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Hey, now to the ominous tone when it comes to the macro. As US consumer sentiment slides to one of the lowest readings on record, and his economists anticipate President Trump's trade war makes a US recession almost a coin flip. We had to Washington, DC into Bloomberg's Michael McKee. He's a Bloomberg TV and Radio international economics and policy correspondent. He's live in our DC bureau right now. Mike, you're
wrapping up the meetings that I am at. The imath I want to get from you just the general consensus, the general tone, the vibes, for lack of a better term.
But before that, I.
Want to bring up the umish data that we got earlier today and really what it told us.
What was the signal there?
Well, the signal is the same as it was with the preliminary numbers. These were a little bit better, but they basically say Americans don't think the economy is in good shape and they're worried about where it's going from here. The question always is with these sentiment surveys is do they translate that into action?
Do they start pulling back?
The inflation expectations number is certainly not good, little bit better by a basis point than they were in the preliminary but they're still very high. And if Americans are worried about prices going up and they are worried about the economy, they might pull back on their spending. And then you've got a demand problem that slows the economy at a time when tariffs might be something of a shock on the supply side and push up inflation.
And that's the nightmare scenario.
So you.
Can sort of game out bad news from this report if you want to go far enough.
All right, So when do you just kind of speculate that it's going to turn into bad actions? I mean, is there a reading mic that you say, Okay, we're there. People are definitely holding back and it doesn't look good.
Well, you'll have to look at the consumer spending numbers, both the retail sales numbers and of course the spending numbers that come at the end of the month. But there was a study downe a couple of years ago by Danny Blanchflower, you know, well, he's an economics professor up at Dartmouth College that shows there is a strong correlation between big drops in consumer confidence and recessions.
And I have been at.
The other end of his emails where he's been saying lately, I told you, and this is what's going to happen.
So we shall see if that does indeed prove out.
Okay, I promised we'd talk about the vibes don in Washington. You've been there the entire week. I'm sure the weather has been great, spring like nice in Washington right now.
What about the vibes though?
What's the takeaway from the Spring IMF meetings and really everyone that you've run into, everyone you've heard from.
I think everybody just wants to get out of this town. As the talk, as you say, no matter what comes up, it all ends up back on tariffs and what the US role in the global economy is going to be going forward. And the problem for everybody besides just the basics of tariffs are bad for economics, is that the uncertainty caused by the presidents waffling around on tariffs and
what they're going to be is really paralyzed everybody. Countries are trying to figure out how they can defend themselves and the protect their economies from tariffs, but they don't know what the tariffs are actually going to be, what they'll be applied upon, when they'll be applied. So it's very hard for anyone to get a clear idea of where we go from here. And of course we're all in this echo chamber where that's all what gets talked about. I think people may be glad when this event is over.
Well that's interesting too, Like I do wonder when the echo chamber, like we just kind of are in this vacuum, we're like bad, bad, bad. Having said that, Bloomberg did their own survey of economists and they basically are saying a couple of things. They say, the US economy set to expand one point four percent this year, what and a half percent next year? Not great compared with two percent one point nine percent in the last month's poll, the median respondent now sees a forty five percent chance
of a downturn in the next twelve months. That's up from thirty percent in March. You're the expert here. I know it's all just numbers. I know it's just a survey, but you go back a few months, we really weren't talking us recession, and now it's part of the narrative.
Yeah, I feel like we're playing family feud here. The survey reflects basically the feeling on Wall Street and among almost all economists that a recession is not necessarily likely, but the odds of it have gone up significantly, and a lot of it is going to depend on what consumers do. We also see the beginnings of a real slowdown in business investment. We saw that in some of
the categories of durable goods. We had a big durable goods number yesterday based on Boeing sales, but machinery sales, machinery orders, computer orders, things like that fell during the month. So if businesses are pulling back, and FED officials tell us that that's what they're hearing as well, then the odds go up significantly that recession could occur.
It wouldn't take much to tip us into what.
How big of a grain of salt should we take surveys or not surveys such as this, but what economists think will happen. And I think back to what two three years ago at this point, Mike, when pretty much everyone was saying we'd be in recession and that didn't end up happening.
Well, I think the difference this time is economists know that this is sort of an impossible situation to be in. And I've talked to a lot of them this week who all say that I'm lucky because I get to be an economist who doesn't have to make a forecast. They get paid, they get paid for making forecasts, and they don't have a whole lot of good data to make a forecast upon, so it's very difficult for them to know whether this forty five percent is a good strong number or not. I think as we go along
and get more hard data, they'll refine their views. But for right now, I think they're being They're just being cautious because the odds are the story is lining up that we could go into recession, but it doesn't necessarily mean that's going to happen.
Right, and at least putting out some numbers, right, They're not saying well, we could go this way or we go this way. I mean, it's like kind of an interesting environment, as you know with corporate earnings, where we're getting some CEOs or some c suite. We keep bringing up United Airlines, but I think there's a few others where are saying well, it could go this way, or it could go this way, depending on the tariffs and depending on the US economy. Mike the Fed speak, you
caught up with Fed Governor Waller. I'm just curious how you were thinking about what we were hearing. We're getting ready to go right into a quiet period when it comes to the FED as well.
Yeah, this is going to be an uneventful one and an uneventful FED meeting because they don't know they're not going.
To make any change at the main meeting.
The question then becomes how fast do we get enough data for them to make a decision. Waller said that he wouldn't expect anything until we get June data, which comes out in July.
Which would put the next move.
Perhaps it wouldn't be in June, it would be maybe the July thirtieth meeting, or even September seventeenth, and I think that Waller is leaning towards the fall before you have enough data to show what's going on, because companies are going to move slowly on all of this. If their input prices don't go shooting up, but just start to rise, maybe they'll eat a little bit of it to.
Keep share of business.
And if the economy slows, they may be a little more reluctant to let people go because it was so hard to find them before. So we'll have to see how the data play out. They know they'll be behind the curve, but there isn't much else they can do about it at this point.
We got anecdotes from the Beige Book this week. We know the data that the Federal Reserve looks at as they go into their quiet period.
How do they look though.
At company earnings? Because we're going to hear from some big ones next week. Are they watching what companies like large megacap tech public companies are telling investors?
Sure, And of course they're always talking to the CEOs of companies, especially the bank presidents in their districts. They don't particularly care I think about what the earnings per share is, but the guidance is what's giving the Fed some kind of clue as to what's going on. And when you have what Delta and American pulled their guidance, and you mentioned United setting up two scenario guidance that suggests that the businesses are.
Going to sit on the sidelines for a while.
And if that's the case, then the economy slows because it doesn't get the stimulus from investment.
Are we seeing any shift? Next week is a big week when it comes to the job market, right, we get the monthly read from the government on Friday, That's what we'll be talking about one week from now, and then we get obviously some lead.
Ups to jolts action coming earlier, a little.
Bit of other stuff. So I am how important is it when I feel like it's almost getting to the point. Yes, we know the Fed obviously is on inflation watch, but people are kind of maybe debating are they gonna have to start watching the labor market more for signs of weakness, signs of growth slowing down? So I'm just curious how important the numbers are next week. I know they're always important, but are they a little bit more important.
Next week, I think it'll be a little more interesting, but not necessarily more important. You know, Chris Waller said yesterday to me that he thinks that unemployment is going to be a more important indicator of where the economy is going than inflation, because his belief is inflation's a one time move, but if you start seeing people getting
laid off, that tends to pick up speed. The thing about this week coming up the April numbers is we don't have a clear picture of how the job cuts the president has forced on the federal government are playing out.
Yet.
We don't really know how many people have been fired. I'm not sure all the people who've been fired know they've been fired. And we don't have a great idea yet of what the spillover into the contracting world is now. So there should be some impact, It should be noticeable, but is it going to be big enough to make a difference.
Probably not.
And the longer term, immigration has come to a stop, and so the labor market should start to fall, which changes the denominator on the unemployment rate and could keep the unemployment rate from moving up as quickly. So this week or this coming week, it'll be interesting to see what clues we get out of this, But it won't be determinative it anyway, because they're not going to move in May.
Mike, just twenty seconds, Tourston slockout with the note today about US trade between China and China, trade between China and the US collapsing, could see empty shells COVID, Like, how big of a deal would that be if that happens?
Just twenty seconds.
Oh, if that happens, that'll be a big deal because that's the kind of thing that Americans notice right away, not only prices, but the availability of goods.
So that's something to be concerned about.
We'll see if the numbers continue on those container ships coming in.
Yep, funny, not funny. The hunt for toilet paper and so much more. We all remember it all too, Michael mcgae.
You Ward in the basement. I know that about you. So we're all going over to the masterhousehold if we run out of TP.
Michael McKee he is, of course TV and radio international Economics and Policy correspondent, coming up, the CFO of Huntington Bank Shares.
You're listening to the Bloomberg Business Week podcast Catch us Live Weekday afternoons from two to five These during listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
Huntington Bank Shares reported earnings last week, some analyst noting how the regional bank based in Ohio seemed to be more optimistic about growth than its peers for the first quarter, the bank being on earnings and interest margin and more. It also approved a one billion dollar share buy back. The stock rally three percent on that release, but the stock overall year to date is down about eleven percent. In our weekly check in on cfo's chief financial officers
back with us as Zach Wasserman. He's Senior executive VPCFO of Huntington Bank Shares. It is the holding company of the consumer and business regional bank, Huntington National Bank. It's got locations and a handful of states we'd like to remind you Ohio, Minnesota, North and South Carolina, and a few more. And Zach joining us from Columbus, Ohio. Also with us is Nita Trentman, senior editor at Bloomberg News, the author of the CFO Briefing Newsletter, which you can
get at Bloomberg dot com. Slash CFO briefing. It comes out a new one every Sunday, and Zach is among those featured in the newsletter out on Sunday. Zach, you know, welcome. Good to have you both, Zach, We want to get right to it. Great to have you here. I think we talked with you in about mid March last go round, and that was before so called Liberation Day. What's changed as a result of what we've got from the White House and the volatility and uncertainty that has followed.
Yeah, well, it's triving to be back with you, and certainly it's been an eventful first start of the start of the second quarter here, but for us, it's continued business as usual for the most part. We had, as you noted, a really strong first quarter. It was, frankly, in my finance career, within the top five of any quarter I've ever been a part of. You know, Revenues growing ten percent, earnings per share up twenty percent, with
really strong customer acquisition trends, and great credit quality. So a lot of momentum actually carrying into the second quarter, you know, without being said. One of the ways we characterized the sentiment right now on our earnings call was cautious optimism. You know, certainly more uncertain the today than was the case earlier in the year. With that being said, we're still seeing growth, you know. Indication of that is
loan pipelines. Our forward projection of likely loan closings actually higher in the first two weeks of the second quarter here from the from the end of the first quarter. So still seeing that come through, notwithstanding a bit more uncertainty, for sure.
Given that you have a regional focus, what would you say is the biggest potential impact from tariff policy on your business? We talk about some of the bigger banks, and certainly you know that the issues around M and A and sort of a pause when it comes to IPOs that have been pulled that affects their capital markets business. But that's not necessarily where where you guys are playing. What are the biggest risks based on what's happening in Washington to your business.
It's a great question.
It's a great question, Tim, and I think you know, for the most part, it is the uncertainty itself. You know, we're seeing somewhat delays in the decision making process that affects loan activity in our regional bank, for example. I was just talking with our key executive there mentioned that the loan closing process is taking about six days longer, about ten percent longer maybe than would historically have been
the case. We're seeing some of our segments that are that really service companies who are keyed to durable goods, particularly those that you know where they have a foreign supply chain, that we're seeing some impacts in. We do have an m and a advisory business that supports middle market, largely private companies, and we're seeing somewhat slower deal closing
process there. So you know, we're seeing to some to read those impacts and that if that uncertainty continues, we would expect to see that those impacts continue and probably magnify. So absolutely we'd like to see a resolution of some of these uncertainty. With that being said, as I know, even my first answer, we are seeing generally growth. You know, loans for us into the first quarter grew two percent from the end of last year, and our forecast for Q two the quarter in right now is we're one
to two percent growth. So overall still seeing growth, but at the margin, you know, some of those impacts I'm Zach.
To follow up on that. One of the themes in the upcoming edition of the briefing will be controlling the controllables, which is a theme that is coming up in many earning scolls that we're seeing these days, coming in wondering from your perspective, like, if you're looking at your business, what are the items that you can actually control?
Yeah, it's a great question, Nina, and I think, you know, I think one of the things that's critical for us, and to some degree, situations like this really reveal which
companies are managed the most rigorously. And we always think about multiple scenarios and scenario planning with contingent actions, and so to some degree, you know, this scenario that's playing out right now is part and partial to the way we manage the company all the time, always thinking about what could potentially come to pass and how we'll pull the levers of the business to maintain you know, strong relative performance in any of them. With that being said,
you know, I always think about three things. Firstly, the key pillars of financial strength for the bank, capital, liquidity, and credit, and uh, you know, those are the things that under all circumstances we want to have strength in and you know, in an environment like this, we we know how we will operate to maintain those those areas of strength. Now, the second is the growth orientation of the firm. What are the goals that we're putting out
to the organization. Where do we want folks focused, and what's the pace of our investments into key growth initiatives. And then the last thing is how can we be consistent with our customer base. You know, fundamentally one of the most important things for a bank is to be there for the for our customers through all cycles. And so for us that consistency of customer interaction, consistency of underwriting, and really making sure that for the customers we're always there to support them.
Right, Just wondering, actually you pointed out the importance of credit and liquidity in the current situation. If we go back a few weeks time, basically, ever since the April two terrorifts were announced, we've seen a strong sell off in US assets. We've seen investors questioning sort of the stability of the US financial system, and we're also seeing corrects emerging around institutions here in the US with with
questions around the rule of law. Do you process so I'm wondering from a from a CFO perspective, how do you think about those impacts to your business now and also for the longer term.
Yeah, it's a it's a great question. Look, I think to some degree, we see ourselves as a as a bastion of strength at times when there is those kind of uncertainties, you can count on us. As I know it just just a minute ago. Our decision making criteria are going to be are we going to be consistent? We're there to provide advice and counsel to our to our customers. IM it's this time. I mean, to some degree,
this actually is a time that that bankers relish. And don't get me wrong, no one wants uncertainty and potential challenges to the economic environment. But this is the time
when we really prove our worth to our customers. We help them think through how are they going to address potential challenges to their supply chain, how are they going to continue to address the level of interest rates which have clearly risen it And if inflation does re emerge and begin to reaccelerate, how are they going to address that?
So it really is a sort of go back to the core focus on customers, focus on their best interests, and really help them to be ready amongst this potential uncertainty.
Hey, one thing I want to ask you, just to follow up Zach on Nina's question, and especially when it comes to the rule of law, we are living in an environment where it's being tested. We're seeing a consolidation of power by the president in the White House. We have a story this morning that is among our most read on the Bloomberg about a state judge in Wisconsin arrested by federal agents after an investigation into whether she obstructed officials trying to detain an undocumented in and I
guess whether that was legal or illegal. The point is, we're living in a very different at this point, it feels like the United States of America. So how do you think about it As a CFO. We're looking to our leaders trying to understand the way forward, and how do you think about what could be a very different, potentially country going forward and operating within one.
Yeah, it's hard to speculate on how things will go and how the operating environment could potentially change. You know, we walked into this year with an expectation that the regulatory environment would continue to evolve and be very constructive to growth, and so we're certainly looking to see that. But you know, we try to get out of the game of speculation and really just continue to focus on the core of what a bank is, which.
Is forgive me forgiving, customer, Zach, forgive me, not even speculation. I mean, we're seeing things happen that, you know, it's not business as usual in terms of how things are run. And I just I am curious and we're really on folks like you and all leaders that come on on Bloomberg just to try to understand. Is it upsetting and hard for leaders too to see things not kind of business as usual? Potentially you know, becoming the target of the White House.
Yeah.
Look, I mean I think we want to see certainty and clarity and and to have an operating environment which is clear, and so to the extent that it's not, that's not helpful for us. With that being said, and again I kind of come back to what's the role of our company. We're not a legislative body, we're not a political entity. We're there to help serve our customers.
And this is the time when, to some degree, you know, the culture of hunting and certainly is all about service, and we just double down on that at times like this and just try to be that that bastion of strength, that pillar that people could always count on, and that's what we draw inspiration.
Well, speaking of service, you mainly operate in the Midwest, and I'm wondering how you're servicing manufacturing and auto parts and auto related clients and how those are intending to manage supply chain challenges. What can you tell us about that? What color can you give us some what you've heard from them?
Yeah, Look, I think certainly, sort of as I noted earlier, the folks that are really the most keyed toward foreign supply chains, you know, there is some concern and I think it's affecting decision making, it's affecting some of their investment plans. With that being said, I also generally speaking, I think we're seeing from our customer base that.
They this is not totally unexpected.
You know, we saw from the first Trump administration the tariffs were part of a major part of the agenda, and certainly during the election cycle that that came up as a major likely focused and so folks knew that something was coming and they were beginning to think through that. And so you know, for the most part, we're seeing us calm, more calm maybe than the headlines generally would indicate.
And I think, you know, likewise, if you think of the commercial sector, you know, there's been a number of challenges over the last five years of COVID, rapid rise of interest rates, high levels of inflation, and so I think for the most part we're seeing resiliency, more resiliency perhaps than the headlines would would imply. I don't want
to be Pollyanna here. If this uncertainty continued for a long period of time, you would see things more markedly deteriorate, but thus far we have not seen that.
That's why we like to talk to folks like you, Zach, thank you so much. Really appreciate really weighing in on our world environment. And like we said, he's got a very optimistic view, and we saw that play out in their earnings and certainly investor reaction. Zach Wassterman, CFO of Huntington Bank Shares and our own inga trpment, senior editor at Bloomberg News. Check out the CFO Briefing newsletter, A new one out on Sunday.
This is Bloomberg. This is the Bloomberg Business Week Podcast. Listen live each weekday starting at two pm Eastern on Applecarplay and Android Auto with the bloom Business Up. You can also listen live on Amazon Alexa from our flagship New York station, Just say Alexa Play Bloomberg eleven thirty.
We're going to talk about someone who has been a fixture, no doubt about it, of the global investment world. His financial moves watch closely. One of the very successful and uber rich members among Middle East royalty and yet, as Bloomberg's Devin Pendleton rights, Prince Awilid Bintellal is one of a kind figure among the rich and the powerful in the Middle East Skulf region. Devon has been at his top floor office in Kingdom's Center. It's a landmark of
the rial skyline several times. She is Bloomberg Newswalth reporter. Her Bloomberg exclusive on Prince Abilid is Today's Bloomberg Big Take. It's also among the most read on the Bloomberg on this Friday. She joins us here in studio, really great story about someone that I feel like. At one point, Devin, we talked about him constantly over and over again in terms of his investments, and then you know, he kind of got quiet. And then there, of course was a
big thing that happened over in Saudi Arabia. Take us back to kind of who he is and then kind of the moment, it feels like things changed.
Sure well, thank you, thank you, Carol, thank you Tim. So Prince aghlid Is he's a Saudi billionaire and he's a member of the royal family. I mean, the royal family is huge, there's thousands of members. So he is related to the king, but not like in the kingly line of succession as we think of it, but a prominent member and very very entrepreneurial from a young age. He attended college in the US and started investing here
and there in Saudi Arabia. But he really the reason we all talk about him and know him is that he made a bet on Citibank back in the eighties when it was really struggling. That bet did tremendously well. For a long time, he was city's biggest shareholder. He went on to form relationships with Rupert Murdoch, with Bill Gates,
he bought a steak in the four seasons. He bought a steak in news Corps, he had a steak in Disney, he funded euro Disney, I mean all over, and also very prominent hotel investors and amazing properties and just like a larger than life character. He was with a fixture, like you said, always showing up on financial television, loved to be quoted. He always traveled with a motorcade, like he had an entourage with him. Incredibly lavish lifestyle.
And then pretty much overnight November twenty seventeen, everything changed.
Everything changed. So in November twenty seventeen, this was about a year and a half after King Salman became King of Saudi Arabia and his son, Crown Prince Muhammad bin Salman was really just basically running the show in Saudi Arabia.
Incredibly young and ambitious guy, and he locked up hundreds of the elite of Saudi Arabia, not just businessmen, but also governors, government ministers, prominent people, philanthropists, business people, detained them at the RITZ, and that included Prince Albhalid, which was a big deal because Prince A will lead at that point, like kind of prior to this moment was
really like for the US. I mean, maybe the most famous Saudi, Like this was what a lot of investors thought of, or Wall Street thought of if you mentioned Saudi Arabia, because Saudi too was so private and closed off for so long, like it was difficult to crack. They weren't investing like it is, nothing like it is today. Albaalid was detained there for eighty three days. Nobody really
heard from him, that they took everybody's phones. After eighty three days, he was released, and Bloomberg actually had the first interview with him. When he came out, he said, everything's good. He didn't look so great, he was quite thin, but he assured us everything's good. He said he'd struck an agreement with the government. He couldn't say anything about it, but just said, you know, business is normal, and it
was like, okay, all right, business as usual. But he has a very very big, prominent investment company called Kingdom Holding, which has stakes all over the world. And he pretty much went quiet, like after he got out of the ritz. He gave that one interview and then didn't nearly have the same public profile that he had before.
What I love is you say the terms of the agreement were secret, but it was clear the government, the Saudi government had a close interest in his portfolios portfolio with his stakes in hotels, aviation, and entertainment, all sectors overlapping with Vision twenty thirty. So is there any what do folks say that they wanted to exactly know what he was invested in? So what do we know?
So we know? I mean he owned ninety five percent of Kingdom Holding this big publicly traded conglomerate before and in twenty twenty two the Public Investment Fund or PIFF bought roughly eighteen percent of it, so they actively had a stake at this point. I mean, they definitely had
an interest before. And I think a big reason that this his investment empire was interesting to them is he for long time is invested in hotels and airlines and entertainment and these are all core sectors that are very important for Vision twenty thirty as they try to diverse Fy away from oil and you know, become a tourist destination, and he's very useful for that. Like he's been a
hotel investor for a really long time. He has relationships with Bill Gates in the four seasons of Management and so You've seen a lot more domestic investment by all the lead in very specific projects.
Some of those projects include projects by none other than Elon Musk. And I was pretty taken by one of the one of the things that he told you. He said to you in February when you were having one of your Zoom calls. Musk is de facto vice president and running the show.
In Washington, Yes, and he was saying that in the context of talking about the value of X at that point, because you know, from we're all looking at X and thinking, gosh, its value has kind of really fallen, like since Elon took it private and he saw so many advertisers flee that had a big impact. He was roughly forty four billion dollar gross valuation when he bought it. Abili's had
tremendous conviction that it was worth more than that. So, you know, one of the first things he said to me was like, hey, you know this is this is a valuable entity and you can't say that it's not. Look at where Elon Musk is now, Okay, it you know, speaks for itself.
I mean, how close are they do we know? Like are It's obviously there's investment connections and a relationship. But I mean, how close are they I mean he.
Told me they speak every week. They didn't know each other until twenty twenty two. Abili was a longtime investor in Twitter before it was even a public company, and he didn't really know Musk until Musk stepped in to buy it. But Abili totally immediately threw his hat in the ring, said I'm in. You know, I'm going to roll my stake over.
Let's do this.
So that meant a lot to Musk, and he said they speak regularly.
Why do this story now?
Because it was so marked, like after so many years of him being quiet, all of a sudden, he is taking to the airwaves in a way that we haven't seen in so long. And it really was reminiscent of the Abilid we used to know. You know, just this big, colorful guy with some very important differences.
What's his relationship with the president?
So he is a supporter, He has a long history with him. Actually in this time in the eighties and nineties, you know, go Go Wall Street. When Trump was mired in debt in the early nineties, Abilid kind of bailed him out. He bought his yacht, which he still owns. A few years later, Trump's still in debt and Abilid and another Singaporean billionaire bought his stake in the plaza. So he says, Oh, he loves to say that I know how to negotiate with Trump. I know what he's doing.
You know, I've dealt with him before with the tariffs for example. You know when Trump was running for president of twenty sixteen, the run up to that, he had his muvelim Van. Prince Avolide is not a fan of that. They actually sparred on tw it, but very quick they papered things over. You know, he's very happy with his treatment of the Arab world.
Fascinating read. Highly recommend everybody to check it out on the Bloomberg. Devin, thank you, I really appreciate it, Devin Pendleton. She's Bloomberg News Wealth reporter. This story is among the most read. It is the Bloomberg Big Take. Find it at Bloomberg dot com or on the Bloomberg.
You're listening to the Bloomberg Business Week podcast. Catch us live weekday afternoons from two to five these during listen on Applecarplay and Android Auto with the Bloomberg Business app or watch us live on YouTube.
Broomcle how about you let me drive?
Oh no, no, no no, this is not a toy.
Honey, please, I'll do the gravels. Listen, I want to drive. It's a good question.
Good.
This is the drive to the clothes punks.
Well run on Bloomberg Radio.
All right, everybody, just got about any eineteen and a half minutes to go until we wrap up the trade on this Friday. Also for the week overall, we've got kind of a mixed market, but up on the S
and P just slightly. You here, Charlie and Bill Maloney breaking down the numbers, just up about twenty two on the S and P five hundred nowstek one hundred again of about seven tons of a percent, up one hundred and thirty four points back to the S and P up about four tenths of a percent, and you've got the dowg just down about one tenth of one percent here. But we have seen, as Tim mentioned earlier, most names a majority of the names in the S and P five hundred or lower, so more of a risk off
trade on this Friday. But we are up pretty significantly for the week overall.
Thank you megacap Tech.
Yeah, yeah, we'll see what happens next week.
We got Apple reporting, yes we will, paforms, We got Amazon.
Yes we will.
Hey, let's speak to Adriana Machi. Bring her in.
She's founder of managing partner of Strategic Wealth Capital. They've got about two hundred and thirty million dollars in assets under management. She joins us from San Francisco. Adrian, good to have you back with us. It's been kind of a wild ride this week. As Carol manche in the S and P five hundred, what it's on its best four day street.
Carol's going back to January.
Something like that, something like that significantly.
So don't quote me on it, something like that. That's okay, But as Carol reminds us all the time, what fundamentally has changed when it comes to the trade ward, not necessarily.
For it's longest advance is January. There we go, Well, mister Stennaman, Okay, we got that one right right, Adrian.
What are you hearing right now from clients?
The trickiest thing right now, of course, as everyone knows, is not just the uncertainty of what's going to stick so with tariffs, with interest rates, since there's been a lot of reversals, but it's what I have found. A lot of my clients are New York, DC, California, and the values of and the policies of the administration have been a bit hard. So I one thing I am telling clients to do. I have had more than one family ask if they should move abroad or move their
assets abroad, which I have not helped. I know, and I do have a client who is also going to be moving to Europe and getting a passport. I can say I've never had that before, but I talk it through them. One thing that I do cancel everyone, regardless of political persuasion, is to just try to separate the business, the stock market, their earnings, and companies from the government piece.
It's not easy, but when you're making the financial decisions, you have to try to be able to separate emotionally from the two.
Wait, so why are they doing it? What did they tell you why they were doing it?
That's such a good question. It was really interesting. So one client said, I'm worried that the current administration will dissolve a lot of protectionist measures we have, like insurance for savings accounts, and she was concerned that because if we're no longer, for example, of a reserve currency, and if our currency goes through severe devaluation, she wanted to be sure that she would have enough funds. She has quite a lot of savings and was wondering should she
hedge against currency. And my answer in her case because she if she if someone is planning to move abroad and clients who own properties in multiple countries, that might make sense, but the risk of moving it abroad two euros for example, and back when it's going to be ultimately spent in dollars didn't make sense. For most people. It doesn't.
So what did you advise her? Just do nothing?
Because she's obviously anxious about what's going on here. And look, we've I anecdotally, I've spoken to people who are very anxious too, not necessarily taking steps as drastic as that, but definitely selling US assets and buying assets outside.
Of the US.
Yeah, so it's I think the last time I was on the show was I think the first or second business day of this year. I was just looking through that when I was reviewing my notes.
Different different tone, different sentiment, different narrative, a little.
Bit different sentiment, but my advice. So the consistency of asset allocation and diversification, that's always that's always going to be important. And so I had talked about international assets and last year I talked to a number of clients who said, well, I don't like Europe. They have high taxes, slow growths, so population growth. But what I what we had talked about in January was yes, but you're investing in multinational blue chip companies that happened to be based abroad.
And I know we had talked about like Toyota and Honda, companies that build abroad, and we talked about European consumer product companies even with the tariffs. If you look at the makeup, a lot of these companies have sales outside of the US. And it's funny because only what three months, four months, I mean we've seen I mean, the EPHAH is up about almost nine percent I saw today and SMP is down about six So if you look at
the difference, that's fifteen percent in what four months. Yeah, the timing, nobody knows the timing, But if the fundamentals are there and international was trading at discounts, it's going to be the case. That's that everything will revert to the fundamentals.
And it did.
But what are the fundamentals? Because we expected what are the fundamentals?
Though, because the US has outperformed over the past decade or so, and you know, those people with global equity portfolios have said, Okay, this is the year. This is the year you know when things kind of revert to the means. Is the era of US exceptionalism and US out performance over.
So, there are two things worth think that we're talking about. One is a stock market and the other is the US as a country, which produces, which has top institutions, and quite a large presence in the world stage. I mean, from education to research and technological advances. The short answer is on the business side, in the market side, companies are much more nimble than governments. And when some of this uncertainty clears up, and it's always going to exist
in some form, I'm not concerned about the companies. The US companies will find ways to do to remain profitable. I am more concerned, however, about the US as an institution. It's not a fear so much as I think the cornerstones that the administration is trying to change. I think that will be detrimental. Even if we just look at universities, If students are afraid of coming here and researching and staying and starting businesses, they're going to be tough to remain exceptional.
Okay, because agent it sounds like it's really going to be too also hard to separate, because I feel like the markets and the government will separate, you know, are connected, you know what I mean? So I do wonder how you know there's no faith in the US government, what that does to kind of the whole US marketplace? Like it's just there, isn't there twenty seconds or so, yeah, go ahead.
Oh, it's not a We don't invest in governments. There's a lot of interplay, but the most important thing is to look at the earnings of the companies. So just like when we invest in Europe, we're not investing in a specific country's government, We're investing in the companies that are domiciled there. Interesting, absolutely the same thing for US as well.
All Right, that's an interesting perspective. Good perspective to hear. Great to talk with you, have a great weekend. Adrianamachi, founder of managing partner Strategic Wealth Capital, ABOT two hundred and thirty million in assets under management, joining us from San Francisco.
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