay Powell, how do you look at how they thread that needle, communicating not just to businesses and to Americans that, you know, they're really watching not just the soft consumer sentiment data, but also the stronger than I think a lot of people expected hard data that we continue to see.
Yeah, and I'm not sure Torsten wrote about this or certainly people are talking about the kind of typical pattern when you get a shock to the system like the one that we had is the soft survey-based data starts to erode reflective of that shock.
on more of a forward-looking basis, because you're asking people in real time, what are your expectations going forward? That erodes before the hard data does. Now, what we're coming off of here, of course, is that following the soft data in the most recent decline in soft data was a really bad strategy because the soft data ended up not being validated in the hard data.
So we have this period in time. It's typical where you have the break between soft data and hard data. And now what we're going to look for and what the Fed will talk about is, does it show up in the hard data? What's critical for Fed policy is they're not going to be forecast dependent here. They're not going to forecast and move policy based on the soft data. They're going to wait. And by waiting, they will be late and they're going to be happy to be late. Well, whether financial markets are happy that they're late, that'll be a different question.
Could you make a dot on a dot plot right now?
Well, you know, they have to kind of make the dot plot. It'll be interesting to see how those evolve. But again, it's this kind of difficulty of, you know, waiting for the data. So, you know, I'm old enough, Jeff Rosenberg, young Turk that he is, and Tim and Lisa, they have no clue, folks. We used to sit in like second grade and there'd be an air raid siren like, you know, five blocks away. And you'd have to practice getting under your desk because...
That's what you did. Duck and cover, Tom. I'm actually old enough for that. Really? Duck and cover. Yeah, I am duck and cover. In the yield portfolio of our clients that don't want to own NVIDIA, I mean, how do you duck and cover? The only thing you do is buy money market funds, right?
Well, you could do some other things. It's a great analogy, Tom Duckett. I may have to use that. Duck and cover. Where do you duck and cover in your fixed income portfolio? I mean, the big thing, and this is what we've been harping on for a long time, we call it the new conundrum, right? The new conundrum is sort of the old conundrum was Greenspan.
was raising rates and long-term rates were falling. Now the new conundrum is the opposite directionality. Powell maybe cutting rates, saw this last year, cutting rates in the short end, long-term rates going up. So this disconnect in long-term interest rates don't necessarily
follow the Fed's short-term interest rates in this environment. And that's one of the consequences of stagflation. So for duck and cover, what does it mean for your portfolio? It means you gotta really be careful about thinking where in the fixed income market am I getting the protection of my desk in the elementary school? Where am I getting protection in my portfolio in the fixed income market? It may not be in the backend the way it was when you had that, to the earlier question, the clear disinflationary alignment
for monetary policy. So you can kind of hide out in the front end, you know, cash, you can move out the curve a bit, two years, five years. You know, we look for alternative forms of diversification, ways of engineering, negative correlation. And we like that in our strategies. So you got to be a little bit more kind of forward looking, not backward looking playbook that the long end, the 30 year is going to be a great hedge here. You know, I want to be backward looking a little bit and go to a month ago when everybody was really, you know, for lack of a
better term, freaking out about what the bond market was doing. I believe the president said the bond market got a bit quote yippy, Jeffrey. Yeah. Not again, a technical term. I do wonder though, is the bond market now behaving the way the bond market is supposed to behave? Or is that, is what we saw 30 days ago, is that something we can say, okay, that happened and now we need to move forward and everything is fine. Well,
Well, you know, is the bond market behaving the way it's supposed to be behaving? God, that's a, we could spend a lot of time on what those words mean, supposed to be behaving, right? Because it's all about like, what's the role of free market capitalism? What's the role of financial markets? What's the role of pricing? And what's the role of financial repression to countervail those models of how our system works? And so what we had, you know, whether it was expansionism,
implicit or implicit in the post GFC world is we had a very large active balance sheet by global central banks. And that kind of took away a lot of the old bond market vigilantism. And so I kind of got a piece coming out shortly and I brought back, you know, the famous James Carville line, you know, I want to if I if I die, I will come back as the bond market because they can intimidate everybody. You know, and you think about when he said that that was back
pre-GFC, pre-an environment where you had such large central bank balance sheets, kind of really truncating the ability of the financial markets to signal through pricing disagreements around policy. You go back to the Liz Trust moment in the UK, and we started to see some emergence or reemergence of this older form of bond marketplace
behavior, whether that's what bond markets are supposed to do depends on what school of thought you subscribe to. But yes, I think it's really notable that in that April time period that long-term interest rates went up when short-term interest rates went down. You've got to take that observation and dwell on it for a little bit. And the conclusion you need to make, this isn't your last 20 years bond market.
It may be that pre-GFC bond market that we're starting to see reemerge here. Jeff, thank you so much. Jeffrey Rosenberg of BlackRock in preparation for a Fed meeting. This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple Podcasts.
It'd be nice to know what people are actually doing. Right now, there's a huge split.
between institutional with some fearedness out there and retail, I guess the stereotype of the story is they're buying, they're strong, they're forever with some going into cash. Joe Mazzola's expert at this had a trading and derivatives strategy at Charles Schwab, but really about what people are doing in Schwab. Just simply, what are they doing?
Well, Tom, it's not really that much different than what we saw on the institutional side, at least at the beginning of the month, I can say, because it was a real big drop in stacks. The biggest drop that we've seen since March 2020, you know, COVID time. So a 14% drop in the number from March into April. I would say the biggest amount of selling was really that first week.
It's kind of across the board. Equity outflows on the 7th were pretty strong. And I think something that was a little bit different than maybe what we'd seen in the past was the idea that there wasn't as much maybe dip buying as we'd seen. So, yes, we did see some inflows on the 8th.
And then but then the ninth, when we had that, you know, that nine percent kind of rally off the bottom, we did see clients trim. And that I find that pretty interesting to see. That's you know, I thought I thought the dip buyers were there. I thought and I thought the flows were really going into the S&P 500 index funds. So that's interesting. So one of the big differences that we saw normally when we come across our list of our top 10 buys is.
Usually maybe one, maybe two of them are ETFs. This time four. So what we saw was concentrated buying between about maybe three or four symbols. Netflix is always on top. And that was that was excuse me. Nvidia is always on top. Excuse me. Nvidia was always on top. Was interesting about that. That was eight to one over the second place stock, which was Amazon.
So real big buying in NVIDIA. Amazon was second. Tesla was third. But then four of the other top 10 were ETFs. So that was interesting. It was either you shift it within this small little sliver of names or you broaden out a little bit. What were the ETFs?
uh, you know, spiders. Okay. So they were the, they were the index funds. Okay. So does that tell you that the, is there, is there commentary about the state of the economy, the state of cash balance there that retail investors still have money to play with, to put to work? And that's a good sign. I think so. I think, I think some of the, the liquidation that we saw at the beginning, um,
I guess it kind of tailed off a little bit at the end, but we didn't see the heavy buying. I think part of that, and I think this is an interesting topic, is kind of margin balances. So when you see a liquidation day like we saw on April 7th, what you normally see is a rotation into something like fixed income, mutual funds. You didn't see that as much.
probably because of margin calls, would be my guess on that one. But margin balances really started to decline towards the end of the month. So what that means to me is that there wasn't necessarily heavy selling. It's just you didn't see them loading the boat back as they're kind of getting back into the market. This is gospel for me, folks. The asymmetric tendency of this
where there's a bid and ask, and like when things are going down, what you learn the hard way is the bid falls away. That's right. I asked this of Lizanne Saunders. Was there a catharsis?
And I don't feel the emotion of catharsis with that empty pit of my stomach. Oh, the bid just walked away. We're rationalizing it. So here's something that's interesting. We get this question all the time. And people will say, well, you know, what makes a market, right? Are people stepping away? And what I think is people are just kind of lowering their bids and they're waiting for that opportunity. The other thing we saw, guys, was what I found was really interesting is
is we started to see a lot of premium selling in the options market. So maybe, Tom, maybe that's a way that clients are getting back into it by saying, okay, maybe we'll sell some puts down here. The VIX is trading 60 as it kind of trickled its way back to 20 by the end of the month. Premium selling, whether it was selling spreads, whether it was selling puts as a way to maybe buy the dip a little bit cheaper, that was something that we saw with our retail clients. Were the same people...
who were selling in the beginning of the month, buying later in the month? Do you have that data? Well, what we can do is we can kind of break it down. So one of the things that we noticed is we broke it down by generation. OK. And, you know, my generation, Gen X, right. We came in a little bit more heavily loaded up in terms of margin and in terms of equity allocations.
So they kind of peeled back a little bit just because they were a little bit more exposed. Some of the other generations, millennials and generation above, they didn't come in as exposed. So they did a little bit more buying. So what we really saw was that the people that had more heavy equity allocations and even a little bit more option allocations in the term of long options, those are the ones that started to peel things back. People that weren't as exposed, they started to add when they had that cash available.
The trade balance just came out. And I'm doing, yeah, I can do it. On the Bloomberg, I've got a thing where I can do it. I can't count this high. Joe Mazzola with us right now. The trade balance on trend back to 2007, 2010-ish, you know, after the crisis, has been on a trend of a greater trade balance. And then it fell out of bed.
with COVID, came back, and now it's really fallen out of bed to a huge negative statistic. Survey was 137 billion, which is a ginormous number, and it came in actually at 140 billion. And Joe Mazzola, let's count. One, two, three, four, five, six. I can't even, I got to use my finger. The surveillance finger. One, two, three, four, five, six, seven.
We are out eight standard deviations on the trade balance. You and I have never seen this. Schwab clients have never seen this, have they? It's front-loading. I mean, that would kind of be my assumption is that
While there's so much indecision around what the trade war is going to offer, whether it's businesses, whether it's retail clients that are making their purchases in advance while we're waiting for this to happen, it's hard. I mean, the hard part is we talk about businesses and how that will affect their P&Ls and how that affects what they're doing in terms of their profit margins, but it hits the retail as well, too. At some point, they need to figure out with their monthly budgets, okay,
How are they going to allocate those if their expectations are that prices will go up going forward? And we've seen that. You've seen it in the Michigan consumer sentiment numbers. You've seen these expectations for inflation. So what do you do? You buy it when you can, not when you have to. And that's kind of what we're seeing. Is that your view, that prices are going to go up moving forward?
I mean, that's I think at least that's where we're at right now until there's some type of pivot from what we're seeing. It was interesting hearing from Jane Frazier, Citigroup CEO yesterday. Please, I missed that. Please. She basically said what she's seeing clients do right now. And these we're talking huge businesses, right? You Citibank.
They're taking a break. They're just not making the investments. They're at a standstill. They're waiting for clarity. And that's a real concern. Yeah, we'll have to see. I mean, Matt Winkler just sends me, Matt, when he gets angry at me, sends me love notes. What did he say? Founder of Bloomberg News. Sends me a brilliant essay by Noah Smith, who's just smart, smart, smart.
All the certitudes out there now, and one of the great certitudes of Gloom is, woe is me, imports are overwhelming exports. And a lot of people, including me, take a simplistic math on that.
where when you have imports come in, they do strange stuff like investment, just as you mentioned, or inventories. The math, folks, is not as simple as what you hear from a lot of people, and that's how you get to the uncertainty, like in Jan Hatsias' note from Goldman Sachs, where Joe, all of a sudden, Hatsias has Q2 at 2.X%.
- Yeah, economic growth. - Sure, I think those are all very feasible numbers. And here's what I think we need to look at is the idea that we've prospered pretty well in the United States, even with the trade imbalance. And you can look, not to get political, you can look at any sense that you want, but we've benefited from lower priced goods. - Joe Mazzola, Lizanne Saunders, Kathy Jones, what a great team at Charles Schwab. Joe, thank you so much.
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Zoran Memdani
came out of an experience in New York that's absolutely original, and I live this with Afterthought. You hear me talk about Afterthought. Afterthought's elementary school, her first grade class had 11 languages.
and you have to live it to understand it. It was absolutely extraordinary experience. I treasure the experience of what they did. This is on the Upper East Side School 528, I believe it was, up in the '90s.
Zoran Mamdani lived this as well, much more in Queens and, of course, his Bank Street Elementary School, and then went on to great academic acclaim at Bowdoin and now runs for mayor with a decidedly left strategy. Zoran, thank you so much for joining Bloomberg and Bloomberg Surveillance today. How are you going to move to the center of
to compete and win how do you go from a more left socialist structure a more strident progressive structure and capture centrist votes with as many Bloomberg interviews as possible that's the right answer okay continue you can stay it's it's a real pleasure to be here you know I think I
I think one of the key ways is explaining how the crises that we are speaking about, whether it's on affordability and understanding it with regards to housing or childcare or public transit, these are crises that are affecting New Yorkers wherever they identify politically, whether on the left or in the center or even on the right. And I've found that while I don't believe there's an ideological majority in our city,
of any one political persuasion, I do think there's a majority of New Yorkers who have been left behind by the economic policies of this mayoral administration and of politics today. And this is what this campaign seeks to confront in a politics that requires no translation. I can see it now, though, sort of to Tom's question. The painting of you as a democratic socialist or even a socialist, how do you avoid
the label or do you embrace the label? Do you, do you make it so centrists are not scared away by that? I embrace the label because ultimately I do identify myself as a democratic socialist. And I think, you know, I think that the thing that New Yorkers hate more than a politician they disagree with is one that they cannot trust. And I think it's important to be honest about how we're coming to this politics and also what that label means to me, which is ultimately that each and every New Yorker is,
has what they need to live a dignified life and that it's city government's responsibility to provide that. And I think we have a general consensus on many of those building blocks in our society, whether it's public education or libraries or sanitation. But then there are certain places where we
tend to believe that these are necessary parts of living a dignified life. And yet we allow people to be priced out of it. And I think housing is one of the most obvious examples of that. So let's talk about that. What is your policy for increasing affordability and increasing supply of housing? Because no question, that is the issue. Supply of housing. That is why it's expensive here.
Absolutely. And I think what we're seeing is that when you ask New Yorkers if they were to pick one of the many crises they're facing in their life, it's the housing crisis that tends to predominate. And, you know, I think that what we need to do, there are a few things we need to do in terms of allowing the private market to play a more significant role in the construction of additional housing supply. That includes ending the requirement to build parking lots when we're constructing housing. That means
increasing density around mass transit hubs. That means upzoning wealthier neighborhoods that have historically not contributed to the housing production. What makes our campaign distinct is in tandem with that. I also believe that the public sector has a role to play in building immediately affordable housing. And the reason I say immediately
sorry please well the time that we've got i got to get into themes the reality is labor's going down in flames in the united kingdom and there is a wealth exit from the united kingdom if we have mayor mamdani do we get a wealth exit from new york city
No, I think what we actually get is an end to the exodus we're seeing right now of working in middle class New Yorkers leaving our city in the hopes of finding a place where their dollar can go a little bit further. And what we know is that it's housing, it's childcare, it's general cost of living. And so often when I speak about our campaign to make the city more affordable, to make
know, to freeze the rent, to make buses fast and free, to deliver universal childcare. Sometimes it's framed oppositional to that of, let's say, business interests. But oftentimes when I speak to business owners, one of their primary concerns is how to retain their employees in a city that's so expensive. And I think that these are proposals that will make the city not only more affordable, but also more livable.
because there are so many knock-on consequences of having a city that's out of reach. There's a real sense of almost permanent anxiety that New Yorkers are living in. And this addresses that. One of the great themes right now of all the 28 flavors of candidates we've spoken to
is crime. And the great theme is how do we re-find 3,000 New York Police Department officers? Are you in support of stabilizing and increasing the number of police officers in New York City?
So I'm in support of stabilizing, and I've said time and again that I think the ultimate concern has to be delivering public safety. And police have a critical role to play in that. Yet what we're doing right now is relying on them for almost every failure of the social safety net, a reliance which is preventing them from doing their actual jobs. And we can see the results of that in our inability to increase our clearance rates for the major seven categories of crime. And so what we've put forward
as a proposal is to create a department of community safety that would tackle the mental health crisis, homelessness, gun violence, hate violence, and victim services, doing so in a manner that's aggressively pursuing evidence-based policies that have proven successful elsewhere in the country and allowing police to focus on their actual jobs. Free buses, increased childcare, more housing. How do you pay for it all?
So I think there are a few key ways. We've put forward a revenue proposal that seeks to raise about $10 billion a year. Now, about $9 billion of that comes from increased taxes on $5 billion from the most profitable corporations in New York State. We would tax the top level of corporate tax would match that of New Jersey, where across the river they have an 11.5% top corporate tax rate. Here in New York, we have a 7.25% top corporate tax rate. And then we'd raise $4 billion by raising
income taxes on the top 1% of New Yorkers. These are New Yorkers who make a million dollars a year or more by a flat 2% increase. So this would just be about $20,000 a year. I've got to get this in, Zora, and we're out of time, but this is too important.
You are in the crust of the national resurgence of the Democratic Party. Is your voice, the senator from Vermont and other voices, the gentlewoman from the Bronx, is that the future of the Democratic Party? Or is the future of the Democratic Party centrist more towards a tradition from the last century?
I would argue that my voice and the voice of so many others that you've cited, whether Senator Sanders or Congressman Ocasio-Cortez, is very much still in the tradition of the Democratic Party. And I think so much of what we are also speaking about is seeking to learn the lessons, whether it's of the New Deal or also in New York City specifically, of Littleflower, Mayor Fiorella LaGuardia.
and how the public sector was so critical in providing dignity and working people's lives. And we're seeking to bring that back because too many working class New Yorkers and Americans rightfully feel that they've been betrayed and left behind. And it's time for us to deliver that which they have so long been denied. Next time you're on, we're talking cricket. Zoran Mamdani, thank you so much. Greatly appreciate it. This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at 7 a.m. Eastern on Apple Podcasts.
Let's go right now to the newspapers. Lisa Mateo.
oh and we're gonna start there okay let's start it so a record amount of money was raised at the gala last night huge yes huge 31 million dollars the biggest gross 77 year history of the event it doesn't reflect though the seven figure cost of staging the gala but but that's still a big figure to begin with um i want to get to the fashion because that's what it's all about at the met gala right
You mentioned Zendaya. So we have a couple pictures if you're watching on YouTube. So it was this all white pantsuit, custom Louis Vuitton. It screams Matteo. I totally, with the hat on top of it, I could totally see myself with that. A big focus too on men's fashion because that was a big thing for it. So you had Tom's favorite, Pharrell Williams. He was there. Custom Louis Vuitton. Tiffany jewelry on top of it. So he was looking mighty good.
There you go. He's rocking it. I mean, you mentioned the Tiffany. I mean, it's never too early for Mother's Day. And I got the Tiffany Titan by Pharrell Pharrell, whatever you pronounce it. $16,500. It's a bargain. It's a bargain for Mother's Day. That's crazy.
Correct. Screams value. It does. Who else? I thought Usher was great. Usher looked like an adult. Usher, yes. Usher did. But Bad Bunny stood out to me because it was so colorful. Like, you know, everybody else. Bad Bunny stood out to me because he's the only one at the damn event that listens to Bloomberg surveillance. No, he's just the only one who gets in touch. They all listen. They all watch. He's the only one who reaches out. I keep it very quiet. We are humbled. I don't have time for a story now, but.
humbled by the number of people in entertainment that listen to what we do. Early Morning LA as well, continue. John Cena too, he listens to us. John Cena is great. I thought you were great in Chicago. That didn't go well.
okay um so we've been talking a lot yesterday we talked about president trump's plan to place tariffs right on movie productions made outside of the u.s so actor john voight said he has a plan to fix hollywood so i want to quickly break it down this is a great article in bloomberg um he presented it over the weekend to the president federal incentives for u.s theater owners to upgrade their facilities because you know the theaters are the ones who have been struggling a lot so that was one of them changes to the tax code to encourage investment in u.s firms
job training initiatives tariffs on films produced overseas so that still was in there but filmmakers who co-produce foreign companies are allowed to obtain their credits for U.S spending so those are some of the things he brought about the president said he supports the plan he's going to meet with industry executives that we talked about this yesterday too so that meeting is going to be coming up but you had California Governor Gavin Newsom calling for federal tax credits of at least seven
and a half billion dollars. From a theoretical standpoint, tax credits are more surgical, more immediately successful than the silliness of tariffs. But I don't see, Tim, I don't see tax credits working within a hugely entrepreneurial entertainment basis where failures... This is not like making aluminum cans. No, I mean, when you produce a film, you're making a big...
bet you're putting money down that right you know you think it's going to actually be successful in the theaters or on demand and the hit rate isn't necessarily great tie this into the met gala let's tie it anna sawa looked lovely like was in daya rocking the white and anna there was shogun shogun was a success because it was made in like three geographies including canada right wasn't there a big shogun was in canada too yeah vancouver the x files started that you know
You can tell by the trees. Port Moody, located near Vancouver. You're right, Tom. Oh, listen to you. Do you have one more to squeeze in here? Oh, squeeze in because you're a big fan of education. So I want to put this out there. This was exclusive to the Wall Street Journal. Trump administration, they've been talking about these different threats to colleges, universities. Now it's kind of like an ultimatum, I guess. But they're saying if former students don't pay back the loans, then future students might not get any themselves. So that was what just came about. Big issue.
Lisa Mateo in the newspapers. Thank you so much. 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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