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We want to get to this economic data. ISM manufacturing data came out. We're looking at the fifty point three. The consensus was fifty point seven, so a little bit weaker there. New orders kind of interesting. Consensus was fifty four point six. Came at forty eight point six, so
a big miss there. Tim Fury joins his chairman of the Manufacturing Business Survey for the Institute for Supply Management, Tim, what do you make of this ISM data coming out here on our Manufacturing Buddies by Hi Paul Hilo.
So hey, I think the real story here, let's get right to it, is the prices number sixty two points four. We're up seven point five points, and you know in December and January we had some price growth too. We really were putting our prices then for the twenty twenty five economic year, for the delivery year.
So there's really no reason for this number to go up so high, except for the fact that.
As soon as terifts were announced on the lunium and steel, the spot market immediately jumped up twenty percent. Now, our sixty two point four number is a measurement really.
Of why the lake is, not how deep it is.
So what this is really saying is a lot of companies were impacted by the stealing lunum increase that was almost immediate and had to carry over factor I think on what's happening in a new order level, because it's essentially frozen people from placing orders because suppliers and sellers
are arguing amongst themselves about who's going to pay for this. Then, on top of that, the inventory number grew in part because of the Chinese lunar New Year materials being delivered, but also because people were pulling forward material in anticipation of tariffs. And then your supplier delivery number went up too, in part because suppliers may be refusing to deliver until
customers agree to pay the increased costs. So you know, overall, this is the fifty point three look pretty good, But to.
Gut to this doesn't look pretty good.
Yeah, if you had if you had a stable input number Stummer wouldn't been in the forty eight range, so wow.
Okay.
Also, the employment number dipped significantly as well. I felt like the narrative before it was that we weren't seeing layoffs, but we weren't seeing hiring. Has that now changed?
No, you're well, you're exactly right.
We're continuing on the same cycle that we've been for the last three or four months. I think what's happening here is in the absence of some confidence that we're going to start to grow here and not have a burp. You know this, This does not support another rate cut. I think what's happening is people are continuing to release people, but they're not doing it so much. Alex's time on layoffs. It's more about attrition and freezes.
So they're not overreacting here, but they are.
Deciding that, well, let's continue to d staff. You're a slightly, but we're not going to use a layoff activity. We're just going to freeze and we're going to trip down until the environment becomes clearer.
All right, Tim, thanks so much for joining us. Really appreciate it. Tim Furrey, he's the chairman of the Manufacturing Business Survey at the Institute for Supply Management. Smart kids call it IM. This may be, I guess, kind of one of the first concrete data points that will point back to us about the potential impact of some of these tariff discussions on actual manufacturing activities. So we'll keep that in mind.
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Josh Wingrove is joining us Bloomberg Senior White House Reporter. He joins us now in the White House lawn. Hey, Josh, good to chat with you. We're clearly waiting for these tariffs to be put into effect tomorrow. My question, though, is how sensitive do you think the administration currently is to the market, which is saying some thing a little different than maybe we were expecting, say, four months ago.
Yeah. I think that that is seen as the sort of one true guard rail that President Trump pays attention to.
Now.
That said, many of his aides have been saying, look like, in the first term, we did a lot of tariffs and things didn't really you know, go sideways. Although you know inde bend anailists will tell you there was a lot of sort of weakness periodically on the underrelly of the economy in the first term. The big question right
now is, you know, is this all a bluff? And remember this is only one stream of tariffs, and if you've been having trouble keeping the plot, not that any of us have, obviously, but it would be understandable because you've got these ones. You've got ones next week on steel and aluminum, which by the way, would hit Canada and Mexico pretty hard, regardless of whether there's another delay
tonight or not. And then of course in April you have not only the sectoral tariffs on autos, maybe lumber, maybe chips, maybe pharmaceutical drugs, all of which could hit Canada and or Mexico pretty hard. And and those other dare so so called reciprocal tariffs that would be on a country back country basis, including of course maybe Canada, Mexico and China on top of whatever does or does
not happen tonight. So things are coming down multiple paths, and there's been going to be a lot of focus of course, to I know, whether these go in or not. It's you know, a bit unusual that we're sitting here. We don't know. A month ago we were in the same position of what happened. There were calls between President Trump and President Shinbaum in Mexico and Prime Minister Trudeau in Canada, who only has a few days left or so as Prime minister. We don't know right now whether
those calls are on tap. That would do one thing to look for today as a signal of whether there'll be another deferral. Remember, of course, the China tariffs also could be doubled from ten to twenty percent today. No real sign of any indication that that would be put off. So you know, these things could all move into Pendley. It's maybe not all, sort of all three or none.
Josh, We're going to hear from President Trump addressing the Joint Session of Congress tomorrow evening any preview there. What's kind of the agenda.
I mean, he wants to take a victory lab he wants to talk about the things that they've done in the first month. I think we're going to talk about the border that is context for the tariffs, and really it's kind of an eye the beholder, think on how you choose to read that. He's been, you know, tweeting
or posting about border numbers coming way down. Of course, the border is the justification for some of these tariffs, so you know he'll either be there to say, look, I just dropped tariffs on a trillion and a half in goods, and you know, here we are and we're into a trade fight now, or he can declare victory on the border. Maybe that gives him a window to defer at least some of these terraffs. But other than that,
I think we'll hear a lot about the border. We're going to hear a lot about, of course, America first messaging. The backdrop of that, of course, will be the fallout from last Friday and the ongoing question of what will happen in Ukraine, Will there be a minerals deal? These are all just swirling in the air. So you know, Trump is a showman at heart, so I think a lot of this will be pomp and show and circumstance.
Of course, he wants to point to what he's done, but there are questions, huge questions swirling about what comes next.
So what's the off ramp?
For the tariffs is.
If Trump decides that Mexico and Canada in particular have done enough on the border, then he might defer them. Secretary Besson, of course, has talked about maybe reciprocal. That's maybe a bad word to choose, because we're reasoning another thing matching tariffs on China that Mexico and Canada have either talked about or in some cases already done. So that's been a bit of a puzzler. He's sort of
asking for stuff that's already out the door. And if they can get sort of this Fortress North America type of idea into President Trump's sort of, you know, get his buy in on it, then maybe there's a deferral. We also don't know that these will move at the same time. Remember a month ago Mexico was deferred before Canada was. Trudeau and Trump had two calls. Trump has been very critical of Trudeau. So right now we don't know if anyone or all three will again move as one.
I think this is a really important point. The way they've technically done it is by doing separate executive orders, so they can pull in punt and you adjust on the fly. One other quick thing to flag is last night they tweaked the can of their Mexico ones. It is either a signal that they plan to proceed or at least a signal that they want to be seen
as threatening to plan to proceed with these terrats. And what it did is tweak some of the rules on deminimus change, which affects parcelshipping, basically punting that until they can figure out a way to collect terrafts from either individual retailers or mom and pop shipping things across the border. And so that is a if they're fine tuning, that suggests that they're at least holding open the option to go ahead with these terrats, if not planning to do so explicitly.
I mean, in the meantime, President Trump, I'll be speaking later on today. He hinted that there'll be some economic policy rolled out. The Wall Street Journal now reporting that a TSMC is expected to announce one hundred billion dollar investment in the US for chip making facilities. You like, twenty seconds. Is this the kind of thing we can expect now at one o'clock.
I mean, I will defer to my friends of the journal if they're reporting that Trump has loved to make these announcement big numbers. I will say, until now, the numbers have not always withstood the full life of day when you dig into the details. So we'll be looking for those details today.
Well, so Josh appreciate that. Josh Winning Grow Bloomberg Senior White House reporter and Bloomberg. Of course, we'll be bringing you that live later on this afternoon. The Journal reporting that TSMC expected to announce one hundred billion dollars in investment in the US.
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All right, The other stock on the move is Kroger. That stock down over one percent. Apparently the CEO resigns over quote, personal conduct after a board probe. Want to get more on this with Jaywon Kong, Bloomberg retail reporter joining us. Do we know Jaywon what this personal conduct was?
We do not. It's pretty limited. You know what we know right now?
We know that the CEO resigned after the the board conducted an investigation into his personal conduct. We know that it was a personal conduct and that the behavior did not involve the company's operations, but that it was inconsistent with their policy on business ethics. So now you know Brodney mcmull and he's resigned effective immediately. And Braun Sergeant, who's been on the board of the company for almost twenty years, he'll serve as in terms CEO.
So how important is this CEO that did resign, mister McMullan, How important he has he has he been to the story.
He's been in his role for you know, over a decade, and he's you know, led the company through really important moments, whether it's you know, really getting into the e commerce business, led the company through the pandemic, you know, the period of historic inflation that we've lived through, and most recently, he tried to merge with Albertson's in what could have been the biggest grocery deal in in the US and history of course.
That you know did not come through after the government blocked it.
But he's, you know, someone that's been at the Helm for for quite a while after a long tenure at the company, and is someone yeah that's you know what the company through a lot of important moments.
How's Kroger doing otherwise? Did we just take that away for a second. What's it like to uh be in Kroger business right now?
Yeah, So.
It's you know, the company did really well during the pandemic and inflation, like a lot of its other peers in the retail business. That growth has started to moderate, partly as people.
Look to save money.
And you know, as we talked about the Albertson's deal, that had been sort of an overhang on on the company, you for the last few years as they tried to merge, you know, and then that deal about blocked by.
D f TC.
They had to go to court to defend it, and we know the result now, which is that it didn't you know, go through. But that's been you know, a bit of a distraction for for quite a while. And on top of that, the management team is also pretty new. The CFO left last year and joined a competitor at Costco. The chief merchant, which is of course a really important
role in the retail business. He also left at the end of last year for a different opportunity, and so we're you know, kind of seeing both of those factors starting to play out now as they you know, tried to operate and.
Navigate through a lot of macro uncertainties.
So what's the Is there another m and a trade in there for the in that supermarket business? Again, you mentioned Kroger's had some success and they've had and deals blocked. Are they still in the market for growth of the acquisition.
It's hard to say right now. I mean the Alberson theel just fell apart, you know, a few months ago. The expectation, I think from people who follow the company is that, you know, Kruger could look to do other deals down the line, But I think for now, the main priority is getting back to business and pursuing you know, organic growth.
Thank you so much to in turn my Mike there, my bad man, It's Monday, Jay One. Thanks a lot, great reporting. We appreciated Jay Won Kong joining us a Bloomberg retail reporter.
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Alex Steeve, Paul Sweening. We're live here in our Bloomberg Interactive Broker studio. We are streaming live on YouTube's ahead over YouTube dot com starts Bloomberg Podcast Live, and that's where you'll find it. I've seen, like I was mentioning Alex earlier, that in the last few weeks, we've heard from professional investors that there's growing concerns maybe about the US economic growth and the exceptionalism thereof. And if so, what do you do with your investments? Christina Hooper joins
US here. She is chief Global market Strategist for Investco. Christina, how do you think about US economic growth over the last several weeks? Has your outlook change it all? And if so, how did you maybe change kind of the way you're looking at investment opportunities.
Well, Paul, Alex, it's great to be with you. My outlook hasn't changed much. Our expectation when we put out our twenty twenty five outlook in November was that we're likely to see better performance from developed markets x US in twenty twenty five, and so that is playing out. The US has been doing so well for so long, and this seems to be a time in which we're likely to see key drivers like greater monetary policy easing and lower valuation supporting other markets. So my view is
that we're likely to see some hiccups. It doesn't mean we're going to see a dramatic downturn, but we do have as a frame of reference the twenty eighteen twenty nineteen Terra force which were negative for US stocks, so we want to be careful there.
So does that mean, Okay, we had someone else on the last hour that said by the dip, It sounds like it's more let it play out and see what happens by stealth elsewhere.
So I think first and foremost it's about rebalancing. Most investors are likely overweight US equities and underweight European equities, UK equities, EM equities, so this is an opportunity to rebalance. US stocks have had a great run over multiple years, and it's about in doing so. In rebalancing, one is going to have an overall valuation on one's portfolio that's lower, that might be less vulnerable to some of the turmoil and uncertainty that we're seeing right now, and so essentially
maintain exposure to the US. But this is not a time to be overweight the US, in my opinion.
Interesting because I'm looking on a year to day basis the S and P five hundred up about one percent, but the stocks europe six hundred price indext which I think is kind of the broadest view of European investing, that's up eleven percent year to date. Do you expect that to continue, Christina?
I do think so. We have some powerful drivers. First of all, we've got, you know, potentially significant ECB easing this year. But beyond that, what we have is low valuations and we have economic surprise. It's positive. Sentiment has been pretty negative on European equities and they're exceeding expectations. So I think this should be a good year for your inequities, and I think it could very well be a good year for UK equities, Japanese equities and in fact EAM equities as well.
But what about the whole tariff thing, because that's going to hurt everybody, right, So is it just that because valuation is so much lower in Europe in the UK than the US and it can absorb that kind of hit.
Well, I think that's certainly part of the story. Also, you of course have those other drivers that I think can soften the blow, For example, additional easing. If we look at emerging markets central banks, more easing was expected last year than we got, so I suspect that that is what will come this year. We had to wait a little bit, but I think this is probably good timing and should be supportive of any kind of headwinds created by tariffs.
Walmart recently reported earnings, and people look to Walmart. It's just a great gauge of the US consumer here. What did you see from Walmart? What do you How do you feel about the US consumer here?
So Walmart was I think very very rational and reasonable in saying that we don't know exactly what's going to happen this year. There's an awful lot of uncertainty, and I think that's the reality that the consumer has been quite resilient, but we don't know how things play out this year. And I think that makes sense. The US consumer is coming under greater pressure. Sentiment is down significantly, and we saw on Friday that personal spending was down.
We have to be concerned that there are pressures now. Having said that, they could be very short term in nature, since they seem to be driven largely by tariffs and the potential for tearfors. So if this were to be behind us, it could be very similar to what we saw in twenty eighteen twenty nineteen, where as soon as as the bulk of the tear wars are over, there is a resumption in not just improved sentiment on the part of consumers and businesses, but improved spending.
What are the most typical questions that you're getting right now from clients based on this global view that you.
Have, Well, are we going into a recession in the US? And I think that's only been amplified by the Atlanta Fed GDP now estimate, which has shifted from growth expectations of over two percent to now a negative growth in the first quarter. My answer is that we need to wait and see. It's unclear. Our base case certainly has not been for a recession this year, but we are seeing a deterioration in economic data, so we want to follow this very closely. Now, it could very well be
that we do see growth in the first quarter. Keep in mind that the Atlanta Fed GDP now here is real time, so it can easily shift. But I do think we want to be more on top of this, more cognizant of every data point and what it might be telling us. We want to find those canaries in the cold right now.
Yep.
And you're not alone in that. Michael Feroli over JP Morgan just cut his first quarter real GDP estimate from two point two five percent to one point five So like it's moving really fast, Christina, Thank you so much. Christina Hooper joining us from Invesco. Always wonderful to get your perspective.
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