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I have known Peter Navarro for decades. He's a pinata for so many in America. I want to reaffirm who doctor Navarro is. In nineteen ninety four, a bombshell of a book came out of University of California, Irvine. It was called The Coming China Wars, and Peter Navarro Agree or Disagree invented a franchise and conversation point on America in China.
A guy up in New.
York, Donald Trumps citizen looked at mister Navarro and said, hey, I can agree with that. And of course, Peter Navarro advises our second term president of the United States, a senior counselor to the President. Doctor Navarro, thank you so much for joining Bloomberg today. I want to get right to it.
Peter.
When you were at Irvine, you lectured on McKinley's capitulation on tariffs, McKinley was the arch Trump like protectionist of the nineteenth century, and he did the Buffalo pivot where he said, We've got to get more open. Are we in the process now of a modern Buffalo pivot?
Tom?
First of all, I just want to let the Bloomberg audience know how much I admire you. For years I've I just love what you do.
So let me get that out of the way.
McKinley, Henry Clay, Abraham Lincoln, Alexander Hamilton, these are like the four people on the Mount Rushmore of American tariffs. And we are not in any pivot away from that. We are fully embracing a structural shift engineered by Donald Trump in the entire international global trading system in a way which will make that system better and more prosperous.
The problem we've had, Tom, is under the rules, the very rules of.
The World Trade Organization, specifically the most Favored Nation rule, every other nation in the world has had a license to cheat us through higher tariffs, higher non tariff bearers, and the costs, particularly after NAFTA and China joined the World Trade Organization in two thousand and one, has been in the one hundred thousands of factories and the millions of jobs.
And we are reversing that.
And you can see fifty thousand on the now, which I predicted in April.
Trump, either you or Kevin Hasset, I'm gonna give credit for that. Peter Navarre, We're going to go with you on the sequence here. You mentioned the follow on from NAFTA. I spoke to our Josh Wingrove this morning and he made really clear what we need to know is a president actually thinking about moving away from our trade agreements with Mexico in Canada. Have you heard the president say I want out of NAFTA and everything that followed it.
Tom, I'm one of three people, Stephen Miller Dan Scavino being the other two who was with the president from the twenty sixteen campaign through all four years of the first term. And the reason why that happened, among other things, is I never get ahead of the president. I can tell you this that USMCA has some significant flaws in it and it's going to be reevaluated in July. The Great Jamison Greer or US Trade representative will be taking
the lean on that. But nothing ever happens in the White House without the Commander in chief, particularly on trade. So as the boss says, uh, let's see what happens.
But we're in a situation.
One of one of the things you know, I'm the senior Counselor of Trade and Manufacturing, and one of one of the things that's really troubling right now, it should be troubling to the variant people, is that Mexico UH and and to UH extent, Canada are basically being used by staging areas for countries like China, UH, some of the European countries, in the Asian countries, Japean, Korea, they come into China, into Mexico and they leverage NAFTA, UH and now U S m c A to get into
our markets in a way which essentially is terriff avoidance at best and tariff of evasion at worst.
I could have to deal with.
That, Tom accrastination and worldwide.
Peter Navarro with us, with the Trump administration, our Paul Sweeney with doctor Navarro.
Mister Navarro, I guess last night we saw in the House of Representatives they voted and some of President's tariff agenda against Canada. Did they overstep their bounds? What is the response of the administration.
Well, I think it's highly ironic, Paul, that the Democrat Party is opposing tariffs on behalf of working class Americans when it was the Democrat Party, which is supposed to be the party of the working class. They simply because they hate Donald Trump, now they're anti tariff. I think the bigger story is the shame on the three Republicans who defected. Although Thomas Massey I don't consider him of being nice anymore.
I'm being nice. What I'm just selling like it is, it's like Nancy.
Hang on, let me give a compliment to the Democrats, Sez, the Democrats hold ranks and we don't, and we got to stop not holding ranks, sir.
Because Okay, it's.
Very harmful to the party and to this country when we have that kind of thing going on.
Okay, Peter Well said, but let's give two examples right now. Tom Barrett, who's the congressman from Lancing, Michigan, he's got two GM factories up here, his Republican working class constituents who President Trump stole from the Democrats. Tom Barrett is going to fight for his life in that congressional district of Lancing, Michigan. What do you need to do to get Tom Barrett re elected?
Well, okay, so that's a bigger conversation. I can tell you this, The stakes have never been higher in a mid term congressional election. If we lose the House in twenty twenty sixteen, we will see a repeat of the impeachment circus craziness that we saw beginning in twenty eighteen. It really was tremendously harmful. The Democrats they hate Trump more than they love this country, as Corey Lewandowski once said, and our strategy now, look, they're coming at us on affordability number one.
We are turning that around as we speak.
We're taking a micro approach to the macro problem inflation. We're taking it cow by cow, fish by fish, gallon by gallon. And nothing is more important to the President than strong growth in a deflationary environment. Following the four pillars of trump Nomics, tax cuts, we got strategic enter g dominance, we got deregulation, and of course fair trade. So we're gonna first of all, address the affordability crisis head on. We're making great progress on that. The border
issue remains troublesome. I've got a peace out in a rival network thing today that does the body count when you let millions of illegal aliens in.
To this country.
I mean, we lost two Americans in Minneapolis because of what was.
Going on there.
But my calculations, tens of thousands of Americans are going to be either murdered, burgled, raped, or assaulted by the illegal aliens unless we deport them.
So that's going to be and that bounds your You know, one of the things. We saw very strong jobs report yesterday, but a lot of economs will say, this is an economy that is kind of slow hiring or no hiring, but slow or no cuts in jobs. It's just kind of hanging out there. If you want this economy to grow, many economers would argue, you'd need a larger workforce. Does that suggest the Trump administration maybe rethink their immigration policy?
Hey, hey, god, we had one hundred and seventy thousand private sector jobs created last month.
One hundred and seventy thousand.
And by the way, Paul, the best answer to your question is increase the labor force participation. Oh, it went up yesterday in the report.
Even as the unemployment rate went down.
How many times do you see that we're looking at five percent GDP growth, and we're looking at earnings which you're off the charts and back in April April seventh, to be exact, when the futures for the Dow word thirty eight thousand, my friend, thirty eight thousand Onipical Titanic.
I said fifty thousand.
On the data tied out to Hasset. That's all.
Look, Peter Navarre with Kevin wrote a book like years ago. He never said fifty thousand on the Dow this year.
I've just to be clear, Peter Navarro with us here nationwide and of course some miservine California as well. Peter, you mentioned the midterm elections. Here's the reality for the president right now. You go out I eight across Illinois, you run into the Big River and there's Davenport, Iowa. The Republican in the first congressional district won that district by six votes last time around. They didn't cross the aisle yesterday to vote with the Democrats. But they've had
it with the Navarro Trump trade. What do you need to amend to get Republicans re elected in November?
I just so disagree with that.
We Iowa loves Donald Trump and by the way, farmers love Donald Trump.
Farmers above all.
Understand the necessity for tariffs. And every time there's been retaliation by China or the Europeans or by the Canadians, guess.
Who's had the farmers back.
I've personally been involved with the great Brook rawlings over at the Department of Agriculture and making sure that farmers are made whole and can't be used as bargaining chips and pawns in a bigger game. So, I you know, Iowa is Trump country, and I just it's like you're making assertions that I just I mean, if you start with an assertion that's wrong, then everything that else that follows is not.
Peter, what we're talking about.
This is too important, and Paul wants to talk about the legal background as well. Peter Navarro a two to three percent terraf regime for whatever reasons, and you were
providing leadership on this. We had Liberation Day in the Rose Garden and we went up, up and away, and Toby n Angle at the Ft has brilliantly shown that we've pulled back our blended terrifyrate right now I'm guessing to ten to eleven percent, where is Peter Navarro's optimum blended terrifyrate if it's not the two to three percent that President Biden and others had before you.
Great question, and the way I like to think about it.
Is the trade deficit.
The trade deficit, when it's chronic like it has been, and large like it has been, is toxic to the future of this country. First of all, a big trade deficit that's chronic, that's opposed to occasional, is a proxy for all the factories and jobs and supply chains that go offshore that happens. That not only hurts us economically, it's hurts us from a national security point of view, as the pandemic underscored.
So there is that.
Secondly, when you run a chronic trade deficit, you're basically shipping your wealth offshore. We've done that by the last calculation, I made something like fifteen trillion.
Dollars of our property.
Bottom line time is when the trade deficit gets to zero, then you've got to run with that thing. Well but by the way, by the way, the goal here is simply fair trade. And what we're doing, what the President is doing with Jamison Greer, Scott Bessen, Howard Lugnik are doing is working with our allies and countries around the world to get them to lower their tariffs and trade bearers. Who in bloomberg Land could disagree with that as.
Okay, So Peter disagree with the results.
Tom, I gotta get this in because Sweeney's like all Supreme Court right now. Peter and NEvAr, you didn't answer my question. We came up, we had Liberation Day, we did No, you did not that.
Your question was what will satisfy Peter Navar? And I said, when the trail.
What is the what is the optimum blended terrifrate? James Diamond wants to know that. Brian moynan wants to know that. Solomon over at Golden Sax wants to know that. And the people in the first Congressional District of Iowa, where are we heading? Is these exemptions come in? Do you see a seven percent optimal terrifright? Four percent? Do we capitulate and go right back to two to three percent?
So here's a Kevin Spacey aside here, Jamie Diamond, lower your fringing.
Credit card interest rates.
You are a criminal the way you charge the American people at twenty two twenty five and thirty percent, and the President wants you to lower that. So until Jamie, until you do that, please refrain.
From commenting on other public policies.
Okay, got that off my church. Now answer with respect to your question.
Please.
The way we think about it, Tom, and this is important, is.
That every country that we trade with is like figure prints, right, they're unique, which is to say they cheat us in their own way. It's like some countries like India have had the highest tariffs, some countries like Japan have had the highest non tariff barriers, some countries like China have all of that stuff going on. So when you ask me what the appropriate tariff would be, it's it's bespoke.
It's like what President Trump does.
He goes country by country by country and he sets the tariffs according to how badly they're cheating us. So there's no blended tariff concept here.
It's like a country specifically.
Thank you for that. Let's get Paul Sweeney in here, hitter.
Just real quickly. There's some of President Trump's tariff policies in front of the Supreme Court. To the extent the Supreme Court rules against the administration, what will be its response.
Well, first of all, let's let's talk about the law and the use of i EPAH. If the Supreme Court wants to rule in favor of President Trump, the law is clearly on the Supreme Court side, and you have.
Is a teriff attacks, No, it's a.
Tariff on foreigners, and is a tariff a form of restriction on imports. Of course, it is just like quotas and other things and embargoes. So those are the two points of law which this case is about. And if the Supreme Court wants to rule in President's favor.
Clearly laws on their side.
With respect to Plan B, of course, we have a Plan B, but this is not the place.
For me to talk about it.
If the decision comes out next Friday, which would be the next time the Supreme Court is going to be releasing decisions, then the President will speak first on what's going to happen, and then folks like me will come in behind him and explain the details.
Peter, thank you so much for joining us.
Thank you for commenting on the realities for the first Congressional District of Iowa.
I believe it's the eighth.
Congressional District of Michigan, as well, and on the world of trade Peter Navarro, Senior Counselor to the President for Trade and Manufacturing for the President of the United States.
Stay with us.
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You're going to get a good amount of time here with Brian Belski to reframe this bull market.
I'm looking at this Brian, and I'm.
Looking company to company and Paul and I remember times where there was exuberance without profit. I'm absolutely overwhelmed at the set of companies that have extraordinary profit. We've never seen the margins of some of these companies.
We've never seen the margins of some of these companies, Tom, But I think more importantly, we haven't seen the consistency and earnings that I think people are missing. I think at the end of the day, this fourth year, the bullmarket that started in October of twenty twenty two, part of our big secular bullmarket call that we've had in place since two thousand and nine twenty ten, we're transitioning.
We're transitioning to more of an earnings driven market, and traditionally and historically an earnings driven market still positive, but not as positive as a multiple driven market, momentum driven market, which we've clearly been in since early twenty twenty three. So I think investors are having a hard time understanding that.
But I think the biggest thing, too, is that the broadening out is real and it's showing up in the fundamental numbers where you're seeing smaller areas in the market, not just the s top five hundred, but smaller cap companies are actually showing great earnings and better earnings than the large cap But more importantly, something that you and I and Paul's been involved in a conversation too, is we talk about price or free cash flow and cash
on these companies continue to grow, and that's something to us that is very, very very positive in terms of how we talk about our small MidCap portfolio that we offer clients.
Brian, one of the things we have seen over the least three months, let's call it is a little bit of a rotation out of some of the growth parts of the market into some more cyclical sectors of the market, maybe even small in mid cap. Is that a short term trade? Is that a longer term rotation? How do you think about that?
I think it's a longer term rotation. You know, the market had these fits and starts into small cap through the years, as the last couple of years in particular when the ten year treasury went down, and then everybody just kind of assimilated to you buy small caps because the rates are downe and you buy small caps from
a fundamental perspective because they have better growth or attractive valuations. Again, going back to the operating performance with respect to return on equity, return on invested cap, all these things, they're looking really, really great. And I think I think that ten years from now we're going to be kicking ourselves that we didn't own more small cap companies.
Brian Belski with this with him list. We're waiting on Peter Navara. We'll go to him at age fifteen. Here the trade representative for the President of the United States, Paul Sweety with Brian Belski here in New York City.
Earning seemed pretty solid. Brian or sixty seventy percent away through the S and P five hundred reporting double digit earnings growth. I mean, corporate America continues to come through. Here, are these good quality earnings are enough to support this market?
Nice?
We think they are, and I think earnings are actually going to continue to grow because we're going to continue to see them from other areas, including financials, parts of industrials, consumer discretionary, and communication services. Is not just all about tech. We haven't even mentioned it yet. So how amazing is that that we haven't talked about tech. But at the end of the day, we think the broadening out and we're seeing a broader distribution of earnings, which is very,
very positive. Number of years ago we talked about how we need to see more of a normalization of the market. Yep, And I think that one of the last times I was here live and Soon we talked about the ninety five ninety six market when I was at Dane and you're at Rauscher, Tom, and we talked about how that market was probably the last time we've seen more normalized trading.
I look at this, folks, I want to go to Kimilis. So what the story is? Belski He didn't like.
His mantre Canadian ticket and see it Cimill's investment strategies and the website really pretty cool. And you have something that I'm huge on away from the mathematics of any finance will intentional concentration. Yeah, discuss intentional concentration when Apple's up sixteen percent twelve months trailing and Microsoft is flat twelve months trailing.
It's a great question.
That's why our tagline is investing with conviction and humility. You know, in my old institutional days that I that I ended late October when I left my prior employer and started off my own shop. When you go into an institutional account and you talk to a fancy portfolio manager one of the big banks, they own two hundred
stocks yep. And to me, that's not conviction. And so we typically and historically have run portfolios now since two thousand and five, real live money that we like to run fifty stock portfolios are back testing in terms of all of the fancy portfolio analysis tools that we have and still have shown that that fifty numbers is pretty good number. So we have an opportunity to have this thing called tracking here To answer Tom's question, so you
can be you can place your quote unquote bets. I don't like that phrase, but it's probably the best way to say it. So do I want to own eight percent Apple and four percent Microsoft? Or do I want to flip around? We want to continue to own both those names, but from the conviction side of things, we can own order less or more through time, but add and delete the actual position. So that's how we run money.
That's how we've been able to outperform for so many years, and we're very blessed fortunate having a great team and a great process and discipline.
It's okay, so let's I mean eight minutes into this, let's talk technology here. Yeah, software is a surface. Boy. They took a hit on the chin there over the last several weeks.
AI.
You could make the call. I don't know what AI is going to be. Therefore, I'm not sure what the risk is to anything I own, particularly technology.
Well, it seems to me, Paul, like the markets has a checklist. Okay, Now, first we're gonna pick on the big semi conductors. Then we're going to the meg seven, Then we're going to go to the chips, and then we're gonna go to financials. Then we're going to what's next. Is it gonna be healthcare? Is it going to be in dust? Are going to be energy? So I think the Marcus done a good job kind of doing that. We don't know, but you know, we've always said control
what you could control. So at the end of the day, you don't have to own all the Makes seven. You can own some of them. We don't own all the Makes seven. And the portfolio is that we run the five US centric portfolios and in three North American portfolios, we run up in Canada. But at the end of the day, we think AI is here to stay. We think it's going to be more of a diversified thing. And oh, by the way, too, I think I think we've made binary decisions on open AI.
And I think for last year it was all in. Remember last year when everybody sold Google. We doubled our position in Google and everybody sold the sample in April when mister Cook was good, exactly exactly, it.
Is going to be terrible. I got twenty seconds. We have twenty four hour treating like bitcoin inequities.
I don't think so, because I want to sleep a little bit. I think let's let's afford people a little arrest. No, I don't think twenty four hours.
Thank you so much for Jake John Jamilus this morning.
Can't say enough about the density of his notes and the work here on participating in.
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Monica Desnzo joins us here Global. She's head of the global Investment Strategy for the JP Morgan Private Bank. Monica, what are you and your team? What do you think about some of that sell off we've seen in some of these blue chips software names. A lot of people are saying, boy, this might be the opportunity of a lifetime to kind of get into these names. But the concerns are real.
The concerns are very real. I think as everyone's trying to understand the next phase of this AI cycle, we're trying to figure out who are the winners, who are the losers, And clearly the market is telling you software as a whole has risk to it. I think we're all grappling with what's the right multi well, what is the growth trajectory? What do these businesses look like in five or ten years. It's a really hard thing to do.
And so you're just seeing a broad cell off which is tempting to add and we're looking, we're trying to sift through names. I will tell you I've seen traction. I've seen some clients who want to take a long term view start to add on this tip to some of the higher holy names. And they're doing it in a really interesting way that they're not making a trade for the next week or month, because I think these headwinds will persist. They're saying one or two years out,
these are still names I want to own. They're buying long calls things like that.
Right now, Gene Monster, Dan Eyes, if you're listening, this is the most important conversation of the day.
First of all, Monica, can you do my taxes?
You know, I am technically a CBA, but I do not do taxes.
Thank god.
I used to do my own and it ended badly.
So bad, Monica.
You know, you get serious, serious cred here in accounting at Georgetown and as a CPA as well. How do you interpret the depreciation raging debate that you hear from tech analysts like Gene Munster, Gil Luria, or Dan Eyves.
I mean, it is a very valid debate. I think this is the problem with the AI question in general. It's just we're still in such the early innings of this transition that I think it is really hard to figure out who's spending too much, who's beending too little. How do you think about, again the accounting side of this and anmorization everything over the next five ten years. I don't think people know, and so you have to just try to. I think, take the big picture of
you here. We look across the US. We smate less than twenty percent of US companies use AI in any meaningful way, and until you get above fifty percent, you really don't see mass adoption and the real impact. So I just still think it's too early to try to call all the winners and losers. I do think you
have to be a little more choosy. I've been guiding my clients this is the time for active management to get in tech, be very careful about just owning ETFs or everything broadly, work with managers to try to figure out who are the winners and losers.
Oh, it's like the depreciation of the New York Yankees pitching staff.
Yeah, figure that going out.
What are your family offers is? How are they thinking about alternative investments? That's become such a big story. I used to think the allocation was five percent, ten percent, coming here in much bigger numbers these days.
Much bigger. We have our new Family Office report out where we've surveyed a number of larg framilies. We work with globally alternatives. Again, what is an alternative? We do lump real estate in there, so we think of it as anything that's not a liquid investment. So for us, that's real estate, that's infrastructure, that's pe things like that. We see allocations for large families of generational wealth forty
to fifty percent. We'll get that high now, but that makes sense for you if you're not going to touch this money. This is for two generations too. Now that makes sense, But again that's not everyone on average. I see people trying to build towards twenty to thirty percent for these large families, but we still see gaps everyone tells me they're worried about inflation, yet they don't own infrastructure or not real estate, So there's pivots happening. People
were very long growth for a long time. Now they're trying to make sure they have a little more diversification in their old book.
How important is the FED here in terms of cutting rates for your longer term view? Here, we think we've got one, maybe two cuts priced in. I guess for a lot of people that's fine. For the markets, that seems to be fine how you think about it.
Yeah, we're still looking for one. I mean, our investment being is a bit of a debate. There's maybe saying none, we're saying one. I think anything in that realm is fine. I think for my clients, the bigger debate is we just need to maintain FED independence and the credibility that FED, especially roughly because I work with a lot of clients overseas and like they're watching us very closely and they're nervous and they want to make sure that things stay on course here.
Jana Martin Adams and Torsten Slock have published together in the last forty eight hours two Blistering Notes, which goes Monica right to the heart of the matter. No signs of profit margins going up outside of tech. That's some slock it. Apollo and Gina Martin Adams at the same tone yesterday at her new shop. What does JP Morgan see in the profit margin dynamic?
Almost the calculus of at the first derivative?
And that goes back to this whole AI debate, like, we're spending a lot of money now, and I can tell you Jp Morgan.
We are too.
It's still early days. You're just we're not seeing broadly the flow through yet. I do think the next couple of years you are going to see that. And then again the question becomes is it for the entire market? Are there certain sectors where you see more of an opportunity And that's where we think of sectors like healthcare, where we know AI is going to help you bring
drugs to market faster, cheaper. So you just got to make sure you're finding the right companies who can take advantage of that broad market.
How do you feel about this market right here? It's had a great run, you know, a good run in twenty twenty five. How about thinking about the US versus non US, because it's as good. As the US market performed in twenty five, the rest of the world did a lot better.
Yes, I was doing with some clients, as you know, we were up what eighteen percent last year. It was one of the worst performing acquitty right, So still a great year, but again relative to everything else didn't.
Look so great.
We think there was a bit of a catchup trade. I still think there's opportunities in Europe, as opportunities in Japan and Asia. But for again long term allocation, I still want to have a large allocation in US, and we still do. We think twenty six is going to look a lot like twenty five well, and the year probably higher in equities, more modest returns I think probably high single digits, but I think it's gonna be bumpy, and we do have midterms. Historically speaking, mid terms are
a positive. If you do get that balance of power in the House, which you think we're going to get, that should be a good thing for markets. I would expect volatility into that and then probably a relief rally after it.
What's your your clients in the private bank, what's the fixed income call here? What do they want to own? They wanted to your treasuries at three point five percent, or do they want to take some credit risk?
What are they doing there?
I mean, you guys know the debate around private credit. Right, so we've got a lot of people who have moved into more of these evergreen vehicles and others. Really interesting for a lot of clients to get accessing it invested quickly. I think they'll still make a lot of sense, a ton of interest less so in like treasuries, more in things like bank preferreds. If you're a US taxpayer, these hybrid instruments pay you a very compelling tax aggesity.
I got this is too important. I'm going to go here.
What's the yield that you're selling on a private credit? I mean, just as a general statement, you're saying, I'm going to make four or five percent? Sweet, you're making what nine percent?
Sure, New Jersey Munis.
What was a private credit yield?
This is the thing.
A few years ago you were talking double digits. We've now guided clients to say that in this rate environment, it's going to be lower, so anchor towards like eight to ten, which is still attractive. But again, if you're a full taxpayer, you'll start thinking about does that make sense for in Union, so for my clients in New York California, like Muni's actually still stand out being preferred standout.
Yeah, Lisa Mateo emails in. She says, that's a great idea. Can Monica do my text and still look kill a bunch?
Hey, I'm happy to try, but I gotta tell you I messed mine up a few years ago and I stopped after that. You can come over to Park's ird sit do.
That, Monica Descenzo, Thank you so much for JP Morgan Private Banks.
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Martha Gimball provides leadership at the Budget Lab at Yale. They were, without question, my think tank of the year last year, last year, just killing it on tariff talk.
I didn't get an answer from Peter and avar H.
Let's see if we get one from Martha Grunde to try Kimball. Martha, we came out of a two to three percent tariff. We had Liberation Day and popped up to twenty ish or higher, and we come back right now to a ten eleven twelve percent blended teriff. Right, are we just doing what William McKinley did in nineteen oh one with a buffalo pivot? But we're doing a slow motion getting back down to lower tariffs.
You know, I think that's a question for the President, and he's the only one who really knows what's going to happen with tariffs, except I guess the Supreme Court. So if you can get the President or Chief Justice roberts On here, I would ask.
Them, not me.
I do agree that this is feeling very early nineteen hundreds, late eighteen hundreds.
It's got that vibe to it. Martha, you and your team at the Yale budget Abbotistion Yeoman's work on tracking these tariffs. Do we have any data that shows who's really paying them? How is it kind of cycling through the US economy.
It's so funny that you asked that, because yesterday the Congressional Budget Office released its updated baseline and they said that ninety five percent of tariffs are paid for by the American consumer. So for all of the discussion from the administration that you know, know, China's going to be paying this, Mexico is going to be paying this.
That's just not where we are.
You know, all of the economists agree, you're paying this.
I'm paying this, Martha. We had some labor data yesterday, pretty solid results here, kind of better than expected for the monthly data. The headline unemployment rate coming down. How do you guys look at that data?
You know, it's kind It's so interesting because in between job reports, it feels like everyone starts having a nervous breakdown about where the labor market is going and convincing themselves that, you know, it's all over, we're going into a recession.
And then each month.
You know, the job report pops up and kind of goes it's kind of fine, everyone, could you calm down?
That one says, oh great.
We're calm, We're totally calm, and then in two weeks everyone starts panicking again. So I do expect you to have some people panicking on your show, and let's say ten days, but right now, you know, if you look at the data, it's fine. You sup pretty substantial revisions down to job growth last year, but that was expected, right, particularly given the massive changes of immigration policy that are literally removing.
Workers from the workforce.
Margaret is up, but only barely.
Martha Gimble with a CEO budget lab. Martha, you took the kool aid at the University of California at San Diego, which is arguably the most hippous rigorous mathematics in America. Conometrics with the laureates Granger and Angle, and they own time series analysis. Help our viewers and listeners who are mortal. Is all this tear of stuff countable like a we are we guessing in our math here? Or is it rigorous and countable like what you studied at San Diego?
Well, I mean, first of all, any estimates and I do feel that I have to say this or they're going to get mad at me. You know, any estimates have standard errors. Any estimates, you know, have a range of confidence. There's always some amount of guessing, you know that being said, the you know, standard errors, the range of confidence on this is pretty small in a lot of ways, right, Like we do know that it's getting
passed on. We can see prices for durables rising and so you know, I don't think this is one where people are going to be sitting in ECON seminars debating standard errors at nauseum. I think, you know, people are pretty agreed on what's going on here, Martha.
We're waiting for the Supreme Court to rule on the AIPA terrorisa they get pushed back against it administration. Will that deal a serious blow to the administration's of tariff capabilities or that they have some flexibility, some plan b's and c's.
You know, they've said that they have a plan ready to go.
I mean, the thing that's useful for.
Them about a EPA is they can just do it right. IPA is the legal authority that they're currently using. You know, President Trump can see an ad in Ontario that he doesn't like and putting new pariffs on in Canada that minute. The other legal authorities that they have are a little bit more complicated. So it's understandable that they went for
AEPA first. But people shouldn't fool themselves that if the Supreme Court says that they can't use the IEPA authority for terraffs, that tariffs are going away, if anything, that will just stretch out the uncertainty of what the tariff regime is going to look for Martha.
Thank you so much.
After Peter Navarro, Martha gimbal That's the way we roll. She's with a budget lab at Yale.
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