Bloomberg Surveillance TV: May 1, 2025

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This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along with Lisa Bromwitz and Amrie Hordern. Join us each day for insight from the best in markets, economics, and geopolitics from our global headquarters in New York City. We are live on Bloomberg Television weekday mornings from six to nine am Eastern. Subscribe to the podcast on Apple, Spotify or anywhere else you listen, and as always on the Bloomberg

So you know, it's meant to capture an idea, and it's about convincing the market that you're sort of done with the trade policy issue, that there is a huge amount of uncertainty about the different ways that that can be done. And at the end of the day, given where we are, you know, I expect it will be kind of mushy. I don't have a better word than that.

At least to ask the question where the pressure would come from. Where do you see the pressure coming from? What drives that credible relent?

I think at the end of the day, it's the same thing.

So when you think about presidential elections, you know, we've all heard it's about the economy.

Stupid in the sense that other things.

Matter, but it's mostly about the economy. And so I would argue it's presidential job approval ratings. And because you know, if you think about if the presidential election is about the economy, and then you ask people, you know, where do we ask people how do they feel about the economy? It's consumer confidence. So the typical pattern is new presidents start with the hefty sort of goodwill or a honeymoon

We land at.

Levels that are basically, you know, dictated by consumer confidence. I would argue happened the last two administrations, and so you know, we are.

Midway in that process.

We started up here, we've been coming down and the trajectory right now and I'm just remind that current consumer confidence levels, you know, suggests that you might get down to thirty percent.

And so I think there will be a reaction long before.

Yeah, there's some pretty negative soft data that have been coming out. You talk with us when you head is still a seventh thousand and reading seven thousand target on the S and P five hundred, saying it was a matter of time and if this uncertainty didn't get resolved, you would have to bring your forecast down, which is part of the reason why.

You did bring your forecast down.

Now there is a question of how much longer can this go on before you bring it down again, Before you cannot put the toothpaste back in the tube, you cannot put the gen back in the bottle. Pick your potential saying how much are you looking at that?

Very much?

I mean I think that, you know, the risk is that the relent that we were talking about comes basically too late and the noninearities of for session kick in.

I think one has to be honest.

Which is that it's just very difficult to gauge what the impact of the tariffs is going to be. And by that I mean I think they're clearly negative for US growth. They're very negative for US earnings. Precisely how much is the question? I mean, on a twelve month basis, you know, we calculate that the impact would be fifty six dollars p five hundred EPs. And just to put that number in perspective, you know, last year we had

Basically in the.

Sense that big tech is going to lead this charge. That is essentially what we have already seen from both Meta and Microsoft as well as Alphabet last week, that there's sort of a resurgence in faith in US tech that can bolster some of the pain that you might see elsewhere from the likes of McDonald.

Or GM or some of the other companies that are more hit.

Yeah, what I would say is, you know, earnings are basically saying they're hanging in right now, and earnings are fine. But again this is about you know, this about yesterday, not about tomorrow, and the question is what happens tomorrow. So you know, our take is that earning's growth for the first quarter currently, you know, looks like it's coming

Think you talk about this relent, what's the level, what's the destination you think we're going to get to in a base case scenario.

I don't know, it's the honest answer.

I think it's all getting worked out dynamically, and so the circumstances and what happens.

So it's data dependent to use a bad term.

So do you think it's political?

Question of yeah, I think it's political.

So basically they have to November third of twenty twenty six.

You know, the midterm elections start a lot earlier, and I would argue, you know, the clear and present danger is to approve ratings they have, you know, sort of predictable consequences on your ability to cover.

And so we shall.

See, Binky, we shall see. It's going to get an update from you. Thank you, sir, appreciate it. Binky Chant of the Deutsche Bank on the equity market, Brank under a stafer with a surround of table branc and morning's a little bit later this morning, we'll catch up with Binki Chanda, a Deutsche Bank and this is his call sixty one fifty on the SMP. He says that's going to be driven by a credible then on tariffs, and that will be shaped by damaged polls. Is this president driven by Poellink?

No.

I think he's driven by legacy. I think that's what drives everything with the White House right now. This is the second term. There will be no third term, despite the you know, the jokes about it.

But he's been talking. Trump has been talking about.

Tariffs and a restructured US economy since the nineteen eighties. This is it for him. This is a one chance to get this done. So the idea that there's going to be this massive pullback despite the pause and everything, I think Trump believes this in his heart.

Maybe there is.

Some economic data, some market data that comes in later and causes them to recalibrate.

You know, certainly.

Everybody's thought there was a Trump put. I think we miss priced the Trump put to a large extent. Maybe it's still there, but I think at the end of the day, they're thinking about legacy.

Well.

He basically said recently to The Atlantic that there's really no red line, no certain number that would pull him back and reverse policy. To your point, though, that he wants to see a global realignment. He talked about yesterday in this town hall. The fact that terrors are difficult to explain because he takes a maximus approach to then bring it down. Do you believe he wants a full global realignment with some of the figures he has now or he wants negotiated deals in terms?

I think he wants negotiated deals to get to that endpoint. That endpoint being that restructured global economy, whatever that looks like. And I don't know that he necessarily has a clear picture in his mind what it's supposed to look like, what he wants it to look like.

I think at the.

Heart, the current system, in his view, does not serve America well. And you can debate whether that's true or not, but in his mind it doesn't serve America well, and so he wants to leave something that's better, and I think it's probably through a negotiated deal.

How you get there is another matter.

So when it comes to China, what do you think this could look like? I was talking to people yesterday Washington, DC who are convinced that Trump wants a grand bargain includes things like TikTok and other levers they can pull. What do you think that deal could potentially look like?

Yeah?

I think I think I'm not sure what the deal looks like, cause I think it's a lot more complicated than people think it is. So, look, China takes a much longer view than we do. They think they can outlast us, that the pain threshold, that kind of Jonathan was just alluding to that it'll be so great in the United States that the US is gonna have to capitulate at some point. So they're gonna they're gonna wait

So I think this is going to do. I think China is going to take much longer than people expected to.

I want to build on John's line of questioning where he said, right now, doesn't seem like the polls is really a check on the president, despite what a lot of people had expected. Doesn't seem what the stock market is a check on this president's policies. What is a check potentially on what he decides to.

Do and not just what he decides to do, but how he does it.

I do think I agree the stock market is not a check. I do think what we've seen is that the bond markets and the broader financial markets are a check. And I think you have the Secretary of the Treasury talking to the president and warning him about economic repercussions if he keeps going down in certain lines on trade policy. I think that's why we got the pause. So there are some checks. Again, we probably have mispriced all of this.

Right.

The checks are still there, there are just much different levels. What that level is I don't. We don't know until we know. It's impossible to say. But his poll numbers have deteriorated over the last couple of weeks.

The honeymoon seems to be over.

Very interestingly enough, this is lining up pretty much with the same timing that President Biden saw his honeymoon end when he got when we had the problems with Afghanistan and a few other issues in April of twenty twenty one.

Maybe there is some level at which.

You know, further poll deterioration causes the White House to rethink this. And you know, because the president's not running again, he's a little bit immune to polls.

But at some point does.

The vice president ste been because obviously the vice president is going.

To want to succeed.

And how much sway does jd Vance have with the president, because clearly he is looking towards twenty twenty eight.

Donald Trump's not He's.

Got to say that's a huge question.

Broan.

It's got to say you've said thank you for having got in that have stayful. Let's stick with tech. Apple reporting results after the closing Now today Dan ives of wet Bush, writing, we remain bullish on the long term opportunity for Apple's flagship ecosystem.

Investors need to look.

Past the next three months and assumed China tariff negotiations take a positive turn, Dan optimistic as always joined us Now for more, Dan, welcome to the program sir, Let's go straight to it with Apple. How are you going to draw a distinction later on this afternoon between a front loading people rush into the stores before the tariffs and decent, sustainable underlying demand.

Yeah, I'm actually less focused in the quarter as you talk about in terms of pour forward or front loading. Really about what Cook talks about in terms of parrots, like are they going to stay on schedule iphon seventeen launch? You know how they're going to sort of scenario analysis in terms of when they're seeing in China that we need to hear from Trump administration? Whose are the keys? And I actually numbers take a back seat to Cook's commentary about that.

So don let's talk about the guidance then, what kind of scenarios they could offer, and what you think of the approach so far from corporate Americas, Because we've seen a range of things down. Some people have just pulled guidance, haven't offered any other people of some people have offered multiple scenarios. What would you appreciate What would you prefer to see this afternoon.

I prefer no guidance because I need you give guidance. Jactually put your back ends the wall. I want they could give some sort of scenarios, but it comes down to Junes of Mulligan. It's a passaway border. I think the really focus is, you know, do you launch in terms of September. I've burned seventeen and give some scenarios

You know, John Ray's just a really interesting point earlier Dan about how much forward buying there was over the past couple of months and frankly over the last couple of weeks to get ahead of any potential disruptions in shipments from China. Are you expecting to get any guidance about the pull forward effects and maybe that we could even see much better than expected numbers that will only be made up in maybe declines later on.

Yeah, Look, there will be pulled forward, and again I think number draps are going to be burned strong, and I think they could quantify some of that, But that's sort of that sort of breadcrumbs. I think the real focus in next few quarters, over the next six to nine months, how they're going to navigate these in terms of maybe even talking out some supply shame plans the

We're hearing a lot of commentary about how maybe Meta and Microsoft have been somewhat immune. We're going to be hearing more potentially from Apple and Amazon. We got this reporting overnight from the Wallstreet Journal that they were thinking among some of the height at Tesla at some of the height of the of the carnage and some of the boycotts, that they are looking at potentially getting another CEO to replace Elon Musk.

What do you make of that?

Look?

We talked about it on your show right a lot. I mean the point is, regardless the board denies it, and the scenario is this was the moment of truth. The board had to do something, whether it's a warning shot or whatever it may be, it must kind to choose CEO of Tesser Dude, and we thought that conference call is probably the best conference clubsee must do maybe ever or Leased in the last four or five years so important because the brand damage and what was ultimately happening.

Clock struck midnight.

So regardless of the semantics and what actually happened, what did happen, the end result is a huge positive. Must back in the driver's seat SEEO of tests. And I continue to think like his deeds the White House are essentially do well.

Dan, They're not in the sense that he was at the cabinet meeting yesterday wearing not just one but two make America Great hat stacked on top of each other. Even though he is more focused maybe on Tesla now than he was in the beginning of this administration, were very focused on Doje. Can that brand destruction still carry through?

Yeah, look me and you've talked about that a lot, and I'd be surprised of these other cabinet meetings. I mean, just given I think the pressure for him to short detach himself. But we've to have brand damage.

You got to contain it.

You have a massive error of growth ahead. Autonomous robotics turning things around in China, especially bid in terms of rising here, in terms of from a share perspective, leaders lead. That's what Musk has to do now, and I just think that was the move that he started to take on last week's call, and I think that's what we

And then let's finish on the biggest challenge to them right now, which I think could possibly be a tie up between Weimo and Toyota. We're talking about the best setting comprand on the planet, two of the best setting models out of the top three in the world in the last twelve months getting together with Weimo, that's delivering two hundred and two hundred thousand, two hundred and fifty thousand paid trips every single week. Why isn't that a threat to Tesla.

I personally think that's not as big a throw as maybe some park right well, Wimber two hundred forty thousand dollars cards and four cities that obviously will expand they had the lead in terms of coming out of the gate. I think when it comes to Scire cabs and house iding on Parliament. There the scaling scope. They're really going to own that market. So you're going to see more

I'm guessing you're at the airport, Dan travel safely. It's good to see us, sir. Thank you guys a making sign for us. Then I have a web pish there with this around the table now being Lincoln of being my capital market Seeco.

Monic morning, thanks for having me on.

I'm going to repeat that question for you. The Treasury Secretary scout person said, because the two year yield is trading below FED funds, it's evidence that they are too tight and they should cut interest rates. What's your response to that.

It's suggesting that the market anticipates it. Over the course of the next twenty four months, effective FED funds is going to be lower than it is. That doesn't mean that now is the time to cut that just means that the market is telling us that they FED will resume normalization at one point.

Does it concern you that there is so much discussion around FED policy from administration officials.

Well, we came into this knowing that there was going to be some political pressure put on Powell. There's been conversations coming out of the White House about potentially removing him. I don't think that that's really in the cards order.

Well that's what I was going to say on the margins.

Is this a fact not just FED policy, but also how the market responds to it. If there is this feeling that there will be somebody else coming in, that there could be a shadow FED, that there is pressure increasing job owning, and frankly that FED fit officials may feel like any decision or words that they say will be interpreted in a political way, both in the market and in the White House.

I don't think it's really a typical for the administration to be pushing back against any given FED or any head of the FED. But what I think it's what's so unique in this cycle is how vocal and how real time it has become. Typically, you would expect any sitting president to want the easiest monetary policy possible. But Powell's objectives are for the long term stability and health of the US economy, which involves price stability, and that's the That's a battle he's fighting at the moment.

Because it's so vocalsure and the trum FED chair how to come out and say this is an appropriate a sense saying by law he's allowed to stay in his job. Does it make it harder for them to cut rates if they had to extend It just looks like they're placating the President of the United States.

Well, I think something that we've learned over the course of the last several weeks is yes, there's a power put, but there's also a Trump put, and the Trump put is struck higher than in the power put. Powell doesn't want to encourage and reinforce behavior in the White House that isn't necessarily going to be good for the long

Following the Treasury Secretary's comments about the two year rate below the Fed funds rate, Neil dot To put out notes and wage and salary growth is running below the level of Fed funds rate as well, meaning it's already too tight. What do you make of that argument?

Well, I will argue that the bulk of what has occurred over the last six or eight weeks has been really a uncertainty inducing event, and it follows intuitively that as some of the backward looking data could suggest that it's time to cut rates, that the market is focused on those aspects of it. There's also aspects of the data that suggests that the Fed should continue to remain on hold until September or later, which is actually my assumption at.

This point is ready to call moments. Take the numbers from Visa. We mentioned this just yesterday. We've not seen any signs of overall consumer spending weakening. That's from the CEO from McDonald's right now, this is what they're saying. They're cautious about the overall half of the consumer. They're seeing pressure hitting the middle income consumer in America and elsewhere. Picky poison.

Right now.

It's difficult, and that's the reason why cruise liners are up. But if you look at one cruise liner, it's up, but maybe not the other. And then you have people saying, well, sometimes companies are just trying to use the circumstances as an excuse to talk about weakness.

That might have already been president in their business models.

It is difficult to understand whether this consumer is going to be tolerant of price increases or not, which is the reason why you might see some testing by companies to see, let's get a sense can they absorb this and can we pass it along.

I don't think it gets any easier from here. You're going to see way more distortions in the data for weeks, maybe even months to come in. It's wonderful to catch up with this appreciated in lind There of Bemo Capital Markets. This is the Bloomberg Sevenance podcast bringing you the best in markets, economics, and politics. You can watch the show live on Bloomberg TV weekday mornings from six am to