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Alex deal At, Paul Sweeny, John Tucker, this is Bloomberg Intelligence Radio. I want to get back to this data because it is moving the bond market. In particular, the ten year yields now down by full ten basis points, kind of encroaching on the two hundred day moving average. All that consumer confidence data following the most since August of twenty twenty one, joining us now as Stefani Guie Schard, a senior economist at the Conference Board, what led this decline in confidence?
So, first, this decline of confidence was broad based across income and edge groups, and it was ready driven by a return to pasimes in terms of expectations for future business condition and future employment.
Stephanie, it seems like when we had the election, there was this burst of optimism across the number of fronts, including the economic front, that perhaps the Trump administration would be very pro business, pro growth, less regulation, lower taxes, all that kind of the data kind of suggests that that is fading a little bit.
Is that Is that how you interpret a data point like this?
So I think what you were mentioning before was reflected in our CEO Confidence Index that search over the last quarter. So we published this last week. In terms of consumers, we are really focused on the short term, on what's happening right now, to inflation, to the job market. We saw some increase in the price of some key stapers for consumers, like the price of X, and this is really affecting their mood and how they think about the economy.
Is this data bifurcated in terms of party lines, because we typically see, say in the Umish surveys, the Republicans feeling good, Democrats feeling bad, particularly well under President Trump.
Yeah, so that's still the case. I mean, Republicans are feeling much better than Democrats. But what we saw this month is a decline across the board, strong decline for independents and Democrat consumers, and a slight decline also for Republicans.
Stephanie, thank you so much for joining us. Really appreciate it.
Stephanie Gisha Senior Commerce for the Conference Board. Joining us from New York via zoom.
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We bring you all the top news in business, economics and finance, broadcasting to live from our interactive broker studio right here in midtown Manhattan. Just taking a look care at the markets. As John Tucker was just talking about, we're around the loads of the session. The NASDAG is now out by almost full two percentage points, the S and P off by one percent. The semis are also getting hit quite hard. But really the rollover picked up
a little bit of steam after that. US consumer confidence that have fell the most since August of twenty twenty one. Carolshlife is chief investment Officer at BIMO Family Office and joins US now. Carol, I know you look longer term, but what do you make of that market action we've seen over the last three days. It feels like the buy the dip is sort of losing some steam here.
Well, maybe by the dip is But it's important to remember too, we hit all time highs a week ago, so and markets have gone a very long period of time without the normal level of volatility that you'd see. You would expect a five to ten percent kind of pullback in the normal range of things. We haven't really seen that, and so for markets to come a bit
off that US exceptionalism story. And look at there are a lot of moving parts going in the economy right now, but consumer confidence, business confidence, some of that stuff is
starting to waiver. We came off of the elections with a lot of exuberance in both places, and it's important to look at those numbers and realize that people are just kind of like it's been an awful, big barrage of news in the last forty five days, and so taking a step back to take a breath and process some of that is pretty normal.
So, Karl, I know you folks over there at BIMO Family Office take a longer term view here. But putting in the context that we've had investors in twenty three and twenty four had really really really good equity returns north of twenty percent, how do you kind of reset here for twenty twenty five. What are the conversations you're having most often with your clients.
Well, I think a piece of it too is to realize that having balanced in the portfolio and having balanced portfolios didn't work in twenty two, but it definitely has worked some in twenty three and twenty four. And so having some high quality fixed income in the portfolio being willing to take some trims in there instead and in cash that's fielding four and a half five five percent is a pretty nice way to balance some of this
off in the short run. Now, not trying to time it all the way in or all the way out, but there is an ability to be able to have some of that dry powder, if you will, on the sidelines. And we wouldn't be alone because clearly Warren Buffett has a lot of dry powder as well.
Oh yeah, it was eleven billion an interest in funny market for.
Sitting there.
Yeah, I'll take that. What we have seen though, yeah, right.
Is money kind of flows starting to move out of the US and into Europe. Do you think that that actually is a trend that had legs?
Yeah, we do think that You've got that. You know, you've had a lot of conversation around Trump tariff's notwithstanding that there is an appreciation for Chairman Chief, for example, and there's a suspicion that all the tariff talk is because he wants to cut a deal there. So we
do suspect that you've got a lot going on. And it's interesting because I saw some stats yesterday that talked about the performance in ETFs since inauguration day, and when you look at that, the US is flat, China's up close to twenty percent, And so you've got a lot
of different interesting things going on there. And we have recently just actually taken a country position in China specific as well as the Japan specific one that we've had on from a house view standpoint for a very long period of time.
Well, talk to us about that China call, because we just had a segment we were talking with Bloomberg economists just about the tariffs and the trade situation with China. So what is your view on China these days?
Well, I think another piece of it is is when you look at the technology leadership that they've gotten, not just deepseek, but you go back to twenty fifteen when they first initiated the China twenty twenty five plan industries they wanted to own and the ten years they've had to really focus on them. There's a lot of technological innovation and work around and the more we restrict advanced technology from them, the more they try to figure out
how to make it work. And so between that and the beaten up valuations, not just in China but in Southeast Asia in particular, there's a lot of interesting things going on there from trying to balance off the world and it's always been a challenge. We've always led with, if you will, with globally diversified portfolios, but that's been a really hard argument to make in the last few years, as as the US markets have so vastly outperformed so many others. But we think you're seeing a broadening out
of that. So having balanced portfolios. And the key challenge is for long term investors is never knowing exactly when those when those non US markets are.
Going to move interesting.
All right, Kenl, thank you so much for a few minutes your time. We really appreciate a couch life. The Chief Investment Officer BIMO Family Office.
Here.
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One of the other big global economic issues out there for global trade is the US relationship with China. It got tough under Trump's first administration, President Biden kind of keeping some of that rhetoric up as well, and now the second Trump administration trying to take up another level. So we want to get a sense of kind of where that this may go. And there's no one better to speak to than Tom Orlick. He's a senior economist.
I mean, he is the Bloomberg Economics chief economist, lived and worked in Beijing for many years, so we really really understand what's going on over there. Tom, give us a sense of kind of how you think the second Trump administration is going to approach China and maybe how China will react.
Well, it's great to be here, Paul. So I think it's interesting. I think there's going to be two rival groups who are kind of jockeying for position in terms of shaping Trump's second term China policy. The first group, well, that's the China Hawks. That's the folks who think China's catching up with the US way too fast. It's playing fast and loose with the rules on global trade, on intellectual property, and the US needs to take a really
really strict stand on this. And the second group, and you saw them on stage at the inauguration, well that's the tech titans. It's folks like Tim Cook who have the entire supply chain or a substantial part of their supply chain located in China. It's folks like Nvidia who have a huge part of their business depending on China's electronics supply chain. So of course that group would very much like to see something which looks more predictable, more stable,
more open in terms of US China relations. Early days, but we've got some reporting from Bloomberg News saying that Trump officials are speaking with the Netherlands and speaking with Japan about further toughening controls on China's access to semiconductors. So what that suggests is that the China Hawks, at least for now, are trying to set the agenda.
So based on that, we're taking a look at the socks INDECKS semi index down over one and a half percent. So let's just go with the idea that we'll see stricter curbs on chips.
Will it work? I mean, we saw what happened with deep seek for example.
Yeah, it's a great point, Alex. So I think if you were speaking with one of the folks that did the export controls in Biden's first term, they'd probably make a couple of points. So the first is that the first round of export controls, the Biden administration told everyone about it six months before it came into force, right, And that's a kind of fairly obvious misstep.
Right.
If you tell China in six months time you can't buy any advanced semiconductors, well, of course China is going to spend six months assiduously stockpiling those advanced semiconductors. And then the second thing I think those China hawks would say would be, well, we always knew China was going to catch up pretty quick on the large language models. We knew they were only a few months behind chat GPT,
so deepseak wasn't the surprise. The export controls are really aimed at preventing China from taking that next step towards autonomous general intelligence.
TOM based upon your experience in China, how do you think presidency and the Chinese government will I guess respond and deal.
With this trumpet ininustration?
Did they understand how transactional President Trump can be and therefore maybe there is a quote unquote deal to be worked out to maybe just avert some of the bigger issues.
So we've had this news overnight from Bloomberg reporters on the on the Trump team speaking with their counterparts in the Netherlands and Tokyo. So clearly there's not nothing going on on US China policy. At the same time, if we think about where the kind of the major focus of attention for Trump has been in his first few weeks, well, it's been on Ukraine, it's been on Gaza in the
Middle East. There have been tariffs on China, certainly, but there's also been tariff threats against Canada, tariff threats against Mexico. So China, relative to where I think we could have been, doesn't appear to be the kind of top of mind gender item for the Trump administration. Now, I don't have, you know, a hotline into China's leadership compound. I don't
I'm not privy to chi jianpings inner thoughts. But my guests would be that's kind of good news from their perspective, right, and they'd be pretty happy if Trump expends all of his energy focused on Ukraine and the Middle East and near neighbors and perhaps doesn't spend so much time thinking about China and China's rise as a geopolitical challenger.
All right, Tom, I always appreciate it.
Thank you so much, Tom, Or like Bloomberg Economics chief economists joining us on potential chip controls over China and then the ramifications of that.
You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple Coarclay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.
Steal and Paul Swinging.
We're live here on Bloomberg Interactive Broker Studio in New York City.
We're also streaming live on YouTube.
Head over to YouTube dot com and search Bloomberg Podcast Live and that's where you find us. Well after the close tomorrow in Nvidia reports, and that is always a big day for in Nvidia shareholders, I think for technology shareholders as well, and as.
The markets overall.
Really, for the last couple of years, in Vidia has been a market moving event. So we want to get a little bit of your preview there, and then we're also going to talk Hamburgers.
How we make the connection here, I don't know, but we'll try to do it.
I like it.
Kim Farst, founder and chief investment officer Boquet Capital Partners in Pittsburgh. So, Kim, I'd love to take advantage of your technology, chops. What should we be looking for when in Vidia reports tomorrow?
Sure, well, I'll say what I say for absolutely every company who really cares what happened last quarter. I want to know what's going to happen next quarter in the quarter after that. And I think never has this been more important than for a company like Nvidia. Who is it the forefront of a very new technology that you know, literally hundreds of billions of dollars are being thrown at. So the question that we have is this is it
for real? Are people still going to pay up? Are they still going to you know, build these huge data centers to run something that we don't have a problem that we can identify that that the money is fixing that is the question.
And what do you think that's going to be best? Guess yes, I.
Well for a couple of reasons. Firstly, you know, I'm a nerd. I'm a proud nerd was I was a software engineer in AI doing stuff with neural networks. How lucky are we that like this all has come up and I know about it? Okay, But anyhow, here's the problem. The only thing that I can and see that large language models really solve is the ability to get information in and out from humans to computers a little bit better.
And who's going to benefit? I say, right now it looks like search that people are using it to search, they love it, and all these other kind of higher order smarter things we're not really able to pull off, like, you know, take care of my travel to go to Sydney, Australia, right and here are the dates and get me the cheapest fastest airline there. It can't do that, not yet,
maybe not ever. We don't know who cares. But right now I think the companies that are putting money into this are those that have some sort of search that they're trying to maintain their market share. So Google, I'm talking to you and to a certain extent meta right, and Microsoft is the third one. So those people are going to continue or those companies are going to continue to pour money into this area for the foreseeable future.
All Right, here's the hard pivot from AI to hamburgers. And here's my take on the hamburger business. Wendy's. I will stack up a good old Wendy's burger against a lot of the new ones out there, whether it's the Shakeshack, the five Guys, all that kind of stuff that Wendy's burger hangs in there. How about the stock here, Kim, what do you guys think about Wendy's here?
It has not been hanging in That's the first thing, right, New is always better. People go hey, let me try that shake Shack, and then they're going to drop a lot of money and go, well, that was an okay burger, But okay, next time, maybe I want to do something different. That's one of our theories is the growth of Shakeshack is going to reintroduce people to a good hamburger. Like McDonald's, has its own flavor profile. It's not like a regular hamburger that you'd make it home and I guess Wendy's
isn't either because it's square. But we move on from that, right anyhow, back to it now, the company's been trying to grow in breakfast and that has impacted its earnings, and we're looking past that, saying, hey, they've got a good idea. They're mostly a franchise e chain. The company owns, you know, some of the restaurants. This is a good model. And you know, we're hanging in there thinking they have a pretty good product and it might be time to look at it because it's sold off recently.
So how do you pick between all the fast food guys? It's sort of like, you know, can you own a lot of them at this point when you have exposure to inflation, when you have exposure to the consumer.
Well, I kind of go on my own, right, because I'm a consumer and I'm kind of a picky I like really high quality stuff, but I don't want to pay a lot for it, and Wendy's kind of fits that profile in many ways. First of all, they skew to a higher income buyer than a lot of the
other chains, So that's something that I like. And I also like that in any sort of consumer oriented pick because as the I think there was news out yesterday maybe by Bloomberg that the top ten percent is spending more than they ever have, and they spend on things like hamburgers, right, So we like that, we like their salads in the summertime, they get a lot of traffic away from Panera again because it's a value option and it's convenient. So that's kind of my view. I don't
want to own the whole lot of them. I want to own companies that are poised to beat the competition.
How about them?
I think, how about on the cost side, the costs of beef. I know that's been an issue for cost of.
Beef is And here's the problem. They're fresh nut frozen, so they're buying from America. They don't really have the luxury that a lot of the other burger chains who are buying from South America and Australia. So that is an issue and that's something that we're all going to have to suffer through for a little while here. But hey, I hear they're these things called.
Tear Yes truth. I hate Kim always good to catch up.
Appreciate you at Kim forrest overbook Capital partners.
Thank you very much.
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