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Joining us now and again in the future. Is lifting up twenty at forty two is someone who's been much maligned and has been fearless in her academics of saying, you know what, I'm associated with the dread at our word recession, but I don't see it out there. Claudia sam has nailed that call. She's chief economist at New Century As Advisors, and she joins us here this morning.
At Claudia, my distant memory is Jeffrey Frankel at Harvard saying, Okay, there's a jobs mandate, there's an interest rate in flameation mandate. But real GDP and maybe distant nominal GDP really matter. Can a dearth of GDP shift the labor market and shift the FED?
Well? Absolutely, I mean these are all growth and employment are absolutely tied together, not necessarily quarter by quarter. And I think you know, if you're referring to the first quarter, the small decline in GDP, like there is a lesson from that, But it is not that we are falling into a recession. It's that we are facing a major cost shock with an increase in tariffs and businesses we're responding to that in consumers that cause a lot of
disruption in the numbers. So that's one example where you know that first quarter GDP declient is giving us a sense of where we're headed. But it's more about where we're headed working through these tariffs, which eventually will have some effects on employment, even if we're not seeing them today.
Okay, way from then the som recession mania. Are you modeling out four percent year over year CPI? Is that in the New Century Advisor's realm of thinking?
So I think that's absolutely in the realm of possibility, And certainly I feel very that we have we are facing slow in growth, rising unemployment, and faster inflation. Now magnitudes are going to be absolutely crucial, and I think a really big question for the Fed in particular is they think about their policy.
Is the duration right?
If this is if we're just seeing a kind of a blip a move up in inflation, the recedes as that we adjust to the tariffs or maybe the jobs go away. But that's like a key question that we are far from having the answers to see.
You see how she does this at the University of Michigan and they get on the XA Exis she's looking at the duration. Yeah, she's looking at the lengthiness, the lengthiness of the magnitude.
Claudia, can this economy avoid a recession? I mean I see a jobs number today, I think about Tom's theory the companies and people adapt this economy avoid.
A recession absolutely.
I mean, we have all the ingredients of a recession. We have the tariffs, we have the slot immigration, we have the federal cuts and other factors. We have massive uncertainty. Like really, if I mean this, we are pointed towards the recession, and yet we are in the very early stages. And we see sometimes our businesses to build some buffers, like a big inventory built getting ahead of the tariffs.
I mean, we're nobody wants to lay off workers, nobody wants to cut back on their spending, right like people are trying to make adjustments. So but what needs to happen is these aggressive policies have been put in place. These cost shocks, they have got to be dialed back and really quickly. I mean, there's some damage done already that we're going to deal with costs as this year
goes on. But magnitudes matter, and avoiding the recession, and particularly the recession dynamic is when that shock, it just spreads through the whole economy, and we really have got to nip this in the bed, in the bud before you have those feedback effects take cold.
When you see a lot of companies again, we're probably seventy percent away through the earning cycle here, a lot of companies are, as you said, either pulling their guidance, or if they still have guidance, they're saying, we're concerned here, We've got a lot of variability around our businesses. What do you take away from some what you heard from Corporate America so far?
So clearly these are big shocks. There's a lot of uncertainty.
I think.
The other place I found pretty interesting reading this time was going through the Fedspage book, which has a similar kind of talking to business contacts, talking to nonprofits in the communities, and you just here over and over again, contingency planning, getting ready like potentially cutting our potential, but not there yet. But it is so clear that a massive amount of time and energy is being spent on this.
What do we do when.
It hits Claudia, You've sat in the offices at the FED, folks. This is not the romance of some big fancy table in the Echos building. This is the meat and potatoes that doing PhD work at the greatest central bank in the world. And the answer is, you guys like smooth curves, gradual change. We just had Jeans Soroka, in of the Port of Los Angeles, flew in just to talk to John Tucker. Claudia. He sees a jump condition, a discontinuous
event at his port. How do what fancy people like you fold in the reality of long shorman in truckers in Los Angeles.
Right, it's a moment where to some extent you have to look at the models, but put them to the side. Right, there's no macroeconomic model that's going to give you the kind of discontinuities, the kind of very sharp turns that you're seeing in the data. I mean those way we should expect. We had this massive surge in imports that had a big effect on the composition of GDP in the first quarter, We're going to probably see a snapback because I mean we from that shipping, those imports are
going to the floor. So don't come to me and say, oh, GDP is three percent in the second quarter, all is great, Like that could be under the hood telling us we've got a big problem in the second half of this year. So you have to, like you have to respond to those discontinuities, particularly when you can tie them back to a story. There's noise all the time that you want
to look through. This isn't noise, right, Like we're responding to something big, and then that's why that outlook is important in the judgment.
Claudia, with great respect for your impact in American economics, I think everybody wants to know this unfair question, but I'm going there on this strange Friday. What is your counsel to Hasset at Pennsylvania Vestent of Yale and Greer our trade representative as they counsel the president. These guys are legit academics. What should they do with this unique presidency?
They need to slow it down, right, you know, I disagree with the policies they're pursuing, but I'm strong, I'm very turned about the way in which they're being pursued. This is very aggressive, this is very fast, and it
can potentially cause a lot of damage. So even if you're in the spirit of having more industrial poalicy, having higher tariffs, a smaller government, like, there's a way to do this that doesn't cause maximal damage, right, And I'm very concerned, and I think the White House and you hear some messaging from them that you know, tarafrates aren't sustainable with China, and we're doing negotiations, but we need to see some action that actually pulls back these costs before it's too late.
Doctor sum Thank you so much, Claudius. I'm joins us New Century Advise us here.
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James Uroca where the Garcetti appointment in twenty fourteen has the most important job in America right now. Every one on Global Wall Street wants this view. We're honored off the red Eye that the gentlemen of Los Angeles and Long Beach Ports joined us this morning. Just thank you so much for joining Bloomberg this morning. As simple as I can make it, What is a single thing you would say today to the long sharman of Long Beach in Los Angeles.
We're going to get through this, even though we're going to be down by thirty five percent next week on cargo volume coming into the port compared to last year, five thirty five percent. Major retailers, big importers have said, at one hundred and forty five percent tariffs, I'm not shipping out of China. I don't know if this could change in two hours, two days, two weeks, So let's hit the pause button. But to the long shoreman, We've had a great fiscal policy in place for a decade.
We're going to keep investing. We're going to get through this. Every four containers meet a job at the port.
What would you say to sixteen hundred Pennsylvania Avenue when you observe their press moments, their management.
We're talking about the ground truth. Cargoes down, jobs are down, and this is the dock workers, the truckers, warehouse folks. But also the manufacturing people. This is Los Angeles County. Almost four hundred thousand people go to work every day in manufacturing jobs. It's just in Los Angeles, in La County. It is the biggest in the nation. Those are the folks that we got to keep going too.
So tell us how a tariff works. When does it get assessed, How does it get assessed, who pays it?
How does that work.
There's a start date that's announced. If your cargo is ingated to that port overseas after the date of announcement, it's applied. The tariff has applied. It's assessed when it gets off the ship in Los Angeles and assessed by US Customs.
Who pays it?
The importer of record ammart, big retailer, big manufacturer bringing in parts, they pay for it. And what the CEOs and board members have been telling me is they're going to pass it on to the next in the supply chain consumers from the retail guys. The parts are going straight to the factory.
We have somebody just emails in what's the COVID equivalent? Is this like, Oh, I'm recalling March of twenty twenty, Am I wrong?
Lall day?
Yeah? It was March, and our business was cut in half. That month. We only did like four hundred and fifty thousand containers, but it made a quick return as we all started buying online and curbside pickup. I don't know when the return date is going to be just yet.
So what are the Walmarts of the world telling you in terms of kind of what they think they're going how they're going to behave going forward?
Again? Hit the pause button. I'm not hiring. Open positions are shelved for the time being. Capital investments are on pause, and I'm waiting and seeing guys like Walmart and others of the large big box variety started bringing in inventory back last summertime campaign trail folks were talking about different trade policy, tariffs, etc. These guys saw through that a
little bit, knowing that this day would come. Where I'm concerned right now, Paul, are these small to middle sized importers that didn't have the ability to bring an inventory warehouse, a, et cetera. Now they're faced with a dilemma of do I buy at these super exorbitant prices, Can I pass it on and still compete with the big guys, or do I just sit and wait. I've got to make payroll next month with your harborst.
And with the Queen Mary over on Long Beach that you know, the tourist thing. The fact is the stuff comes off and they gets to get on Highway seven to ten or whatever what happens on the interstate highways. Given this crisis, you're.
Going to see truckers who have been hauling four and five containers up till now per day move maybe two or three. Starting next week, you see less traffic on the roads. The warehouses with their vacancy rate at six seven percent, that's probably going to dip to Retailers have told me that they've got about five to seven weeks left of normal inventory and then we'll start seeing spot shortages. Give us an exam that you may go to the store and you're looking for that blue shirt Duke perfect.
Duke merchandise right.
It gives you want to nice blue shirts your size and your style with the right kind of collar. You may see eleven purple ones on the shelf and one blue one that just doesn't match your taste, and the price for that blue one is likely up a lot more than the others.
Our interview of the day here, we welcome all of you accrastination, particularly early in the morning on the left coast. Jeane Soroca with us here of the ports of Los Angeles, Long Beach and the rest.
Paul, Hey, geene I.
Again, we've got a president who's the situation is very fluid in terms of his policy pronouncements. If we were to have a president that's maybe dial back some of the tariff situation, what's the time frame for your whole process, your whole world to start kicking in again.
Yep, Paul, if we reached a deal today as we're speaking with China, whatever that deal may look like, a framework, etc. It would take the shipping lines about two weeks to reap his their vessels to the major ports Ching Dao, Jamin, Shanghai. Then it takes another two weeks after they load up to steam over to La So we've got a month once we push the button to say, hey, we're back
in business. And that's why this inventory level at the retail folks are telling me about we're starting to we're starting to get a little tight here.
You're maybe the one person in America that can to answer this. With great respect for Ambassador Burns Nicholas Burns with his public service to China here in the recent years, we all understand there's going to be retail shortages here empty the four hundred thousand manufacturing types in Los Angeles, those Chinese names you pronounced correctly, that I Butcher. What's this going to be like for the people in those Chinese cities of manufacturing and export?
Yeah, tom As, you remember I worked in China for about four and a half years. They still maintained very close ties there to the business community. I'm on the phone with guys and friends overnight every night, and basically manufacturing has slowed to levels they have not seen before since the COVID times. And if folks are out of work, the government's going to help them out.
They have a social safety net.
Yes, So what are you telling I guess your workers at the port, I mean you've got I remember from you were so kind to a store in a pandemic to explain how this whole supply chain thing works.
It's not just the people unloading the cargo.
It's the truckers, it's the it's a warehouse employees, it's.
Everybody, right right, It's one to nine jobs in the five counties Southern California area. A million people go to work every day based on what we do at the ports of LA and Long Beach, and so what we're trying to do is just keep morale up. Again, Let's not blink here. We still get a lot of work to do. The longshoreman as an example, they can start doing preventative maintenance on the machinery when volume dies down
a little bit. The mechanics can get out there in force and make sure that all this equipment is ready. When that surge comes back, we're going to be humming with the truckers. Let's move around some domestic freight as well. So we're just trying to keep the morale up, keep the people focused on the job as best we can. But knowing that we've got a preparation. We've got preparation here. Now. When that cargo picks up, we're going to see it
forty days before it actually arrives on our shores. We're gonna be ready.
Do you sleep on the Red Eye or do you work in the Red Eye?
You know, I got a couple of winks, but you know, I mean just getting here to Manhattan, seeing you guys the energy here and with all that's going on in our industry.
We're moving, You're getting energy from this.
This is yes, John, I regularly appreciate it. I'm thrilled to have them with us. A gentleman of Los Angeles and all of this important discussion. Jeans sorocas Chief Executive Officer the Port of Los Angeles.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York Stays and just say Alexa play Bloomberg eleven thirty good brding, everyone.
Post anytime, keeness jobs say digress right now to the earnings that we see in the digestment of Amazon, Apple and the others. And when you do that, you look at the cloud. I looked at a given cloud ETF I went back ten years. I get for anirog Rana, a log regression, and I say the reason for the shaving of the beard. For those of you on radio, you can see this, but on YouTube, it's fine cinema.
When we go down one point four standard deviations, off the ten year trend yep Rana shaves, he's not coming back till we tick on the trend. What's your timeline, Ana, Rog? I'm getting that beard back on the face. Is it going to be a recovery of quarters or years?
I don't know. It depends on the weather, mostly on Rog.
What did you learn last night from Amazon? And they put an operating income guidance? You know range out there that you could drive a fleet of Amazon trucks through what's going.
On, But what you would expect that because the tariff uncertainty is so high, you do not know whether the goods coming in at what price there would be, what customers would buy. I mean, there's a lot going on their retail business. But frankly speaking, the Amazon Web Services margins were spectacular yesterday at thirty nine point five percent. Now that's going to drop down a little bit in
the next quarter because of compensation reasons. But other than that, you know, the operating income is largely dependent on the retail business right now.
And quite frankly, I think are we at the point now on aug where we don't even care about Amazon dot Com?
Is it all just really important WS?
But you know, if you think about it, the rest of the businesses do have an impact on their margin structure. So you know, you do have to care about it because all the benefit that you're getting from the Amazon Web Services profit, you know, some of the other businesses can can negate that I had.
Interag Lizzie Sanders was in yesterday and I trotted out Graham, Down and Coddle seven hundred pages. Securities analysis. In the heart of the matter is a timeline to terminal value. When you look at the cloud, do you have a three year view, seven year view, decade view? What's the RANA terminal value in analysis of cloud cash flow?
See, when you look at something like a cloud business, you know, I rate them as one of the best businesses out there. You know, right next to you know one could say Visa and mastercout payment processors. The reason for that is because once you develop an application in the cloud, you know you're not going back and develop maing it in house. This is, in our view, one of the most durable businesses out there. So my dominant value actually is well above ten us on this one.
What's the electricity story? Paul and I see all this gloom and doom retail's gonna pay for so and so's next cloud thing in Texas or whatever. Just a quick brief here, Should we fear that our utility bills will pay for fancy billionaires in the RAA cloud space?
Yeah, I'll take you back to around two thousand and eight, two thousand and nine, when everybody thought that because of China, the oil prices will go super cycle two hundred and fifty to two hundred bucks. And you know, we haven't seen that happen. So I firmly believe that people in the power industry will figure out how to take care of this shortage of demand that will come from all
the data center build up. You know, I'm not sweating bit that that is going to have a have a big impact on the AI boom that we are seeing right now.
Hey, Anrav, we just said Gene Soroka in who runs the Port of Los Angeles, he says his shipments next week look to be down thirty percent year on year. Is that just what's Amazon saying about what they're doing in terms of stocking their shelves.
See, one of the things we'll see is, you know, Amazon, both on the one P business and the three pe business, you will see a decline in volume. I mean it has to be. You know, something that you're paying ten dollars for, you you were not going to pay substantially
more for that, So you will see a lull. Another thing we learned from Apple last night was they actually brought in a lot more or basically, you build up their inventory before the tariff hyves, so at least in the June quarter they can fulfill that demand that's going to show up. So you could see a lot of companies stocking up ahead of this particular tariff raise. Now the question is if it continues for another three to
six months, then there's a bigger problem. And I think that's what all of us are trying to figure out, is whether this thing gets solved in three months or six months or longer.
Nerik, thank you so much and rug run with us here with much more fun publishing in Bloomberg Intelligence Here on the cloud.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal the.
Peterson Institute for International Economics. This is like twelve years ago, had to fill awfully big shoes of Fred Burston, and they chose Adam Posen, truly one of the nation's great economists, to our duty at the Bank of England years ago as an outside member, where thrilled doctor Posen could join us because of all the readable noise of the trade war.
His essay trade wars are easy to lose this on April ninth has been the definitive essay that along at the Peterson Institute with Olivia Blonchard's work, David Wilcox and the Fed, and i'd mentioned from Berkeley Maurice Sobsfeld on King Dollar's shaky ground. Doctor Posen, thank you so much for joining Bloomberg Surveillance. What did you learn a out him at the IMF meetings? How scared of the fancy people like you?
Thanks so much, Tom.
The partnership with you, Paul and Surveillance gets our analysis out to your audience, which we really appreciate. The IMF World Bank meetings were the most blank IMF World Bank meetings I've ever been involved with. Nothing was talked about in any serious way that I'm aware of, because everybody was just on tenter hooks. The Treasury Secretary and the FED Chair in the G seven and G twenty meetings tried to reassure people and it didn't go very well.
The statements made by the Treasury Secretary to a private banking group, which then leaked intentionally, we're seen as not that reassuring either, and as covered in the Financial Times, in Bloomberg and elsewhere, the CEA chair just made people more nervous. So what does that leave you with? A basically a very uncertain outlook and bottom line, a bunch of central banks who are not the FED, who are going to be cutting rates.
One day, Adam I was in Edinburgh and I did a radio interview back to America to Bloomberg on the economy from the porch of Adam Smith's house. You gave the original Adam Smith lecture at the University of Glasgow. What Adam Smith would David Ricardo, would Adam Posen Would they call this a new mercantilism?
Absolutely?
What Adam Smith and David Ricardo outlined the law of comparative advantage, They advantages of specialization and most of all, the idea that governments trying to stack up cash at the expense of other countries betrays their people's well being.
They'd be all on that.
And then there's more sophisticated, more narrow points, more recently less profound, but still important that you've said in my article on many others that you can't win a trade ward, at least not with the large economy you're heavily dependent on, and you can't win by creating uncertainty. So this is just bad. I mean, I realized the stock market has recovered, and I realized that some companies are just getting on with it, whether it's corruption or investment or paying field fees.
But it's bad.
Adam does as we think about the US and China in a trade dispute. Here does either side have an inherent advantage here?
To me, Paul, I think the starting point is both sides are better off if you don't play. It's like that old movie War Games. You know better not to play the game. But if you come right down to it, China, if push comes to the shove, has advantaged it. So for the US it is depending on the US for a few things which it wasn't already getting in terms of technology and otherwise as a source of money. Money's good, but you can find many ways to make money, and if you have to cut back on money, you can
deal with it. US is dependent on China for a whole bunch of things, ranging from pharmaceuticals to air conditioning systems, to low end chips that populate our electronics and our autos, to rare earth's processing, some of which over time we can substitute for, but in the short run we can't get elsewhere, and that, to me is the real problem here.
If the Trump administration had undertaken a major effort which would have taken years, to wean the US away from dependence on China and worked with other countries and gotten alternative sources and subsidized production a whole bunch of things to make us less dependent, that would be one thing. But starting the trade war when you're totally dependent just leads to the kinds of shortages you were talking about. Our job was talking about in the Port of Los Angeles.
Adam, are trade deficits inherently a bad thing for a country?
No? I mean the US ran trade deficits through much of the nineteenth century. And grew very quickly. Australia has been running trade deficits for years and it has grown well with great equality. Trade deficits can be bad if it turns out you're either a on a fixed exchange rate system and you don't generate enough currency to keep the exchange rate fixed, which is why most countries aren't on a fixed exchange rate system, or B if you're just basically selling off all the family China, or just to
keep yourself alive. But for the US, over the last fifty years, one hundred years, one hundred and fifty years, we've been running trade deficits because people find investing here more valuable than investing in other places. And when that capital comes in, they're paying us to buy more stuff than we have of opportunities, which is great at least until now.
Adam posing with us will continue with the Peterson Institute. On this job's day, twenty minutes away from an important report, Claudia Sum will lead our coverage our conversation at the bottom of the hour equities. As doctor Posen mentioned, lift it's been four hundred days in a row. I think it's like April didn't occur. Up twenty four on futures down, futures up to zero one.
Paul Adam, what do you think the economic impact of the TIFFs, the uncertainty surrounding the terrifsm What do you think the economic impact would be on the US economy over the next I know, six to twelve months maybe.
Well, Paul, I think there's three things going on. I mean, you can list a dozen, but the three big things are first, again where you started the reporting that Port of la is a great source of information. But it's not just Port of Lee, it's Port of Seattle, it's other places that we're going to have shortages, We're going to have interruptions, and it's not just going to be, as President Trump dismissively put it, fewer doll choices at
Christmas for rich kids. It's going to be things that companies need, small businesses need in order to produce what they produce. And so that's going to be big. That's going to be stagflationary. It may not turn the whole economy a stackulation, but it's a stagflationary force, meaning inflation and contraction. The second thing the uncertainty does is it
paralyzes investment. So essentially, The only way you get corporate investment kept cap X in this country when this is going on is under force measure or from the US government, meaning either a company our country is are twisted and punning up some money or huge amounts of money and protection is thrown at it. Otherwise, investment grinds to a halt basically because people don't know what's worth it or not, Adam.
And then the third thing, sorry, go.
Ahead, no, please give us the third thing please.
Sorry. Sorry. The last point about uncertainty is it means that there's no deal. So if you told me that you were going to go to Japan and Korea first to try to make a deal, I was totally believing that that made sense. But even japan officials, who love being good with the US are walking out saying, we can't make a deal because we don't know what the heck's going on.
And even if.
We make a deal, they'll just renegg like they did on the previous one, Adam. And those are the big things.
One of the great great memories, doctor Posen, that we have is we got the intelligence on the Soviet Union rung. I remember Jeff six out of Columbia going over as a young kid out of harvardation to say, and all of us getting humbled on a new capitalism post Gorbashev and such. Your Nicholas Lardi is absolutely definitive on the mood of China. A year ago, he writes, I am a skeptic on the idea that consumer confidence in China
is very weak. From the land of Frek Burston in the Peterson Institute, do we have good intelligence on what's really going on in the Chinese view of the trade war?
I'm glad you made the analogy to Eastern Europe. I mean, I remember going to East Germany for my dissertation research starting in nineteen ninety, and you know, and the reports where they were a third of our or two thirds of our capity income, and the turds out they were less than a third. I don't think we have that big an intelligence gap with China, because not because they're not secretive, but just because it's a different world, more permeable,
more information is out there, Paul. But there are things in China that are hanging on over that. The threat, as I argued a couple of years ago, now in Foreign Affairs of the Colinya's Communist Party taking away property rights from normal so to speak, Chinese people, which wasn't seen as a big threat for the last few decades, and that has continued to be a drag on the economy. You got obviously the real estate hangover, which they can cope with, but they're not doing much and they're choosing.
They've been keeping their powder dry on doing stimulus, in part because they were worried what the US might do. But now there's the time and they don't seem to be doing it. So but I want to go back to Lincoln, back to Paul. All the weaknesses in China don't mean that China can't win the trade war. The
two don't contradict each other. They might explain why China wouldn't have entered the trade war if the US hadn't provoked it, But once we're in it, all these miseries just don't do anything about the relative strength of China for winning a trade war.
Adam, you have so much experience as well in the United Kingdom. Here. How do our friends in the UK and in Europe from an economic trade perspective of how are they viewing what's happening these days?
It's a good question, Paul, and I think the UK has a very different view than Europe, but not because of Brexit and not because of some of the other
things that used to go on. I think His Majesty's current government in the Labor Government really feels much like Tony Blaird and Jordan Brown did thirty or twenty five years ago, thirty years ago, that the future for the UK is in the security alliance and the economic alliance with the US and so whereas in Europe, just like in Canada, and to a lesser degree, in Korea, Japan, Australia, certainly in Mexico, there is a reconsideration at a very fundamental
level about how much you can depend on the US in the US government, US ability to make deals, us ability to be open. So I think there's a genuine divergence between the way the UK is approaching this, which is Trump has some points, I mean, not like all of it, but we're going to make it work, and
it's good for us to make it work. And given our security relationship, there isn't that much we don't like here, whereas for a German led Europe or French led Europe on environmental issues, on foreign policy issues, on defense of Ukraine, on industrial subsidies, on standards. There's a huge set of disagreement, so I think you have to separate the two.
To go to cod in this dangerous word paradigm. Adam Posen. If we get post Trump, whatever anybody's politics, listening or watching now on YouTube, Adam Posen, post Trump, is there a reversion to some form of post Trump Washington consensus, globalization, business as usual? Or is there a permanence to this upset?
It's the big question, Tom, and I'm not trying to stall. I think the answer is it's still the I think depends partly how badly things go over the next couple of years that you could get a real blow up economically as well as politically, and that would lead to a repudiation of Trump. But even then it's still to play for whether that means a different fame of populism or a return to rule of law in mainstream.
Economics, Doctor Post. That's why I'm out.
Here talking with you, and your program's important, Adam.
One final question, if we could Paul Sweeney grew up on the lawns of Princeton, in all of middle New Jersey. You darkened the door of Cambridge. I mentioned, Adam. I don't know if you mentioned it. How many times, Adam, have you been in the Tasty in Harvard Square a few years back? I mean, you know you were in there on one.
Of the stool I liked.
I liked Elsie's much better than the Tasty, So I was only and I was an early night person, so I was only in the Tasty a couple times. I was in Elsie probably once every week or two.
This president is going after a universities that gave us people like Maurice Obsfield gave us Ken Rogoff gave us Adam Posen. How do we get beyond this threat to higher education? Or is some of the President's criticism's valid.
It's insane no matter how valid the criticisms may or may not be. And I'm not going to touch that because I'm not an academic, thank god. But destroying the research capacity of the greatest research complex in human history that has been the source of American advantage and well being and defense capacity for eighty years is possibly the
most destructive thing the Trump administration is doing. And I don't mean just Harvard, and I don't mean worrying about supposed anti Semitism, although I think that's not what really motivates them.
But who the heck knows.
I think you're destroying National Institute of Health. You're destroying at biomedical research across the board. You're undercutting standards for research by having an HHS secretary who makes stuff up in contrast to all known research. I mean, I could just spew on this, sputtering for hours. This is the golden goose for the US economy, for the world's well being,
and we are destroying it. And that's where the UK and a few other countries including Japan and Singapore, Australia, Germany, we have to help step up and find a home for talent and find the money because this is something we can't replace.
I got twenty two seconds left. I'm sorry, it's May one, Red Sox seasons over.
Yeah.
Thanks, thank you for the brevity of that answer. Adam Posen Forever from Brookline, Massachusetts.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven on Apple Cocklay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station just say Alexa play Bloomberg eleven thirty Constance.
Hundred, where this chief economist Eiu Claudia begged them to slow down on policy. Talk about the degrees of freedom you get taking our economics over to policy if you just go slower without being too slow.
Well, I think it's not just a matter of going slow, although that would certainly help. I think it's being more predictable, having a trajectory and being more predictable. And I'm working on a piece that'll probably come out early next week, which is about the fallacy of trade negotiations. Right. Clinton gets credit for NAFTA. Well, that was started under George W. Bush and mostly negotiated by Carla Hills, who is who
his USTR. Right, these take years. Mircosaur has been underway for twenty years with Europe, and so the idea that we can rip up these trade agreements and just put them back together in ninety days is very inconsistent with the way the world has worked.
Heretofore we had.
Gene Soroca on at the Port of Los Angeles, and he says his scheduled sailings are going to be down thirty percent next week. So I mean the ships are already you know, turning around. How does that impact the economy? I mean even Apple, even Amazon are calling out expected economic disruptions goods and services disruptions. That's in their forecast, Like how does everybody else deal with well?
And Paul, this is a great point, right if they're calling it out and calling in about out in the amounts that they are, and they have huge amounts of cash, and if they didn't have cash, they could just go to the capital markets and raise some cash to front load imports. Think of small businesses, they don't have that ability.
Right, We're talking about cash flow?
Is is it best one month of of spare cash flow?
Right month?
Right now? It just goes back to the definition of anarchy, which is we're all nine meals from anarchy. I mean on a trade basis, you know, you wonder well where it falls apart.
And you know, we know that civil unrest happens when people can't get food.
When prices happening. No, I think we're.
Going to have more a shortage of goods, right, So if you if you cannot get the barbies for your children at Christmas, brilliant.
Seriously, both Justin Wolfers of Michigan was brilliant with Stephanie Rule. I think it was last night of the night before on this. You know, we take it for granted that the kids get multiple barbies under the Christmas tree, rich or poor in this nation.
Well, let's and let's bring it back to summers. Summer's about to be here. Maybe your kids need new, uh, you know, clothing and sports equipment to go to camp in the summer and to do their summer activities. That's not going to necessarily be on the shelves.
Yeah, we got to get the market open. Constance Hunter will stay with us. Chief economist did Eiu again, A futures up twenty something tech angst great jobs report features up sixty three into the opening down, futures up four to twenty two in the vics, A twenty two handle twenty two point seven five. Please stay with us, some really good conversation coming up. This is Bloomberg surveillance. Gente.
All right, there you have at the opening dell at the New York Stock Exchange. Right out of the gate, the S and P five hundred climbing one percent up fifty four points. Right now fifty six fifty eight on the index. The down Jones and Dustrial average up four hundred and twenty two points. That's a one percent pop. Right now, Tech having Nasdaq one hundred one percent higher. That is up two hundred points after their earnings after
the closed yesterday. Shares of Apple four percent lower, and shares of Amazon right now in the early going down about eight tenth of a percent S and P five hundred on the verge of its longest winning streak since two thousand and four. I should tell you this report is being brought to you by ship Station Calm the Chaos with the shipping software that delivers use code Bloomberg
for a free trial at shipstation dot com. That shipstation dot com with the code Bloomberg, and that is your opening bail report.
Paul On Tom John Tucker.
Thanks somebody's constant hunter with it. Somebody goes to as quickly as a tweet for the president in the last twenty minutes, Gasoline just broke a dollar ninety eighty gallon lowest to years. Groceries and eggs down, energy down, mortgage rates down, employments strong. He goes on to say, just like I said, we're only in a transition stage just getting started. No inflation, the FED should lower its rate DJT. Is there inflation constances?
Hunter, Well, there is always some inflation. Inflation is above the Fed's target. Now, I think they're concerned that it will instead of continuing to move towards target, will begin to you turn away from target.
Right.
At the same time, we know that labor market data is a lagging indicator, right, So so they're they're in a tough place. I don't think given this labor market data that they can really cut rates in May. Credibly,
they're not. They're on their way. And by the way, if the tariffs weren't happening, Let's say you took a world where these tear none of this was happening, and we were status quo on that right and all we all we had was, uh, you know, fewer border crossings and some labor supply constraints and some and the other policies that the administration is putting into place. Would the
Fed cut rates in May, Absolutely they wouldn't. Inflation is on the way to their trajectory, but they would like to see it get there before they cut rates, so they would likely wait to June or July. Right now, we have the tariff tariffs in train. They're about to impact what is their impact going to be? Supply supply shock and inflation. There's no way the Fed can cut into that.
We've seen the stock market rebound and we retrace, you know, maybe a little bit more than half of the losses we saw earlier. What has not rebounded is the dollar. Continued pressure on the dollar.
What's going on there?
Yeah, I mean, I think you're seeing several things. You're seeing a reallocation out of US assets, and you have a stated policy by the administration that they want less trade activity and therefore less demand for dollars. And you had Adam Posen on earlier this morning as well. I was listening on my way here, and Adam brought up a really great point. Our financial account surplus is a
wonderful thing. It's the opposite of the trade deficit, and it means that investors overseas want to bring money to the US. They want to put in FDI, they want to invest in our equities, they want to invest in our stocks, they want to invest in our treasuries, all
fixed income, you know, private equity, you name it. They want to invest in it, and now we have an administration that's saying we want the dollar to be weaker, we want there to be less activity all around, and so I think that's the crux of why you don't see the dollar appreciating in the face of tariffs, which would be the normal economic reaction.
Oh, markets appreciate it. CONTs us On here, Thank you so much. With EI.
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