Bloomberg Audio Studios, Podcasts, radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
It's got an update here on what's happening down in Washington, DC with all these tariffs. Every single day there seems to be more and more news. Tyler Kendall joined us Bloomberg News reporter Tyler, what's the latest on the tariffs here where we heard some tough talk from mister Carney, the incoming Prime minister at Canada. What's the latest right.
Well, we are expecting the next round of tariffs to go into effect this Wednesday. That's going to be on steel and aluminum tariffs at twenty five percent. We've been told not to expect any exemptions or carve outs at this moment, but of course, like many things, that remains to be seen and could be a moving target here at the White House, and I would just expect to hear this week rhetorics start to shift from senior administration officials.
We've often talked about.
Tariff's up to this point as being a way to advance President Trump's border policies. But now we're going to start to hear a lot more about these tariffs being about national security concerns. Recall, steel was a flashpoint on the twenty twenty four campaign trail with that proposed MEF
on steel acquisition and where we heard national security come up. Notably, a Commerce Secretary, Howard Lutnick, over the weekend did say that Americans should start to prepare for foreign good prices to go up, although he contends that US good prices will ultimately go down over the long term, but that there might be that adjustment period as we've heard President
Trump talk about. I just bring that up about the steel tariffs because we have to keep in mind that includes those downstream items and economists say that could hit consumers the most.
Tyler Trump said of the U with economy faces a period of transition, how much pain are they willing to take?
Right Well, the threshold for pain appears to be a little bit higher than most people believe. But the rhetoric right now of the White House is that there needs to be this short term adjustment period in order to
have this longer term growth. And President Trump actually gave us a little bit of insight into his thinking during that interview that aired over the weekend, actually comparing the US to China, saying, in his words that China thinks in a one hundred year perspective, whereas the US likes to think in quarters. He then used that as a way to segue into doubling down on the claim that he says he is not watching the stock market, though he did noted that he has his eye towards interest rates.
But it really does track with what we've been hearing from White House officials, which is that they are trying to have everybody look at the broader macroeconomic picture when concerns come up about inflation, or the labor market and
workforce cuts, or even consumer sentiment. And I actually caught up with any C Director Kevin Hassett here on the White House North Lawn earlier this morning, and he told me that there's really not much they can do until the full Trump Agenda is implemented, which really means that they are banking on some things that haven't yet quite gone into effects, such as a terrorists as a revenue raiser, which goes hand in hand with importantly here President Trump's
tax cut agenda, which Isabelle, we know is not going to necessarily be an easy task for this Congress.
And Tyler, I guess the initial discussion surrounding these tariffs from President Trump's administration, where they were really not so much a trade war issue but a war against drugs and immigration. Is that still the argument that the administration is making.
Well when it comes to those tariffs against Mexico and Canada that currently have this USMCA as well as auto exemption on them, This administration even over the weekend, said that any amount of fentanyl combing over the border is too much, and it doesn't really seem like they're moving
off of that. We're going to them move into this national security argument with the steel and aluminum tariffs this week, but then we are really pushing ahead to that April second date that the administration keeps pushing us towards when it comes to the reciprocal tariff plans. We did learn that after President Trump had threatened reciprocal tariffs against Canadian lumber and dairy, for example, that that likely will not take effect until April second, even though he had threatened
that those could have come sooner. So we're really going to start to see this argument of reciprocity as we start to expect some more leaders to come here over the next couple of weeks, as we beat the drum up to that April second date.
How aligned is President Trump? And Secretary's caught Best that we have Trump saying that this is a transition period, and we have Best and saying this is a detox period.
Right.
Well, they're really trying to put forward this picture that the government does need to reduce government spending and that does go along with this tax cut agenda. We're going to need spending cuts in order to offset the tax cuts, and that's something that this Congress in particular is going to have to grapple with. Republicans in the House are really divided among this issue, particularly when it does come to government spending cuts and concerns about what it could
mean for social programs such as medicaid. That is going to be a very complicated factor here as they try to get that over the finish line. And we got one indication this weekend that they are expecting this to
be a month's long fight. The House Republicans introducing a stopgap measured keep the government funded until September thirtieth, with President Trump posting on truth Social that he had asked for that date in order to give enough time for Republicans to work out the rest of his agenda items.
All right, Tyler, thank you so much for joining us. Really appreciate it. Tyler at Kendall. She's a reporter for Bloomberg News down to Washington, DC.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Applecarplay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
So I've got a lot of volatility as the name of the game here in marketplaces, and we know that markets do not like volatility, so you see that in the price action here. Let's see what the.
Pros are doing here.
Tim o'bona, what's chief investment strategist at Innovator Capital Management. He's somewhere out there in Chicago, one of my favorite towns. Absolutely, Hey, Tim, talk to us about these markets here. You talk to your clients. How do you is it handholding? Is it what are the conversations these days.
Oh, Paul, there's a lot of jitters out there, and every conversation that we are having right now all comes back to the question of what's going to be the net impact of all these different policies from the Trump administration. And you know, right now, I think there's this mindset shift that you know, everybody was really excited about the
pro business policies of the Trump administration. Now I think it's becoming pretty clear that Trump realizes he needs to slow this economy down if he wants to get interest rates and inflation under control. And there's really two ways that he's going to be able to do that. One is pulling back in government spending and I think you're
seeing that through through DOGE. And then also with the tariffs, and the tariffs we view that as really a tax on the consumer that is going to put additional pressure on consumers that are already under stress. And I think what he's going for here is long you know, long term gain with the fact that we know there's going to be continued short term pain, and he's okay with that. You know, you're not going to get the approval of
the everyday American if the stock markets going up. You know, he counted that the first time constantly, that's not the case.
This time.
He's not talking about it at all. And I think it really comes back to that realization that if we are going to get interest rates down, if we are going to get inflation under control, there has to be some pain that comes along with that. And I think that's what you're seeing right now.
And note you mentioned that the majority of investors were not taking Trump seriously when it comes to tariffs, So now it seems like he is serious and the velocity of the shift from excitement to fear has been swift. How are you trading this market? Where do you hedge?
Well, you know, really in the bulk of what we do is risk management, you know, at all times. And if you look at the flows that we've seen here recently in the ETF market, we've seen a tremendous amount of inflows here to the tune of about a billion dollars over the last week and a half into buffered ETF strategies. And really what these do is they give you a known level of downside protection on an index like the S and P five hundred ETF or the
Nasdaq with known upside exposure. And I think right now, we look at all the uncertainty that is out there, you know the fact that you know, on the flip of a switch, Trump could come out there pull back tariffs and this market could rip higher, or you could continue to see this tit for tat. There's so much uncertainty. And really, what these strategies do and why I think so many investors are gravitating towards these, is that they
do help remove a lot of that uncertainty. They keep you invested, which is incredibly important, especially right now, but they also are going to help you really hedge out and mute a lot of this volatility that we're seeing, you know, coming from the Trump administration.
Talk to us about the fixed income market.
Here.
We've got big moves today here in the in the bond market, treasuries of ten your ersury up twenty basis points, kicking the yield down the like four point two two percent. Here, where's opportunity if anywhere in the fixed income market.
Well, Paul, I think we're starting to get a little more more bullish here, and this has been an area we've been very bearish on for the last couple of years, you know, simply for the fact that you know, most advisors that we're working with are using these as a risk management tool, right, and we continue to see BONN yields in equity prices moving in the same direction that you don't have that diversification that most advisors are going for.
With that, I think with some of the changes that we've seen here recently, they're starting to become more opportunities. You know, if you look at BONN yelds and inflation really over the last several years, they followed this this government deficit as a percentage of GDP almost in lockstep
with one another. So as we see more and more you know, hopefully more success from from the Department of Government efficiency from the Trump administration being able to pull back that spending, I think that gives us more hope that we can see, uh, you know, interest rates start to work, or that inverse correlation start to work a little bit better, that interest rates can come down. Uh and again a slowing economy too, that that should help us out on the longer end of the yield curve.
So I still do think it's it's a risk with the environment that we're in right now with core inflation still elevated, but I think for the first time in a couple of years, we're starting to see signs, you know, that the long to intermediate duration bond trade could be showing some signs of life here.
When it comes to inflation, we have Mohammed El Ariyan and an opinion piece today saying that the FEDS insistence and keeping inflation to two percent maybe limiting its flexibility. Where do you stand on that on your inflation views.
Well, I don't think the Fed is going to move on it, so I think it's a fun thing to debate. I don't necessarily know if it helps investors in the short term. And look, you look back in the history of the US any time that we have seen core inflation starting off north of five percent or above, never before have we had a situation where we've gotten back down to two percent without a recessionary hit to the
labor market coming. And you know what we've heard for the last several years, even from a lot of our you know, advisor clients, is that this time is different. And look, I hope it is. I hope this time is different where we can get back down to that two percent target without a huge hit to the labor market taking place. But we don't want to just go out there and position our portfolios like that's going to be the case, because it would, in fact be a
unicorn event. And I think, you know, a lot of the you know, this comes back down to how strong the labor market has been over the last couple of years. Wage growth still running north of you know, well north of four percent. That's not conducive with a two percent
inflation target at all. And you know, I think what gives me a little bit of hope that we are going to get back down there, you know, within the next year or so now is if you look at all the layoffs that are taking place within the government over the last couple of years, you've had about a quarter of all new jobs that have been created by
the government. We're starting to pull that back. You're starting to see you know, a lot of those layoffs, which I've seen recent estimates in the three hunds to five hundred thousand range, those are going to be jobs that are going to be replaced in the private sectors. So there's going to be a lot more supply coming to market, which I'm hopeful that that will really soften things up to where we need to be.
Tim, thank you so much for joining us. Timber Bouden, what's chief investment strategies from Innovator Capital Management.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Applecarclay and Android Auto with the Bloomberg Business app. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Is Bill Lee Paul Sweeney live here in on our Bloomberg Interrective Broker.
We're studio.
We're streaming live on YouTube at over to YouTube dot com and search Bloomberg Podcast Live, and that's where you're fine. We talk every week to our good friends at Bloomberg New Energy Finance b n EF. Now we've got to talk about tariffs and what that means for green sectors from energy to biofuels. Today we do that with Antoine Wagner Jones, head of Trade and Supply Chains for bn Yeah, Antoine, thanks for being in our studio here. Tariffs cannot be
good for the evolution into green energy. How do you guys think about the wrists that are being introduced into.
That, Yeah, there's at a time where everything is whipsawing and we're seeing a lot of differences in terms of policy approaches. What's really interesting is to see areas of continuity. Trump is very much on board with manufacturing in the US. That was something that was very much a part of the Biden administration. The way in which that's happening is very different, however, as central planks of Biden's approach was to be Okay, we're going to onshore semiconductors, We're going
to onshore clean energy manufacturing. And what we've seen now is attack on the Inflation Reduction Act rhetorically and a version that's starting to build on the Chips Act. These big sources of finance for a lot of these projects that are happening in the US at a time when tariffs are starting to be stepped up as a respon once and this is building on a lot of tariffs that we saw on the Biden administration front. That has to be twinned with support for some of these different sectors.
When that's being pulled out, then it starts to become very uncertain, and when you're seeing the levels of volatility around tariff's being announced, being pulled back, being re announced when things are really unclear in terms of what's going to happen. That's not great for businesses that need to make decisions on investment that has quite a long payback period. And we're not quite seeing the upsurge in manufacturing investment that we're expecting to see over the first few months
as a result. So it's an interesting time. There's a lot in flux. It's bad news for leek green energy, as you can expect, but it's also not necessarily great news for some of the objectives that are a central part of Trump's agenda, whether that's building out data centers. You need a lot of grid equipment, a lot of that comes from Mexico that suddenly becomes a lot more expensive if you need all the transformers that you need, and the examples along that line of thinking just on
ever ending. So it's a lot of uncertainty and not a great outlook when it comes to to you know, this idea that tariff's equals manufacturing, but actually the path to getting there is a lot more is a lot more fraught than I think is appreciated.
I was just going to ask what we see a shift into em Are they starting to ramp up imports of clean tech products? I mean maybe they could stand to benefit.
Yeah, it's we generally speaking, yes, we could start to
see arise from that perspective. But again, I think a lot of the constraining factors they're on grid investment rather than the cost of clean energy, and that's where we're starting to see some real pain points when already there's some big shortages of large power transformers, for example, and that's something that is repeatedly a huge concern and something that has made materially more difficult to integrate that sort of clean energy if you're making building out the grid
a lot harder. So there's a lot of recurring themes that keep popping.
Up, and that's one of them.
How about near shoring. We thought about North America as near shoring Canada and Mexico, but that may not be enough because now we're talking putting tariffs on those folks as well. So it sounds like if you want to manufacture anything, it's going to be almost entirely United States based.
And that's what's fascinating. So over the last few years, we've seen all these different buzzwords on shoring, reshoring, near shuring, near shuring. This idea which was promoted by the Biden administration that will have certain incentives for manufacturing, will extend those incentives for manufacturing parts of evs, for example, to
our North American neighbors in Canada and Mexico. Now, when you're starting to impose tariffs on those same neighbors, then you're flying in the face of that trend, and it really seems like that sort of dead in the water. I don't think we're going to see the death of integrated value chains for the automotive sector over the next few weeks. That's going to remain in North America, across North America because of the inertia in the system, the efforts that are being made by lots of these the
big three automakers for example. But at the same time, I don't think we're going to see the step up in investment in Mexican manufacturing that was due to surf the US market through this trend of nailshuring, which now I really don't see as a poltical priority.
All interesting, All right, and Swan, thank you so much for joining US. Antoine Vagno Jones, head of Trade and Supply Chains for BNF. Joining us here on our Bloomberg Interactive Brokers Studio.
You're listening to the Bloomberg Intelligence podcast. Catch us live weekdays at ten am Eastern on Applecarclay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Earlier today, Joe Dominguez see You, of Constellation Energy, spoke with Bloomberg Intelligence co host Alex Steele about the impact of tariffs on energy investments at Sarah Week in Houston. Joe was first asked about the recession. It's slowing growth, and he was asked if he's noticing any of that at Constellations take a listen.
We don't see an end in sight right now. We're starting to see it get rational, and by that I mean we're not seeing the same request for data centers popping up in five or six utilities. So I think the hyperscalers are beginning to figure out where they want to go. And it's not the frenzy of activity, but in terms of the deal pace, it continues the same way we saw it last year.
And how are the deals like, how is it to get them done?
Is it hard? Is it coming up with a structure the money? Like? What is it?
It's not hard, but they're complicated because they're multi billion dollar deals, right, So we're talking about twenty year deals for power that sometimes could cost five or ten billion dollars.
So, like any commercial deal of that scale, it's.
Going to take a long time to negotiate, and each time you need to do that with a new party, you have to go through all the terms and conditions again. But I think we're going to get some some deals done this year.
Can you give me some hints, like in maybe areas, what kind of deals, like what kind of power?
Well, I think nuclear continues to be very attractive for the hyper scalers because it operates twenty four to seven, it's cleaned, so it meets their environmental goals, and it matches up really well from a reliability standpoint.
So let's go Tom money then for a second.
So coming up with the deals is very interesting, particularly the one you do with Microsoft to restart three Mile Island.
Are your costs going up right now?
A little bit?
But it's really labor inflation that we mostly see. Now, Remember we have existing nuclear plants that are already built. So a lot of the costs of the raw materials that you're seeing, you know, potentially impacted by tariffs in the long run, but in escalation through inflation. We're not seeing much of that tiny bid on uranium pricing.
But most of what we're seeing is labor contracting.
So are you planning for a tariff increase that we should be seeing on stealing aluminum on Wednesday?
Right? You would have no one that would have limited impact.
How do you see that pretty limited impact on us?
It would impact replacement parts and that sort of thing, but it's going to be a deminimous impact on our budget.
And if you wind up seeing an increase in labor, how does that change in your contracts? Like you already said it, you have to go back to them and say, hey, listen, we got to renegotiate my costs are going on.
No, there's no reopeners up or down for those sorts of inflation.
So you're really taking on that risk.
Sure, yeah, yeah, and we're taking it on for over twenty year period. And that's the importance of being able to do this with nuclear Right, we know exactly what our cost structure is going to be within a range for ten and twenty years.
Harder to do with our.
Natural gas assets, where we don't know what the price of natural gas is going to be ten years out, or whether we're going to have a carbon tax, or what the changes in environmental regulations are.
Going to be.
So how do you manage that risk?
Well, I think what's really difficult to do that in the case of natural gas. I think they're what you're doing is something that looks more like an index product that is indexed to either inflation or natural gas prices.
When you talk about the different parts of your business, how much of the capex that you're spending is going to new stuff, beefing up old stuff, or just replacing and making sure everything stays on track.
Yeah, So for us ALEX we face a critical decision as to whether to relicnse the nuclear plants for another twenty years, and we're facing that across the fleet.
So when you say.
New, if we don't do this, it's going to be retired, very much like Three Mile Island was retired. So the distinction between keeping existing open and something that's truly new is immaterial.
Right If it's gone. It's gone. It's the same as if it were never built.
So we are investing all of our monies to secure that fleet for the future, and we're also doing uprights and restarts and other things like that. In terms of a percentage to your question, I would say ninety percent of our spend is in the existing assets and getting them ready to run for decades to come.
So when we talk about power demand booming and increasing by multiple digits, right, I mean ten percent would be huge. How do you play that it's not new, is it just expanding?
Well, it is expanding.
A lot of our clients are interesting interested in operating that's increasing the output of existing nuclear plants, and we're doing that in a number of different regions. Obviously, the restart is more limited. You had one plant there that you could turn on, and I think there might be another in the nation. And then the rest of that is going to be probably spent on renewables, storage and natural gas for the time being, and then the fullness of time new nuclear m and a for that.
I know you just bought Calpine, so that really beefs up your natural gas. Nuclear is now fifty percent of your portfolio. Versus A seventy. That was a big shift. What else is in your pipeline for.
That, Well, we've got a lot on our plate.
We've got a lot of food d Yeah, and so this year we're going to spend making sure that we're ready to integrate Calpine.
And prepared for regulatory approvals at the back end of the year.
But as you said, it's a big deal, and I think what we've indicated as a company is M and A is a big part of our strategy.
Yes, M and A in beefing up nuclear, natural gas, or you want to diversal all of the.
Above, all of the above.
I think storage is going to increasingly be a part of the story, so we'll look at those opportunities as well.
Everyone now wants to get into power. It is the coolest thing right now in the market. Whether you're looking integrated utilities, regulated utilities, even energy companies, are you seeing more competition.
I think what people are trying to figure out is whether they too can secure longer term contracts. I don't see people building spec power plants hoping, you know, the demand will come. So I think there's going to be a lot of interest there. But it's largely going to be fossil. It'll continue to be renewables, but it always has been renewables, and then we'll see whether they could get deals done.
All right.
That was Alex Steel. Bloomberg is Alex Steel speaking with Joe Dominga SI Constellation Energy down there in Houston at the Sarah week At conference, talking about the energy bis, particularly on the nuclear energy side, where Constellation has a big plate.
This is the Bloomberg Intelligence Podcast, available on Apple, Spotify, and anywhere else you get your podcasts. Listen live each weekday, ten am to noon Eastern on Bloomberg dot com, the iHeartRadio app, tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal