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Hi everyone, Welcome to the Bloomberg Business Week Weekend Podcast. Yes, it's been a topsy turvy week. Reciprocal tariffs and almost every US trading partner went into effect, stoking recession fears and bond market turmoil. Then, in a sudden shift, President Trump announced a ninety day pause on those tariffs, but
kept an earlier ten percent baseline rate in place. Now that ninety day pause, well, it caused the major US stock indices to surge, with the S and P five hundred staging historic and its best stock rally since two thousand and eight.
The notable exception to the tariff pause was China, which responded with an eighty four percent tit for tat tariffs on US imports. The retaliation prompted Trump to then respond with an even higher tariff on China of one hundred and twenty five.
Percent, and let's not forget earning season got underway with the big banks reporting all those details on the Bloomberg and at Bloomberg dot Com. This hour the CEO of autoparts manufacturer Magna, who describes today's environment as being like the Great Financial Crisis, the COVID shutdown, and the auto union walkout all rolled into one.
All that to come. We begin with an investment strategist who sounded the alarm on the Trump administration even when Wall Street was feeling all in. Just after the US election.
Peter Barrison and his team at the research shop BCA predicted that broad based, unilateral tariffs were coming and that the new administration's proposals would go well beyond what had been implemented in President Trump's first term. Needless to say, he was right.
Peter is chief Global investment strategist at BCA Research. He's noted that the quote worst is yet to come. We should note that we spoke to Peter before the President announced a ninety day pause on reciprocal global tariffs.
Hi. Everyone, Welcome to the Bloomberg Business Week Weekend Podcast. Yes, it's been a topsy turvy week. Reciprocal tariffs and almost every US trading partner went into effect, stoking recession fears and bond market turmoil. Then, in a sudden shift, President Trump announced a ninety day pause on those tariffs, but
kept an earlier ten percent baseline rate in place. Now that ninety day pause, well, it caused the major US stock indseaes to surge, with the S and P five hundred, staging historic bounce and its best stock rally since two thousand and eight.
The notable exception to the tariff pause was China, which responded with an eighty four percent tit for tat tariffs on US imports. The retaliation prompted Trump to then respond with an even higher tariff on China of one hundred and twenty five percent.
And let's not forget earning season got underway with the big banks reporting all those details on the Bloomberg and at Bloomberg dot com. This hour conversations from the C suite on tariff's, Trump, earnings, and the global outlook.
That includes our interview with the CEO of the industrial supply and tool company fast Enow, also.
The CEO of autoparts manufacturer Magna, who describes today's environment as being like the Great Financial Crisis, the COVID shutdown, and the auto union walkout all rolled into one.
All that to come. We begin with an investment strategist who sounded the alarm on the Trump administration even when Wall Street was feeling all in. Just after the US election.
Peter Barrison and his team at the research shop BCA predicted that broad based, unilateral tariffs were coming and that the new administration's proposals would go well beyond what had been implemented in President Trump's first term. Needless to say, he was right.
Peter is chief Global investment strategist at BCA Research. He's noted that the quote worst is yet to come. We should note that we spoke to Peter before the President announced a ninety day pause on recip global tariffs.
I don't think the stock market has yet fully priced in recession. I mean keep in mind that up until a couple of years, up until a couple of days ago, the four hundred and ninety three SMP companies that are not the Magnificent seven were still actually up slightly for the year. And these are generally cyclical companies that one would expect to go down in recessionary scenario. So we're starting to see that being priced in, but we're not
there yet. To get down to forty four to fifty, which is my target, you don't need to make any wild assumptions. All you need to assume is that the forward P multiple drops to eighteen and the earnings estimates followed by ten percent points. That's not crazy at all. On average, between twenty fifteen and twenty nineteen, the P multiple was sixteen point eight, and I'm talking about eighteen
in recessionary scenario. So if anything, my target, even though going into this year it was fifteen hundred points below the nearest person, might actually turn out to be a little bit too bullish.
Could we even go lower than that?
We certainly could go lower than that. I think it would require a deepercession, but we could get a deepercession if policy continues to be very unfavorable. And I'm not just talking about tariff policy. We also have kind of this discussion of the Morrow logo accord, this idea that perhaps holders of Treasury bills will be forced to roll their money over into low yielding long term bonds. I mean, this is crazy, right. The treasury market is the ultimate
risk free asset. If we undermine the sanctity of the treasury market, then we're looking at a worse financial crisis than what occurred in two thousand and eight.
This was supposed to be the year.
Wait you said we could, Sorry, tim a go ahead. I remember living through two thousand and eight. I know you did too, and I just remember are you talking to me? Yeah, I'm talking to you. I mean, Peter, we thought the financial market system globally was coming down. I remember not going to bed because headlines were crossing, and it was like which Wall Street firm was being bought by whom and which one wasn't going to make it, and so on and so forth, and what the government
was going to do. Say that again so that we understand kind of the theft of what you are saying.
The fact that the dollar is weakening now is very, very unnerving because the dollar is supposed to be a risk off currency. You buy treasuries when everything is going to hell, and that requires more dollars, and that pushes up the value of the dollar. The fact that the dollar is weakening now is telling you that increasingly investors are losing confidence in the US financial markets. And you know, President Trump wants a lower trade deficit. The counter the
mirror image of a trade deficit as a capital count surplus. Yeah, foreigners decide that they don't want to hold US assets anymore. That's going to drive down the value of the dollar. That will make imports more expensive, make exports cheaper. That'll result in a lower trade deficit. But we're talking about something that will also entail a huge decline in stock prices and probably a financial crisis.
So not exactly making America great again.
Not quite.
No.
You know, it raises the question about how much damage can be done before you believe that Trump will reverse his policies. If that is something you believe, well, I.
Think, for one thing, we've already sort of passed the event horizon. I think at this point it's going to be very difficult to avoid a recession, just based on everything that's already happened. They kind of wasn't that strong going into the latest escalation of the trade war. In February, real wage and salary income was only one was only up one percent year of a year. The CPI swap more is telling us that these tariffs could push inflation
to well over three percent. We're potentially looking at negative income growth that's going to be very difficult to maintain without the economy weakening significantly in spending drawing up. So I think the outlook is quite worrying at this point, and it's probably too late to avoid recession. And I don't think that Trump is willing to reverse course anyway.
He's been very.
Very clearly for like thirty years about how you want to build this protectionist wall around the US. I don't understand where this group thing came from, where people were just saying, oh, it's going to be a negotiating ploy. It's not a negotiating ploy. He wants something that resembles autarchy.
Are you concerned that we're going to see in financial conditions titan too much right now? We could start to see some sort of panic or freeze.
Yeah.
We estimate that easing financial conditions last year mainly because of rising stock prices, added around half a percentage point
to growth. The fact that financial conditions have tightened mainly because stock prices have fallen, credit spreads have widened, is based on kind of a very back of the envelope and back of the envelope calculation will shave around half a percentage points from growth, and that's not huge, but the risk is that you get kind of in this feedback loop situation where stocks go down that means people feel less wealthy, that means they spend less, so there's
less sales, less profits, and even lower stock prices. That's what we often see during recessions. And I think that's what we're starting to see now.
You know, I'm looking at something I think you either said or shared with market Watch, and this was around late March, March twenty first, and that even though you had this outlook for the S and P five hundred this year, forty four fifty by the end of the year, and I think when you compared it to any nobody else, it was the lowest on the street, you did have
five scenarios that could boost stocks this year. And you talk about the president, you know, walking back much of his tariff agenda, kind of caving to pressure from the market, and a few other things. Do you still believe that there are scenarios where the market could actually rally.
There's certainly scenarios, and you know, but that's not my base case. I think that probably the trade war gets worse rather than better, because Donald Trump had kind of had this well, i'd almost say, like naive idea in his mind that he's going to raise tariffs and that's going to force other countries to reduce their tariffs. Well,
there's two flaws without argument. The first flaw is that most rich countries don't actually have very large tariffs against the US and don't really have very large non tariff barriers against the US. I mean, they have regulations. All countries have regulations, but they're not specifically targeted at US companies. For the most part, there's going to be exceptions of so there's not a lot that other countries can do anyway.
And the second thing, which is more politically relevant, we've seen this is certainly true here in Canada, that retaliation is politically popular. Donald Trump has single handedly resurrected the Liberal Party, which was heading for a huge defeat in the elections, and so people are saying, well, wait a second, if we can get more votes by retaliating, we'll retaliate.
And so we're not going to get countries acquiescing to Donald Trump's demands we're going to get retaliation, and that could very well spark another round of tariffs.
You know.
One of the things I also wonder is that is it possible that you know this? I guess what I'm thinking about is what you said before a tarchy, and that is the idea that right the US produces everything that we need within our borders. Is that really you think the goal of present Trump, because I think that's one of the things that we've tried to figure out with the tariffs, is that what's really his endgame, what's
really his mission here? But do you believe that his mission is to that the US is kind of self sufficient in providing everything it needs for its citizens within its borders, and then cut down trade.
I think Donald Trump sees trade as a zero sum game, meaning that if one country is running a trade surplus with the US, somehow that country is exploiting the US, ripping the US off, as he likes to say. He doesn't see trade as something that can lift all boats, which is the way most economists see trade.
Nor does he kind of.
Realize that the reason the US has this trade deficit is because the US has been a very good place in which to invest rather than buying US goods. Foreigners have been buying in Nvidia stock or treasuries. That has been a vote of confidence in the financial system. And yeah, if you force people to not buy US assets, you leve a week or dollar to lower trade deficit. But it's not really what you want.
Hey, you know you mentioned politics a little early, or at least from the Canadian perspective. Here in the United States, I'm wondering the sort of guardrails that you see on this president and his policies. How do you see the guardrails around this president here?
So I think that's going to be what happens next. You're going to see more and more Republicans abandon Trump and we're going to have real discord wow within the Republican Party. But unfortunately, the way the system works is that Trump does have a lot of discretion over tariffs. And unless his popularity plunges, and I would say, like it's come down, but it hasn't plunged, He's not going
to change direction. I mean, realistically, if you spend like a month talking about Liberation Day and then say, oh wait a second, the stocks stocks have gone down. Just kidding, he can't do that without looking really foolish. And so he's not going to do that unless there's a lot more pressure. We're just not there yet.
Hey, one thing I want to ask you, all right, So if we buy what you're say saying about forty four to fifty by the end, and it looks, you know, certainly possible, considering what we're going through right now, where are you investing or suggesting investors suggest this money? You guys advise a ton of advisors, share your research. Where would you be putting money in this environment? Or is it too late to move anything around right now?
I think it still makes sense to have a defensive bias in one's portfolio. That means holding more cash than one otherwise would hold. It means holding more bonds, although there's of course risk around bonds given a large fiscal deficit and the whole moral logo cord discussion. But nevertheless, the Fed probably will be forced to cut rates quite
aggressively more than what the market is pricing in. So you want to have more fixed income, less equity within equities, You want to own more staples, healthcare, these defensive sectors, and you probably also want to own a bit of gold I think that's a true safe haven asset.
What would you say to folks out there who attempted to buy this dip listen.
I mean, if you're nimble, you can, of course do it, But I wouldn't bide with the expectation that stocks have bottomed. I think we could get a rally that lasts for a few days, perhaps even a few weeks, but ultimately, if we end up in recession, and I think that's where we're heading, earnings estimates are going to come way down and that whole dragstocks down with them. So I think it's too early to move to an overweight stance on stocks.
Well, it's like we like to remind everybody, markets don't just go up. They don't go in one direction. They go up and they go down. Hey, Peter, thank you so much. Double duty. We know you spend some time with our TV colleagues as well. Glad you could also spend some time with us as well. As we said, this story by our vil Donna Hirich, it is one of the most right stories on the Bloomberg Peter Bears and his chief Global Investment Strategies at BCA Research joining
us from Montreal Canada. Peter, thank you so much.
You're listening to the Bloomberg Business Weekdaily podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Well shares of everything soored this past Wednesday, including auto stocks. After President Trump authorized a ninety day pause on certain tariffs, keep in mind auto tariffs of twenty five percent still in effect.
Additionally, a twenty five percent tariff on major components such as engines and transmissions is set to take effect note later than May third, and could expand beyond those parts. Those measures are expected to dramatically increase costs and up end the supply chain.
One of those suppliers affected is Magna International, a Canadian based auto parts and auto technology company that creates components for some of the biggest car companies in the world that includes General Motors, Ford Stilantis. In terms of sales, Magna International is the biggest automotive supplier in North America.
Swami Codaghari is CEO of Magna International.
You know, we're right really focused on control the controllable, and things seem to be changing on every day basis. So open the playbooks that we've had during the rotating UW strikes or COVID or two thousand and eight financial crisis, or the chip crisis, and you put them all together. I think that's what we seem to be having right now.
What a way to put that all. So, the financial crisis saw car many some car companies declare bankruptcy.
Right exactly, you're saying it's as bad as that, and then some Yeah.
I think I think the important part, Carol, here is look. Part of it is looking at tartifs of importing vehicles crossborder. Okay, the OEMs are the importer of the record. We as suppliers, you know, have to still look at any inter company perts going across the border, and you have to look
at the tier end supply chain. But all in all, even if we look at what we can do internally, all of this is going to lead, I believe, to demand destruction, at least in the short term, which is why I compared it, you know, to what.
Happened during the two thousand and eight and two thousand and nine.
Where the volumes went down drastically, right, And that is the reason for my comparison to that, As to mention.
In the introduction, you know your top customers GM, Mercedes, Ford, BMWVW, Stilantis, Nissan, are you already seeing tell me like kind of what the environment was going into the tariffs, and then how it's changed in terms of demand from your customers now that the tariffs are here.
OKL.
One of the important things in the automotive industry, certainty is stability, and what we have today is the complete uncertainty.
Right.
It's difficult to plan in an industry such as ours, you know, on an everyday basis, right, And that's what we're trying to deal with today. That you might have seen some of the announcements that have come starting April fourteenth, some of them starting you know, last Monday already BMW from the Spartenberg facility, or Jeneral Motors from Fort Wayne, Stilantis in Telukah, war On truck windsor you know, halted productions or changing production schedules and so on and so forth.
So that's the fact we are starting to see. And obviously, you know, it's an industry that you can't flip the switch to change things overnight. If there is a policy roadmap towards whatever the outcome might be.
I think that's addressable.
But today the struggle seems to be addressing what's coming at us on a daily or hourly basis.
So who absorbs the cost here? What's you know, what do your shareholders need to know about? Where customers will see price increases? Where you will see a head to margins? Where the end end user? Right, us people who go and buy these cars will see price increases. Where do the where do the chips fall?
Yeah, it's kind of all of the about him, right, because you know, from a supply base as well as the automotive OEM's perspective, everybody look at whatever that can be done. I think that is given. But given the industry and the type of margins that are there that's out there, you know, everybody knows that nobody can handle the magnitude of the impact that we're talking about here. So I believe it has to some way, shape or
form pass on to the consumer. And if you look at where the car prices are today in the market, they're already you know, stretched quite a bit, right. So that's why I talk about demand destruction and the consumers ultimately facing, if not all of it, a significant part of the impact of the tariffs.
You know, you said, it's like the playbooks from the financial crisis, COVID, the UAW strikes all can But I'm wondering if as a result of this, you are making any big changes to how you do business where these parts are manufactured. Do you plan as a result of these tariffs to do more in the United States?
It's too soon to say that, right, Like I said, we are investing or not we as an industry, if you're doing investments today, it is typically for starting production in twenty seven or twenty eight, So we're talking at least two years out right when we start talking about what needs to be done. Should we react to what's happening today? And where the policy ends up is going
to be ultimately what everybody's looking at. So from a near term perspective, cash conservation and hesitancy or tentativeness to say where will it end up? So if there is a dollar that I can push out from a perspective of investing today versus a month or two months from now, I'll pick the later, right because I want to have certain and where we are you know, ultimately going to
invest and get the return. I think going back, everybody is now focused on free cash flow, conversion, capital efficiency, so there's a little bit of a wait.
And see approach.
And you know, in the industry that depends on two or three year cycles, that's you know, difficult.
So the thing I wanted to ask you, and I keep going back to this interview that Shineli Basika Bloomberg did with Boas Weinstein, and he said, you know, even if we get it changed and perhaps the White House the president comes out and says forget it, delay of ninety days or you know what, let's call it off. The problem is that the President's going to be in the White House for the next four years, and that what he said is the uncertainty genie is out of
the bottle. I can kind of get away from this. That would you feel if the president came out and said, oh, change my mind, would you feel confident enough to move forward or would you feel like you were constantly a little bit off balance, not sure if something might change from the White House.
I think the industry as a whole is going to be a little bit more conservative, and think twice we've always believed, you know, you have to produce locally, whether it's a local for local, and we've always looked at the entire North American market as one market. So that is being questioned right now. So we have to work very closely with the OEMs, not just as saying, I think the whole ecosystem has to be pretty much aligned. As you think of investments going forward, which segment is
going to be consumed? Where where do you put the footprint? So in short, Carol, I think there is going to be a little bit more thought before new investment goes into address, you know, especially where parts or vehicles are going crossboard.
Right, So then when we think about the US economy or global economy, there are investments that will not happen and there will be as we talked, was it a little bit of a demas and destruction, Like, there'll be some destruction that economic impact we don't get back right because of that conservative mode.
I think it's fair to say there is going to be tentativeness in the investment cycle now until people get a little bit more clarity. That's one thing, and the second thing is short term, I think there is going to be you know, reduction in volumes.
I mentioned you have one hundred and seventy thousand employees in countries throughout the world, stock down about twenty five percent so far this year. You're going to take a hit ostensibly as a result of these Are you going to have to start making decisions about who keeps their job and who doesn't keep their job.
And tim Yes, that's the reason why I compared it to what happened during the COVID or the uw rotaining strikes. Right, you have to constantly react to how the OEMs are planning their production schedules, whether it's lines coming down, complete factories, assemblies that are stopping, which means we have to react accordingly. So obviously there's going to be that impact. But we have to as one of our guiding principles is a long term strategy to look at our business as a
long term owner. So whatever decision we make, we have to look in terms of today, but making sure that it doesn't hurt us in the long term. So that's a little bit more challenging today than it was a few months ago.
One of the things I want to ask, are you afraid and do you feel like the c suites afraid to really speak out against the Trump and mysters. You're actually being pretty frank here. CEOs and some surveys are calling this the Trump recession. CNBC did a CEO survey, yet it seems like most don't want their names attached to the criticism of the administration. Is the corporate community afraid to speak out?
Call from our side?
Look, I think Tim mentioned in the introduction. We are in twenty eight different countries, so over the last year and a half, nineteen of the countries that were present in had elections, right, So policy is something we deal with all the time. This is obviously a little bit more disruptive than what we have seen elsewhere or seen in my career here, but we have to look at the industry long term.
Right.
Our design cycles four to five years, and maybe with the changing industry it's dropped down to two or three years, but you got to take a long term approach. So, yes, it's disruptive today, but we have dealt with this in the past, and we just have to keep our head down and hope we look at a policy roadmap rather than react to something that's happening today.
One of the things I do want to ask then, and kind of on that in terms of long term strategy, what does the auto supply chain look like if the Trump tariffs are here to stay. How long does it take to realign a point that will mitigate tariff costs?
I don't know.
It's mitigation that is definitely going to lead to rationalization of the footprint, right, we have to start looking at balancing capacity. You know, luckily we have footprint in Mexico, US and Canada. So again, like I said, it's not going to happen over time. Depending on complexity of the part in the system, it could be anywhere from months
to years. There are some complex systems where just to give you an idea of some of our plants are a million square feed facilities right with about three four hundred million in invested capital. So those kind of plants are not easy to transfer overnight.
Those will take years.
And it's not just a unilateral decision either, right, this has to be done in conjunction with the product cycle planning of the OEM. Where is the assembly planted and how we be going to work with them. So there's a lot of complexity involved here. Some of the more complex footprint rationalization might take years to crystallize.
We talked a little bit about whether you'd move facilities. You said, it's two really to say we are already starting to see automakers reshoring assembly plants or make announcements. Hyundai was one of the ones we saw from the White House just in the last month. If we see more automakers reshore assembly in the US, will you need to move facilities back to the US as well.
We have a footprint in the US.
But to your point, Tim, yes, I think look as a supply base, we look at the material availability of the entire supply chain where it's coming from. We have to look at the logistics. We have to be as closed, you know, as possible to the assembly based on the type of the part and the complexity of the part. So considering all of that stuff, if there is a significant reshoring, yeah, we have to look at, you know, rationalizing the footprint differently.
Hey, SA mean just to kind of wrap up here, you know, you kicked off and both Tim and and I were like, a wait, what moment when you said that you're thinking about this environment akin to I think you said the gfc SE, COVID and Union strikes all together. That's today's environment. So is a recession here in the United States given? Is maybe perhaps a global recession?
Given?
Yeah, I think you know again, hopefully you know, everybody comes to the table and has the discussion to avoid that. But all indications seem to be, you know, heading in that direction that the economy is taking a hit. But like I said, this is happening so fast and so quick. Part of it is you know who comes to the table at what time, and you know how much can you recover and how fast can you recover? But that's definitely on the cards based on the facts today.
Well, we really appreciate your honesty and giving us an assessment of your world that really plays into all of the major auto manufacturers. Swami, thank you so much. Swammi Kudigeary's chief executive officer of Magna International, joining us right here on Bloomberg BusinessWeek Daily.
This is so Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern on Applecarplay 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 played Bloomberg eleven thirty.
No doubt that the biggest stories this week have been the volatility in global markets, the cloud of uncertainty in the US economy, really the global economy too, and a scorching hot trade war between the US and everyone, and especially between the United States and China.
Someone with a pulse on all of this is Mike Siegel. Mike is a partner at Goldman Sachs Asset Management, serving as global head of the insurance, asset management and liquidity solutions businesses, as well as co head of the Client Solutions Group in Asia Pacific. Mike manages over seven hundred and seventy billion dollars in money markets and another four hundred and sixty billion dollars in insurance assets. He joined us alongside a Bloomberg Global Finance correspondent, Shanali Bassek.
I think that people are clearly on edge and are reluctant to make any significant decisions until we get better clarity as to where the tariffs are going to end, where that situation is going to end. Once we have more clarity to that, you can then go back and see the markets will react, They'll adjust, the FED will react, It will adjust, and so will companies in terms of how they're going to invest, including my insurance clients and including the liquidity clients.
We don't know how it's going to end, but I'm curious if you've mapped likely scenarios for how they'll end, what do you think is going to happen.
Well, we do map scenarios, and so first I'll stick with the insurance industry, which is very well capitalized and not levered in the sense that they're not over their skis. They don't hold a lot of equities on the balance sheet, so the equity market volatility that we've been seeing is not creating a capital strain. They are primarily fixed income investors.
And by the way, we're seeing the intermediate and long into the curve rise, we're seeing credit spreads widen, so on reinvestment, that's a pretty good situation as long as it just doesn't continue to cascade into something much more significant.
You have insurance clients that are holding long term bonds and ten year thirty year notes are really blown out at this point. Are they suffering through a lot of pain because of it?
Yeah? So, Soniali, You're absolutely right that on a mark to market basis, these bonds have lost value, But most of these institutions don't have to report on a mark to market basis. They're able to hold their bonds to maturity, So really they are more benefiting from the ability to reinvest at higher yields than what's been happening to their
to the current holdings. Not the same thing being true for hedge funds, example, or other institutions that are marked on a daily basis may have to provide collateral as their asset values are dropping, but that's not the case for the insurance industry.
But do they feel that there is a certainty that this does get resolved sooner rather than later. I think I love your interview you did with Boaz Weinstein, who I thought you know is assessing the situation and saying the thing is here we have a president who's in for just under four years here and that he said,
the uncertainty genie is out of the bottle. So do we continue to in your view, and you've got to think about short term, longer term, medium term, that uncertainty will be with us throughout this tenure.
I think uncertainty will be with us, hopefully not at the level that we have right now, and again it's it's our companies in a position where they're forced to actor or not. And to the extent that they're not overlevered, they're not forced to act. They could sit watch and look for opportunities. I would say, you know, when you gain plan out right now, this has primarily been an equity market event. Concerns that it becomes a bond market event. Rising yields are not that much.
Of a problem.
Draining liquidity becomes a problem, and you know, so there's there's a concern or watch for that. Also, I would say for our insurance clients, they are long term holders of corporate debt. How are those corporations going to fare? And certainly some corporations are going to be much more affected by tariffs, which would we can credit others are immune to it. So where we and our clients are doing a lot of work right now, going literally bond by bond, security by security.
What is the sensitivity to the tariffs or not?
Well, on a micro level, some of that uncertainty has already led companies on a case by case basis to pull guidance CarMax delta earlier this week. You mentioned a lot of uncertainty. Are you seeing signs of a recession?
So let me say this.
So one of the things we want to talk about was the survey, And first I would say, on the insurance survey.
It's at fourteenth annual Global Insurance Survey, four hundred and five companies representing over fourteen trillion dollars in balance sheets assets combined. That's a lot.
That's a lot. It's about half the global industry's as base.
I bring that up because we've One of the questions we said is what are you concerned about? And that question they got absolutely right. They're concerned about inflation, they're concerned about geopolitics. They aren't concerned about tariffs and market volatility. What they didn't get right and nobody did, was the magnitude of the tariffs and the implications for that. So they didn't see recession this year. That view is changing,
including at Gold and Saxson. Within our clients, they thought the equity markets would be well behaved, not riproaring, but well behaved. That view is changing quite dramatically. That they also thought that rates were had peaked and would be coming down slowly. Both at the short end of the long end, and I still think that that's the prevailing view. So this backup in longer term rates is looking like an investing opportunity. None of our clients have been selling
or directing us to sell on their behalf. They are looking for opportunities to get into the market, but they're not in a rush, you know, they want to see how things settle out. Once they see how things settle out, then they'll know where to put capital to work.
You know, you mentioned that you're looking bond by bond right now. And the reason that's so interesting to me is because you're already seeing somewhat of a capital market's freeze. And if you're worried about corporate debt at all in this environment, what does it mean for the way people have confidence in investing in corporate debt in the future and new issuance for example.
Yeah, So Sonali, that's really going to be industry by industry, case case by case. And that gets back to this uncertainty until we know how this unfolds, and it may not, it may not unfold to a point where that we have definition is that this is the way it's going to work. You've elevated the amount of uncertainty, which is elevating the amount of risk I need to get paid a bigger risk premium to hold any of these instruments. And that's why we see credit spreads widening out.
You know, a lot of people are saying this is also a golden opportunity for a while public capital markets are freezing to look at private capital because you're seeing these private credit giants just float right in as the public markets are closed. But are you concerned that there's still a lot of pain under the surface in private markets given that, you know, they call it the denominator effect.
These companies are seeing their public portfolios really shrink and their private portfolios therefore become a bigger proportion of their holdings.
So let me take that question into two break that into two parts. One is the underlying asset values themselves.
And so we've.
Got private equity, we've got real estate, we've got infrastructure, we have private credit.
At the moment, we're.
Not seeing any of this flow through to the existing investments that have been made.
But we have to see how things unfold, and if we end up in a.
Deeper recession or deeper recession, that's going to weaken the underlying asset values. Now, the thing you said about the denominator effect is the ability to put new capital to work, And there's two components. So that one is I already have a private equity portfolio. I was hoping to get realizations give me fresh cash to put back to work. And if the public markets are closed, particularly the IPO market, You're not going to see as many of those realizations.
So I'm going to keeping more of my capital tied up in those assets. And then the second point you're making, which is more applicable quite frankly to pension plans and sell from wealth funds, is as the public assets, particularly the equity assets, decline and value, all of a sudden, my exposure on an asset allocation basis to the private assets has increased. Again reduces my willingness to invest more.
This was supposed to be the year, right, that all of a sudden we could tap the public markets, sell sell some assets, IPO whatever, right or M and A and it.
Well, this was supposed to be the year. It is only April.
Okay, Well, so you are hopeful that it gets better.
Well, I'm always hopeful, but we shall see.
I guess I'm just saying in an environment where if we expect more uncertainty over the next three and a half years, that makes it tricky.
Right, it makes it tricky.
I think you know right now the administration is in the middle of trying to rebalance trade through tariffs. At some point that will settle and then the markets can assess what does it all mean, and then I think you will.
See markets open up again. You'll see more flow of capital.
We're talking about the risky stuff.
Yeah, I'm also wondering.
You have one of the biggest money market businesses in the world under your purview, So how are those behaving? What are they being used for in an environment like this, because it's generally safer than a lot of the debt markets that we're talking about.
Yeah, So, Sonali, we manage over seven hundred billion of short term liquidity products. We consider that to be the canary in the coal mine, so we're always watching what's happening with flows there, and at the moment things have been very stable. The vast majority of the assets are government assets, you know, short term short term treasury bills, et cetera. And we don't see flows coming into that market.
We take that as a good sign.
Another part of the market, which is called prime, includes a lot of commercial paper and other short term debt of corporations, and we don't see companies moving out of prime.
So at the moment, and we watch very closely, things feel calm at that end of the market.
When money leaves your money market funds, where does it go.
Over the last several crises, if I could say like that, it's been actually coming into the money market funds basically, you know, the two competing forces would be bank deposits and money market funds. And you know, some of the crises have called into question, you know, credit worthiness of banks, so it comes into the money market funds.
If people are very nervous, it's going to go into.
Government money market funds, so primarily T bills and other government guaranteed forms of debt.
Are you calling this a crisis now?
No?
Are you seeing money coming into money markets?
No?
As I said, we're watching on a daily.
And a minute by minute basis, and we haven't seen any flows come in unusual flows, nor have we seen flows moving out of prime into government guys.
By the way, every single crisis for the last decade or so, Mike has been one of my first calls, which is exactly, how's it going?
Really?
I hope that's not why you call it.
Is there any money going outside the US? Increasingly?
So, you know you've seen so.
Coming into the beginning of the year, it looked like the US economy was going to be the fastest outside of China, the fastest growing economy in the.
World, exceptionals might we talked about American exceptional exceptionalism.
And you also saw the dollar strengthening over a long period of time. So if I took foreign money and put it into the US market, I had probably a underlying market that was going to rally and I.
Pick up the currency appreciation WAMI.
Right now, the dollar's weakening and the US markets are selling off, so I'm sure that that's putting a damper on those flows.
I want to go to China and specifically the US relationship with China. You spent a lot of time in China, you live partly in Hong Kong, you're head of the you're co head of the Client Solutions group in Asia Pacific. Is the relationship between the US and China broken?
That's really not in my Bailey Wick, But I will tell you our relationships with the government entities and the companies that are there between our firm and those entities is very strong. What's playing out is just playing out above everybody's head, and we're leaving it to play out at that level.
But it has significant implications for the way that companies do business with one another. If one country has tariffs that exceed that's a big deal.
It's very important for the two countries to have good relationships. And then that translates down into the entities that we work with and the relationships we have with them.
Can I ask you one last question. Oak Tree Capital Management coind of founder Howard Mark's today that Donald Trump's tower of policies have the potential to be the biggest economic event of our lifetimes and warned that reversing them could still have consequences. Do you agree.
I don't know if I agree with that statement, but I will say this that volatility has a cost, and it's undermining people's confidence to invest, whether it's corporations building plant and equipment, whether it's investors putting money to work. So there is a cost of volatility, and we're seeing that by the declines in the market and the widening out of spreads.
So appreciate this. Thank you so much, so much. Mike Siegel, partner at Goldman Sach's Asset Management, Global head of the insurance, asset management and Liquidity Solutions business, also co head of the Client Solutions group in Asia Pacific. Mike, thank you very much, really appreciate it. And Janellie thanks for bringing us Mike Bloomberg TV Global Finance correspondence. So she calls you, you know what it's about. Is this a crisis?
But he says no, for now. He says for now, all right, let us know if that view changes. I do appreciate it.
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us live weekday afternoons from two to five pm Eastern Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Plenty ahead in our second hour of the weekend edition of Bloomberg Business Week, including the founder of fair Trade USA on how tariffs affect the people who grow our tea, coffee, chocolate, and so much more.
Plus I know Carol's really excited for this one, and I am too.
Hey, Tim, I get to talk to Kate. I'm excited.
Plus Chris Rouser is going to be here as well. I know our Bloomberg Food editor, Kate Creator. She stops by with the winning formula for many of New York's trendiest restaurants, making better butter and the top snacks for certain CEOs. It's all in Bloomberg pursuits.
What I love about Kate is it's always all these restaurants I want to go to, but I can't get in. That's just what it comes out to.
Hey.
First up this hour, though, I check on the health of an iconic California city that's still trying to recover from the pandemic.
San Francisco is facing a two year budge. What's a deficit over eight hundred million dollars. On top of that, it's been grappling with a homelessness crisis and damage to its reputation as a tech industry hub.
For more, and what the city is doing to revitalize the tech sector and the impact tariffs and a potential pullback that federal funding could have on the city. Bloomberg Technology co host Ludlow caught up with San Francisco Mayor Daniel Lourie.
I want to get straight to the idea behind San Francisco Downtown Development Corporation. It seems like the burden sharing initiative is to get private capital to help you with a lot of what the city needs.
That's absolutely right.
Our business community, our nonprofit me, our arts community, we want them to be partners in San Francisco's revitalization. I'm really appreciative of the leadership of David Steepleman and that board that has formed for taking on the challenge of helping all of us bring our city back and lifted to new heights.
Is the scale of the challenge, billions of dollars and who are the big names behind it.
That will give you that money.
Well, you've seen the board, the list of board members, but it's I don't know in terms of what they're trying to raise, if it's one hundreds of millions or not, but it's going to be private and public dollars. We have to invest in small ways in big ways. We are seeing momentum starting to build in Union Square. We just got news that Zara is launching a new flagship store forty thousands feet four stories.
Nintendo is opening up.
We just had a great local b petisserie, a bakery open up in Union Square. So we're seeing wins happening every single day here in San Francisco, and the Downtown Development Corporation is going to build on those, on those on those wins.
This is the first time, you know, I've spoken since your election and since taking office. Prior to taking office, you really put emphasis on partners that were helping you right with the transition. Sam Outman was one name. What is your relationship like with the technology industry now and the biggest figureheads of that industry in this city.
Well, we launched the Partnership for San Francisco. We have twenty eight different business leaders from tech but also from you know McKenzie and from Deloitte, and from UCSF and from the San Francisco giants. We have the business community coming together. I have said to the region, I've said to the country, and I've said to the world that we are open for business again and San Francisco is
on the rise. We want a business back and we want them to be part of the community, really focused on how they can help lift up our arts and culture, our public schools and help us keep our streets safe, keep them clean, and we have gotten a tremendous response in our first ninety or so days and we look forward to partnering with them, our nonprofit community, and our friends in labor.
Miss Larry.
The main question I get for you from our audience is how you make San Francisco competitive for the technology industry new companies coming here versus Silicon Valley. Why bring a headquarters into the city of San Francisco or require staff to be in the city of San Francisco versus the broader Bay area.
Well, first off, we're the most beautiful city in the world. Second, the horsepower is here, the intellectual horsepower is here. We have great universities, including UCSF around here, and young people want to be in.
Urban environments. They want to be in San Francisco.
That's been proven true throughout history, and we're going to prove that again.
We have great arts and culture institutions.
We were just named the culinary capital of the country, so we have so much to be proud of. And we know that workers want to be here. Our CEOs who were talking to they know that their employees want to be in San Francisco. No offense to my friends down in the Peninsula, But people live in San Francisco and we want them to work here, and we do have to get competitive, but it starts with safe and clean streets. Our property crime rates have dropped thirty five percent,
Our violent crime has dropped fifteen percent. Car break ins in February the lowest in twenty two years. This is a safe American city and we want everybody coming back to work here, to play here, and to live here.
It's very How is the White House and is Tariff's policy going to impact your ability to do what you've just outlined, bring more of the technology industry to the city.
Well, listen, we are all and you all are reporting on it minute by minute. The uncertainty is impacting everybody around the globe, and so we have to plan for that here at city Hall. We're working with our department heads. We have a big budget deficit. We inherited one of
the largest deficits in our city's history. So we're working day and night to make sure that we tighten our belts, we deliver core services to our taxpayers and to our residents, making sure that we focus on public safety, focus on the behavioral health crisis, and the drug crisis that is causing people to feel the disorder on our streets. But that is all starting to improve. And so we can only control what we can control here in San Francisco,
and that's our fifteen point nine billion dollar budget. We have a one point one billion dollar budget deficit. Over the next two years. We're going to get that under control.
We're going to.
Fix our structural budget deficit, and I'm telling you we're then going to be off to the races.
Data Bricks knows it.
They just secured an office space one hundred and fifty thousand square feet open AI just open new headquarters by Chase Center. We are on the cusp of lift off here in San Francisco, and we want.
Everybody to come be a part of it.
The other threat of the administration is to pull federal funding from so called sanctuary cities. San Francisco included in that threat. Your response, please, may.
Our policies have kept us safe, and we have once again. Our property crime is down, our violent crime is down. We are one of the safest American cities going right now, and we need to get that out into the world. And that's got to be the narrative that people here from us, and so I'm focused on making sure we keep our citizens safe.
Every single day.
We're making sure that we're sending a message to those that are coming here to deal drugs. We're no longer a city where you can come to deal drugs, or to do drugs on our streets, or to sleep on our streets. We had a report just that came into me this morning. We used to have a couple hundred tenths in the tenderline. We're down to seven as of yesterday. So we are making sure that our streets are safe and clean for our residents and for our taxpayers.
And that's what I'm going to focus on.
Trade, immigration, tariffs actions by the federal government one way or another. How concerned are you about this sort of the reputational damage to San Francisco? In other words, if you are a tourist from any other jurisdiction, Asia, Canada, Latin America, or you're an entrepreneur, a startup founder, and you look at the situation with tariffs, are you worried about how that impacts someone's perception about coming to our city.
Well, I think we have been worried about that and we frankly, we lost our way for a handful of years and we took our status as a global destination for granted. And those days are over. We are focused on clean and safe streets. We're focused on winning conferences and tourists back.
We just had the NBA All Star Game weekend.
We have Super Bowl sixty coming, we have six World Cup matches coming. We had the thirty thousand people here for the Game Developers Conference. We have so many green shoots in San Francisco. I can't wait to welcome more
people from around the world. We're going to go visit different places in Europe and in Asia and invite people back to San Francisco because they are starting to hear the message from our administration that San Francisco is open for tourism, we're open for business, and that we are a city on the rise. Those days, that narrative that's from a few years ago. We have a whole new story here in San Francis and that's one of being
on the rise. And there's no better place to do business or to visit than San Francisco right now.
That was Bloomberg Technologies Ed Ludlow with San Francisco Mayor Daniel Larry.
You're listening to Bloomberg Business Week. Coming up, the founder of fair Trade USA on how tariffs affect the people who grow the things we love, you know, tea, coffee, chocolate. Yeah, I love chocolate and so much more.
This is Bloomberg.
You're listening to the Bloomberg Business Weekdaily Podcast. Catch us live weekday afternoons from two to five pm Eastern. Listen on Apple CarPlay and Android Auto with the Bloomberg Business app, or watch US live on YouTube.
Well, farmers are worried that Trump's trade war with China could cause disastrous consequences for their ability to sell soybeans. Even before the current administration took the rains, farmer income had been under pressure for a couple of years as the cost of seeds, fertilizer, and equipment went up and crop prices decline. That's what's going on here in the
US with this trade war exactly. We want to go outside of the US and talk to somebody who spent his career thinking about where products, where commodities come from, who brings them to us, how they're compensated, and the working conditions of those individuals. Paul Rice is the founder of fair Trade USA. It's the nonprofit fair trade certifier
he started nearly thirty years ago. The organization says that a product is a fair Trade certified and that means that it was quote made according to rigorous standards that protect the livelihoods of farmers, fishers, and other producer communities and the environment. He's got a new book out. It's called Every Purchase Matters How fair Trade farmers, companies, and consumers are changing the world. He joins us from Berkeley, California. Paul,
great to have you. Congratulations on the new book. It's perfect to have somebody who understands trade and tariffs. You certainly understand these things. What is your view on tariff specifically with regard to the world where you've spent the last thirty years.
Well, tariffs are bad. There's no other there's no other way to put it. Tariffs are dumb and they're going to hurt a lot of people. They're going to hurt American consumers as we all know, because the cost of things that we buy are going to go up, and it's going to hurt American business because there's retaliatory tariffs. I recently spoke with a US company that sells about forty percent of their roasted coffee into Canada. Retaliatory tariffs are going to make it harder for him to do that.
And finally, tariffs are bad for sustainability.
Oh interesting.
The onus is going to be pushed back onto a lot of developing world farmers and factory owners to absorb some of that extra cost, and it's going to pressure a lot of people to cut back on sustainability measures that you know, things like installing solar panels or you know, providing better housing for workers. So all the way around, tariffs are bad.
One of the reasons we wanted to speak to you is because the products that we see the fair trade certification on are often products that you can only get outside of the United States. And I think it's fair to say the reason the President wants to impose these tariffs are because he has, in his view, the US has been treated unfairly when it comes to trade. He wants to see manufacturing specifically and production specifically move back
to this country. Is there a disconnect in your view given that some of the stuff that could see tariffs on it, you can't actually produce here in the US. Like, help me make sense of that?
Yeah, a huge disconnect. I mean, seventy percent of Americans drink coffee. The US can't grow coffee, right, Coffee comes from Latin America and Asia and Africa. And you know, similarly, eighty percent of Americans eat bananas. Guess what, we don't grow bananas in the US. We import them. So tariffs are going to hurt Americans because all of those things that we love to drink and eat, like coffee and bananas,
the price of those are going to go up. But furthermore, you know, tariff's are really going to hurt those farmers around the world. And so you know what is quite possible is that a lot of those businesses are going to fail because they cannot absorb the tariff, which means more workers out of work. I mean, imagine what happens if unemployment goes up in Mexico. What kind of pressure that puts on the southern border. There's nothing good about this whole tariff policy.
Now when I think about Paul Supermarket, certainly here in the United States, they live on such slim margins, so they have no choice but to pass any additional cost off to consumers.
Correct, either they'll pass it on to the consumer or they'll push it back onto the producer. And that's what I mean by you know, companies in Mexico, for example, going belly up or having to lay off workers. If you know, if Whole Foods or Costco or Walmart decides to push some of that extra cost back on to the producer, then we're going to see some severe business uh disruption south of the border, which is not going
to help our our national situation at all. And on the you know, similarly, even if it all gets passed on to consumers with prices already high, will consumers pay more for imported strawberries or tomatoes, or coffee or bananas. I don't know, you know, I think it's quite possible the demand goes down, which means a ripple effect around the world that you know it's going to it's going to be a tremendous hardship for a lot of people.
Well, that brings us to your book, And as we said, it's entitled every purchase Matters how fair trade, farmers, companies, and consumers are changing the world. Fair trade I think it's thrown around. I think we'd like to buy fair trade goods, but explain to the world, just remind them what fair trade is all.
And you're talking when you ask the question, Carol, you're asking about fair trade like capital F capital T fair trade, not the concept of.
Fair trade, no exactly, which is something the president might use. But no, what fair trade?
Fair trade certified?
There?
It is.
What gets that certification, What has to happen in order to get it.
Yeah, So fair trade is a rigorous two hundred point checklist of social, labor and environmental criteria that farms and factories meet and get audited against every year in order to wear the fair trade certified label. And on this side of the market, our you know, two thousand plus market partners from Whole Foods to Target to Walmart all agree to pay a small premium back to those farmers and workers, which they then can invest in healthcare and
education and better housing. So fair trade, you know, through the lens of global development, it's a market based approach to global poverty and to protecting the planet for us the consumer. Increasingly, consumers want to know that there's no child labor in our chocolate bar and that the environment wasn't destroyed in the production of our coffee. So fair trade is a way that we as consumers can feel reassured that the products we're consuming are produced in a responsible and sustainable way.
What are the checks that are in place to make sure these sustainable practices are followed when the folks from your organization are not watching, when they're not there visiting these plants.
So our one million plus farms and factories are audited every year. The auditors talk with the workers, they may visit the production sites. They do a rigorous inspection, and that happens every year. And in addition, of course, all of the brand partners or many of the brand partners are visiting those farms and factories every year. So it's
an incredibly rigorous oversight. And the producers, for their own part, tend to be producers that are really bought into the notion of greater responsibility and the getting this premium, So producers don't want to run the risk of losing the annual premium they get. So there's a real alignment of incentives where the producer, the farmer, or the factory owners get more money, the brands get a more secure and
reliable supply. Chain, and the consumer gets a product that makes us feel good because it's helping lift workers out of poverty, it's ensuring fair wages, and it's helping to protect the environment.
I didn't know Driscolls had kind of gone through a little bit of a path. Driscals. I think about strawberries right like I.
Mean, every berry, every berry is just close.
It's the organic, it's the non organic. We are Bloomberg, and you know, we think, Tim and I think a lot about profitability. Obviously right here we are in earning season, but at the same time, the ability to be a good company, be a good corporate citizen. Do well, what is kind of the financial story of sustainability or fair trade practices?
Yeah, I love I love this question, you know, because I spent eleven years working with coffee farmers in the mountains of Nicaragua in my twenties and then moved back here to start fair trade. And I've always felt that fair trade would never work for the farmers if it
didn't also work for business. So I've spent you know, the better part of the last thirty years working directly with companies to develop a strong business case for sourcing in a more sustainable way, not just because it's the right thing to do, but because it creates value for the firm, right what Michael Porter at Harvard calls shared value.
Right.
So there's value for the farmer, for the worker, for the planet, but also there's supply chain resilience for the company, there's brand differentiation for the company, and there's you know, that emotional gratification as a consumer that we feel when we buy something knowing that it did no harm. Give you a recent example, Walmart piloted fair trade tomatoes and saw their sales go up by three percent when the
label went on the package. Now, who would have thought that a Walmart consumer would care about tomato farm workers in the developing world, And in fact they do. And so it's just an indication of the business case for fair trade right that consumers are moving in this direction. They're voting with their dollars, if you will, for the kind of world they want to see. They're looking for more socially and environmentally responsible products. And quite frankly, this
macro trend is politics proof. I just wrote a piece for a Wall Street Journal and OpEd piece entitled will sustainability survive Trump's second term? And the reality is the business community is moving in this direction, not just because it's the right thing to do, but because it's better business, and it is better for business.
Paul, is there anything that cannot be produced, in your view, in a fair trade way right now?
Can an iPhone? I don't even know that.
We would love to work with Apple on fair trade iPhones. We're not there yet. But over the last twenty six years, you know, we started with coffee, and then year after year we engaged with lighthouse brands, pioneering brands who wanted to take us into their industry. So now we work in apparel, we work in cosmetics, we work in you know, in furniture with Williams Sonoma Inc. And we're certifying seafood, we're certifying dairy. We sort of buy farms and factories
in the US now, not just abroad. And so you know, our vision is fair trade for all, and it's the notion that any and all supply chains, domestic or international, can be can embrace responsible sourcing practices. And so yeah, stay tuned. Maybe next year you'll bring me on when we have fair trade iPhones.
All right, we will do that. We will do that, We will hold you to it, Paul, Thank you so much. Paul Rice glad we could finally get to you, founder of Fairtrade USA. His book Every Purchase Matters How fair trade farmers, companies, and consumers are changing the world.
This is the Bloomberg Business Week Daily Podcast. Listen live each weekday starting at two pm Eastern on Apple car Play 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 eleven.
Thirty, a carefully selected playlist, soft golden lighting, old school Gotham decor, and waiters with studiously casual attitudes count me in. It's just some of the things many New York City restaurants are doing just to become the buzziest place in the city, and places I probably can't get into.
I mean, waiters with cool sweaters who you want to hang out with. Totally with us on that and more. Is the editor of Bloomberg Pursuits, Chris Rouser and Bloomberg Pursuits Food editor Kate Crator. She is calling in from London. Kate, how do you get a reservation at one of the buzziest restaurants in the buzziest city for food in the entire we we just cut.
To the Chase man him.
You're asking the right question, and I wish I could say it's like patience practice, but you know what you do. You have to be intrepid. You have to be ready to stand on a line at five o'clock at some of these places. Because it's not at tree c which is an offsit of Carbone, which everybody knows is one
of the toughest reservations in New York. Treecy is that on blasts they have they can have up to seven four hundred people on a wait list on any given night, so you're you're going to have a lot of company when you try to get in.
Well, it's completely insane. The reason we're talking to Kate about getting a reservation at one of the hottest restaurants in the hottest city for food right now, which Kate argues is actually New York City, which it is is because this is the Pursuit's food issue. Chris Rouser is the editor of Bloomberg Pursuit. It's when you put together something like this, Chris, what do you want to include?
Kate and I sit down. Let's I want to say six months ago, but really it was. And yeah, you know, sometimes at Tercy and we talk about coming up with a great mix of stories about food, drinks, and restaurants, and sometimes there's a bit of cooking. Sometimes there's a bit of buying the stuff that you eat your food off of. And this year we wanted to open up with a story about hot restaurants because New York really
is having like a hot restaurant moments. It's been a long time since we've had so many buzzy restaurants that people are killing themselves to get into, because you know, since the pandemic, we had a long recovery in terms of restaurants in the city and now it's just like it has not been this way in decades.
Okay, that's where I want to go. I remember like talking to you just at the start of the pandemic and through it and just kind of like your heart was broken, because like there was just such a moment in New York City in terms of restaurants, like a real and the pandemic just kind of killed it.
You're exactly right, And especially now on the side of the pandemic, people are still craving social interaction, and in the city like New York where people have microscopic kitchens and no places, you know, they entertain in restaurants and they want to hang out in restaurants, and that's just been put on blast in the past couple of years. And right now it's just Simon Kim who has like two of New York's tighest restaurants. One's called Koko Doc
and the other is Coat. It's this really groovy Korean restaurant. He said it so well. He said, you can have like an MX Black card or whatever's the highest card. You could have the most power JP Morgan account, but nothing says you have social clout like an eight pm reservation of these places. And it's true, It's totally.
True, so true, Kate.
One of the things that I loved in the story is when you talk to Angie Rito, who is the co chef and co owner of Don Angie, and she made the point that because of Instagram and TikTok and other social media, so many more people have a view into these restaurants and feel like they should be able
to participate in these cool restaurants. So like Don Angie has this amazing lasagna where and if you look at it, it's these spirals and everyone takes a picture of it, and then everyone's like, oh my god, how'd you get in? It just has brought the community of people to a much bigger level, and then so the competition to get in is so much deeper, right.
Yeah, I know that's an excellent point. It really has broadened. TikTok has been its we sort of call it the TikTok effect, and you know, you just say it and you think social media, but really what that's done is created an even bigger ground swell, and you have people
who are willing to stay online. You know, like maybe maybe a lot of finance people want to have that eight pm reservation, but you have this whole universe of other people who have seen it now, who've seen like this food, like those awesome lasagna pin wheels that Chris just talked about, and they think I want that, like I want to taste it, I want to take a picture of it, And that has indeed expanded the all exponentially.
They are these sort of sort of commonalities that you find in these restaurants right now that didn't exist a few years ago. I mean, you talk about the idea of waiting fifteen minutes to order a drink at a restaurant a few years ago. That's not the service that you get right now. There's a lot of culling that happens right now. What's the environment, what are the commonalities there?
Yeah, that's another good point these places. It used to be like at a place like Balsazar, which is historically one of the cities like hot dining rooms and hangouts, there would be a huge crowd at the bar. But at a place like the Corner Store, which is another one of these super hot restaurants, you can't get past the matre d. You can't get past the front door if you don't have a reservation, because they don't want a stacked bar. They want everyone to feel like they're
having a great time. They don't want them to be jostled, but they want them One thing that's also was one thing I learned from reporting the story is both rich Teresa who has that restaurant Tarsi, and then Eugene Ram who has the Corner Store. We're saying they treat every night like a play, like a musical, and you're the star. You're the customer or the star every night, and so
it's all really well orchestrated. And if you want it to be a fantastic night for people, you don't want them to be waiting twenty minutes to get their martini.
I thought what was interesting too, is that, right, there's one thing to kind of have a lot of buzz in the beginning, right, and everybody wants to go. But the real struggle or the real mission is to kind of keep that buzz going. And so these restaurants though, have to make sure they cultivate some regulars.
Right, Yeah, no exactly, And that's one thing. Bridges Downtown yet another one of these restaurants, which is right in the corner of Chinatown. So it's not like a power neighborhood necessarily, although it's become quite cool, but they always leave room for walkins because they want to have a neighborhood crowd and they know that. They know that. You know, if you're shy, if you're like cooking on like a white hot flame, at some point that flame it can't last.
So you want to have like steady heat, and you want that just to go on and on. And that's what's happened to don Angie. Like it's been around like for eight years maybe now, and it's still going strong, and it still has like super crowds of people trying to get in or who want to get in, and it has like very loyal following. And the way you do that is by making customers feel special all the time every night.
I recently went to don Angie and the food is incredible. No, it's just like it's so good after all this time. And a lot of it is the vibes as Kate's describing, Like you go in, it's a lovely experience walking in, and then the staff is really nice. It's not that vibe of a sort of oh, I'm in a really fancy French restaurant and like the waiters have accents and I don't know what to say and I'm using the wrong utensils. Like it's very casual. The lighting is super
golden and warm. Everyone looks great. The food is often comfort food, so like at Corner Store, there are these amazing like pizza rolls, which is like the very best version of like a Totono's pizza roll in your story and it's just and Teresa, is that too? It's that's these comfort food things with a twist, and it just is such a nice, relaxing, unfussy vibe.
All Right, I gotta talk about it. We gotta talk about butter, because I gotta tell you, one of my favorite things is a good glass of red wine, some great like fresh warm bread and butter, and I love butter with olive oil. What the heck's going on with butter, Kate, I can't believe it's butter.
Yeah, that would have been a good headline for this too. Butter butters, butters having a good moment, and boy especially is having a good moment. They're called compound butters or flavor flavored butters, and chefs are using them a sort of a shortcut, a secret weapon. The cheff Laurent Torundel, who has Lamico in New York and then also Elsie Steak and Seafood down in Miami. It's really popular, like
hangout on Miami Beach. He uses he makes a cowboy butter that's got like all these herbs and some spices in it, and he plops it on every steak and it's just instead of like worrying about all these sauces, it's something you can make ahead. It cuts your kitchen time, it probably cuts labor down to and so it's become
a sort of secret weapon that chefs are doing. At this restaurant in La Joya called the Coke, they do a chicken skin like they make this like awesome, like like fry fry fried chicken skin and then make that a butter that they serve with bread. And so you think, like bread service is fine as it is, and then you get to have this next level butter and you think and then that changes everything.
That's that sounds so incredible.
Plus you're in La Joya.
Do you know? That's what's interesting too, is I have noticed at restaurants that there's like often a bread meat like choice, right, and there's like different butters with it or something. It's like become a thing. Hey, just thirty seconds the hotel dinner party, what's going on?
Yeah, I think that's I think that's another really fun trend. You know, it used to be that hotels went out of their way to keep to keep people separate, you know, to not to make sure you didn't have to sit
with somebody else. But now they're mixing it up and they're doing it everywhere, Like in Florence at twenty five hours they have a new hotel there or a newishowell there, but they they installed that star butcher, Dario Tuccini, and they do they have like a big table and they have one seating a night, and so you can have these sort of like jet lag tourists sitting down with
locals who think he's the local butcher. And so you have all these fun conversations and it fosters, like, you know, a sense of authenticity and experience, which is what so many people want when they travel. So it's just a super added bonus. It's really fun thing to look out for now.
And I gotta say, there's also a section and when the boss has a snack attack and it you guys talk to some executives and what they like everything from Dorita's to nuts.
And so and so that guy wants peanut butter.
All these CEOs came back with like gorp and dried magagos. And I was like, Kate, find somebody who eats Dorito's.
It's true, a real person.
Okay, what's your favorite snack when you get hungry at work?
You know what?
That's a funny, Like I was thinking about that when Chris said that, because I was like, I think officially, like on the record, I would be like, oh I reach for some carrots, but you know I would I can find I would like look for the best chocolate situation.
I could find, Chris Browser, mine's the chocolate covered almonds that they have upstairs.
Only, but that only comes out in the afternoon when we're on air.
So yeah, so next.
Time you will you please delivery? Returning to we're not joking Carol Masser, I know it's cheerios for Carol.
I do love cheerios. And you know what, Tim Tim Moore in the studio doing our live show, and he like pulls out a sandwich.
Yeahiled eggs, My snacks are full meals.
It's like I look at him and he's got this whole thing full sandwich. Kate Creator, you have made our day, our week, our month.
He've made my day. Oh my god. Yeah, I'm floating.
Be well, Be well, kiddo. Our thanks to both of them, Dynamic duo. We love talking with Chris Rouser. He's Bloomberg Pursuits editor and of course Bloomberg Pursuits Food editor. Kate Crator joining us from Lennon. Guys, thank you so much.
See you in New York restaurant. Bye.
Hi.
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