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Many talk few have to act in. One of them is the Governor of Connecticut, and Mettelamont joins us right now in our studios this morning. You're wounded. For those of you on radio, He's got this sling going in that you're on a trade mission to India. How is President Trump helping Connecticut with your trade relations with India?
India was nervous as heck about President Trump. That said, we went to Eastern India, which is by far the most innovative and entrepreneurial part. We did a trade mission there, met with a four your fifty companies, some of which you're thinking about getting a foothold in the United States. I had to spell Connecticut for them, but now.
They know you have to spell Connecticut for me as well. Governor Laman Blumenthal as well. On this yesterday, you take electricity from Canada. If doug Ford of Ontario or Quebec hydro. If they pull the plug, what's it mean for Bridgeport.
We have some very high electric prices throughout New England, including Connecticut, and we bring down a lot of hydro from Canada. So you put ten percent on there, that would add about seventy five million. You put twenty percent on there, that'd be one hundred and fifty million additional fees paid.
For by our rate payers.
Not a great idea, so, Governor, as you've probably seen here in the financial markets, which Tom and I and deal with every day, a lot of uncertainty in the marketplace as it relates to economic policy of this new administration. We're seeing that in lower stock prices and weaker dollar.
How did you see.
It from Connecticut? How did you and your constituency look at this current environment.
I come out of the business world. The business world hates uncertainty. If you know, when I took over Connecticut, we were going from boom to bust a bust and raising taxes. And we've had six straight balanced budgets trying to give people at certainty or unemployment rate is way down and job.
Growth is up.
But it's just the opposite in Washington, DC, right, now all that uncertainty starting with tariffs, are looking at deficits a lot of businesses that I think I'm going to hold off right now before I make that investment.
That's not good.
So in Connecticut, what are the chief issues that you guys are dealing with from an economic perspective these days?
Look, we're going to we're looking at our seventh and eighth balance budget. Unless they cut medicaid by a billion dollars, you cut Medicaid by a billion dollars, our budget is turned upside down. And that's true of forty nine other states.
What are you hearing from the federal government about some of those big ticket items.
I don't think they know right now. I was down there.
I met with folks, the secretaries that just come into office coming up with their modeling.
But everything runs through the White House.
For those of you across the nation in your commune today, a Democrat, the governor of Connecticut is with us Ned Lamont as he goes through the tiptoes through all this different policy changes we're seeing. I'm going to cut to the chase. You got to vote of confidence from the people. You get forty nine percent of the vote and one in twenty eighteen, I'm going to call it barely. You improved dramatically in twenty twenty two with fifty seven percent
of the vote. What do you say, really the polarity of the nation on right and left. But what do you say to the Democratic Party is they address from a left liberal point the reality of a centrist Lamont and others as well.
A centrist Lamont probably is going to disagree with the Trump administration on a majority of things. But start with areas where we can find some agreement we can work together. For me, that starts with energy. The high price of electricity. You know, the possibility that we could bring in natural gas or expand nuclear in our region would be transformative a place where I've been meeting with the secretaries down to Washington. Something we can get done together.
Right, Well, let me let me you know, we're at a piece of chalk on our hand at Harvard years ago, Nevlamont. Did the Republicans win the election? Did Trump win or did the Democrats lose the election because they were too far left?
I think Trump won. He won because it was a change election. I look around the world, nobody wanted more of the same and I think a little bit Kamala got stuck with the Biden legacy, couldn't differentiate herself from there. And believe me, Donald Trump represented change.
When you think about the Democratic Party today, a lot of folks are saying, where's the leadership? Because it seems like President Trump and his administration taking all the oxygen out of the room. Where is the democratic response? Where's a democratic policy? Where's the democratic leadership?
Who do you think is the leader? Does a Democratic party have?
Aly?
Well, when we're not in power, you tend to have a lot of different leaders I start with the governors. The governors are not making everything a battle about Donald Trump. But when it comes to medicaid, we're gonna hit hard.
We're going to work with Republican governors to say, you know, unensuring these poor people is just going to drive a wedgeendo Era hospitals as well, make a difference, Find areas of specific is interest and focus on that, you know, rather than just make everything about Trump.
Congestion pricing, We've got a congestion pricing corresponding right here.
What is.
Yes, New Jersey has a particular view of congestion pricing against it?
How does the folks in Connecticut.
I just think you have.
To pay your bills, and New York City's got to pay their bills. You've got a pretty antiquated subway system. Does anybody have a better idea of how to pay for things? It's so easy to say no, and right now there are a lot of people say no. So I'm a little sympathetic to Katy Ohlklum.
This you represent vantaged America, with the heritage of JP Morgan and all that you've done in your life. How does America find the center again? We are whatever anybody's politics on this show, we can all admit it's a fractured America. How do we find the center? Back to your family in STSK four years ago and others, how do we get back to the center? Governor Lamont, I.
Think we found in Connecticut Republicans and Democrats find places we can agree. Let's say we did the biggest tax cut ever last year, but it was middle class people and.
Beyond, it was not for rich people.
That was an area where Republicans and Democrats could get together. Five hundred million dollar tax cut. What we're doing in terms of making sure that we educate people for the jobs that are out there right now, there's a disconnect. I'm finding pretty good balance between Republicans and Democrats there. Look, there's a certain incentive to say no, that's what the
nature of the opposition party is. I don't think that's good for Democrats at the national level, and I don't think that's good for Republicans at our state level.
Foreign policy, it's another area that is front and center for better or worse for the United States, both in the Middle East and in the Ukraine. Just start with Ukraine. There seems to be I guess, a willingness to find some solution over there, and then that's question how you get there. And President Trump has a certain focus here. How would you approach what's happening in Ukraine trying to find some type of piece there?
Not the way Donald Trump is doing it. Look, he wrote the Art of the Deal. You go in, you negotiate from a position to strength. Instead, Pete Hesa just pulled the rug out from under Zelenski, put in place a whole list of concessions, a sense that we're not going to be there to back them. I think that's a terrible way to do it, and our allies around the world are watching how we treat Ukraine. I heard that when I was in India as well. I'm glad
they're sitting down. I think they're negotiating. I think that's long overdue, but negotiate from a position of strength.
But I look Governor Laban at Connecticut and I think there's so many stereotypes out there, and folks, you can come up with your own stereotype. It probably starts with the Hinckley picnic voter at Grand Banks. Yeah, but the reality is Connecticut's got an incredible polarity, including sixteen seventeen percent foreign born migrants. You know, whatever those numbers are. Last time we talked, you said you're managing it. It's not the crisis of New York State and what Mayor
Adams is facing. But give us an update, and Connecticut is tackling this polarizing issue.
Connecticut is a diverse state. We represent the diversity of the United States of America.
When I go to India, I.
Have to say, look, the stereotype of Connecticut is a bunch of Fairfield County guys in these voats you're talking about.
Is not the reality.
Our biggest percentage of international students are Indian born students and that we welcome that. I think that's a great strength for our state, and I think is a great strength for our country. And I think we're getting away from that.
You come from business, you have a business background. President Trump today is addressing the business roundtable.
What do you think the message should be from.
Trump to the business leaders and from the business leaders to President Trump.
I think from the business leaders to President Trump, you're seeing the incredible anxiety and uncertainty reflected in a collapsing stock market and a rising unemployment rates. Look, I agree with you in terms of wanting to do big things, but you don't have to do them overnight with a chainsaw.
Give us a direction of where you want to go, and we can invest accordingly. I hope the President listens to that.
I'm fascinated with a Supreme Court decision the other day with Amy Cony Barrett going over. There seems to be a primal scream of the judiciary solving legislative problems. You're part of that as an executive in Connecticut, but also almost like a legislature to Washington. Anor is a governor is a legislatures just giving up the ghost in Washington. I mean, does Congress even part of the debate anymore.
I'm sort of glad to see the judiciary standing up to some of the intrusions from the Trump administration. You know that said they haven't passed a darn thing down in Congress in the last two exactly. Maybe the judiciary is stepping in there, But I think the judiciary right now is the guardrails protecting our democracy.
One of the great themes here, and it's the theme of your life, is we've expanded our federal mandate away from states like a Connecticut. I mean, there's a swing back here where we've said enough on a titlements. When you see the policy from your advisors, we're going to pull back from agriculture, We're going to pull back from Congress. We're going to pull back FAA and all the rest of the DOCH stuff and all the rest. It's a primal scream of a smaller Washington. Is that feasible right now?
It's popular because it sounds like Dose is getting rid of a bunch of bureaucrats who are just leaning on their shovels. But every day in our state level, you're seeing how it's hitting people starting with healthcare. I think that pushback is going to get louder and louder, and.
Ded Lebama with us the governor of Connecticut, we continue our conversation. We welcome all of you, Paul with the Governor of Connecticut.
Governor, you and the state of Connecticut, as you mentioned, have been able to balance your budget. We're coming up to some budget discussions then in Washington, d C. What is your advice to folks in Congress about these upcoming negotiations and trying to balance the budget and trying to.
Push that part of the policy through.
Governors are so frustrated with Washington. We all have to balance our budget down to Washington. It's an afterthought. I understand that deficits are not politically that charged an issue, but you got to do the right thing. You don't have to solve it overnight, but you've got to directionally start showing that you're getting your budget under control. I don't see that happening in Washington.
The price there's not more political pressure to do that because I think the message I've taken is that unless people force Washington to do that, either to lower expenses, raise revenue, whatever they have to do, unless there's political pressure, there's no really no incentive to do anything.
Look here at Bloomberg, we care about that deeply.
We know if you don't have an honestly balanced budget, a bad things happen in the future. I've paid down our debt by over ten billion dollars. People don't care that much. You know, they have real needs every day. How can you not taken care of that?
So how do you think about that? I mean, is this the.
How do you think if you were to balance the US budget? Where would you go expenses, revenue both? How would you think about it?
I don't think I'd have the biggest tax cut in history for the wealthiest folks. I think that sends the wrong signal, takes us in the wrong direction. I think I would be going after efficiency, not the way Doze is doing, but in a serious way. And you can disregarding titlements.
I got two questions left. They're both really really important. One with im Men's respect to your family, the heritage of the Lamont family on all of Wall Street? Is this a new gilded age? Have we skewed things so far over to billionaire mania that we're really reliving? I mean, Trump has this fixation over McKinley and tariffs. Are we reliving McKinley as a society.
I think we are a little bit.
I think in flighting the money supply and all the deficits have made the rich a lot richer, probably the richest they've been since nineteen twenty nine.
I got one final question. It's credible. Paul emails in and says it's just simple. Finally Big East basketball is back. I mean, I'm looking at Yukon Saint John's. This could be a bid.
Is going to be a great Big East game. Yukon is playing better and better than men, and women are top flights.
Women are top flight. But in men's basketball, Yukon's won four in a row. Are they saving it for Saint John's here?
Hey, look we're too I'm national championship. We know what we're doing.
Okay, Finally, after four hundred years, we get new Amtrak trains. Everybody blames Connecticut for the worst wires. We fixed it. You know, forget about the tunnels. We fixed it in New York to Washington. Give us an update on your unspeakable relationship with Amtrak to give us better, cheaper train service.
I will tell you.
We're gonna be able to speed up Amtrak dramatically over the next five years. We got significant resources from the Biden administration.
We are a choke point.
We got a lot of little towns, a lot of stops along the way, a lot of twisting turns around Missus O'gillicutti's home.
We're going to speed that up.
Is the President going to cut your submarine effort?
I don't think so.
It's the strategic piece of our triad. It's still undecipherable, folks.
For those that don't know it. You take the train up and you're there and there's like a submarine over in a window. Explain to people what's going on. It's your submarine base in Connecticut. It's top top, top secret. They don't even know if they leave her because they leave underwater. But explain the commitment of Connecticut to our United States Navy.
Yeah, electric boat part of General Dynamics makes most of our submarines here and down in Virginia. It's the last piece of our triad that is still undetectable. So it's really important in terms of our strategic deterrence. If you think the Soviets are coming in from the North Sea. You know they're going to come right by New England. It's very important what we got there in the Groton, New London areas.
Governor, thank you for joining Bloomberg today, Grant, I appreciate it. I'm still a mount of the state of Connecticut.
You're listening to the Bloomberg Surveillance Podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube.
A time of conversation with someone seeing this a few times before, Margui Petateel on correction, Mark you Pattel of course, offspring Margie, you're going to tell me to find quality, free cash flow. You're going to tell me to find dividend and dividend growth. Where is it? Well?
I think really, with this kind of correction we've had, you really have to look more at the growthy orient rather than so called defensive high dividend kind of stocks that a lot of people have said to be popular. Simply because you've had such a big correction in many of the large cap growth stocks, they actually look rather reasonably priced, maybe even about the same price earnings ratio as the average stock in the marketplace.
So how do you when you talk to your clients. Is this a we don't want to be catching a falling knife scenario, or.
Hey, we could be selective here in some names we like.
Well.
The thing is when you when the market has a lot of volatility, short term volatility senseless, it's not really related to the fundamentals.
In fact, I think we.
Ought to bring back the uptick rule, and that might mute some of the volatility that we see. You go, but when you look at the economy itself, it's chugging along at a low rate. We may have a negative quarter, many people are thinking, But we actually had a negative quarter when the Fed began to raise short rates a couple of years ago, and after that quarter we were off to the races again. So I think that after we get through this choppy uncertainty, we may have a better market for the rest.
Of the year.
What is the character of this pullback? I mean, I mean, when you're talking, Mark, you telling the uptick rule, we could stop the show and go for an hour and a half on does piece of legislation? Sure? Ever, Marguie, what's the character of this pullback versus in any other fourteen vanilla corrections. Is it just all political?
Well, I think for this cycle, as opposed to say seven eight, that you have many, many more short term traders, and that's contributed to the extreme volatility that we see, short term volatility that we've seen, rather than fundamentals. So I think that's really the issue. But as I said, when you look at the economy, it looks pretty good.
The FED is committed to not tightening up financial conditions, and this is actually kind of a weak period right before people do tax is the uncertainty about the budget. So I think we have a little bit to slosh through and then the market will stabilize.
See how she's calming. Sure she should come over for dinner tonight. Yeah, everybody Venville's portfolios got of hammered. Mark, you should come.
Over, Margie.
A lot of folks in President Trump's economic team are acknowledging that some of his policies could result in some short term pain, whether it's slow in growth or higher inflation, but longer term, and I think they define longer term as the back half of this year, there should be some gains, whether it's from you know, extended tax cuts or maybe some other pro pro growth initiatives.
Are you buying into that?
Is that short term game, longer term gain?
Is that something that makes sense?
Well, yes, I think so.
I think the big risk with the with the change in administration, would the temporary tax cuts expire and then tax rates for corporations and individuals would jump up, and I think that would have been very, very negative for the stock market. So now we have a lot of uncertainty about our terrorists good or terrorist's bad. And how much can they cut from the government. I think it's pretty modest at the margin that they'll actually be able
to cut. But any improvement and efficiency in the government is just what business does every day, so that's pretty good. Mainly, I think the tax cut is a number one issue that will benefit the economy and the market this year.
Margaret Patel with us and we will continue with Margui Patel of Allspring Global Investments in Boston. Good morning ninety two nine FM in Boston. Good morning across the nation and community. Thank you Nedlamnt for some real wisdom there from Connecticut, the Democrat from Connecticut, particularly on the hydro power, if you will. From Canada, Market Patel's with us with all spring and we continue market. Do you own bonds still or you just gone all divining growth? No?
In my portfolio I have about actually i've raised a little over the last month. It's about sixteen seventeen percent of the portfolio, which is a bit higher than it's been for a while, simply because if you think this is going to be a so so year for equities, I'm thinking eight to maybe ten percent. High old bonds, say yielding six and a half percent, looks like a pretty reasonable trade.
What's as good as a dividend income anyway?
There you go, what's the duration? You're buying forty year paper?
Well, that you know, the duration of the high old market is shortened up a lot, and it's now about a little over three years. My duration is a bit longer, maybe three and three quarter years. That's really it's shortened up quite a bit in the whole market.
I think a lot of people listening, Paul, they think a high yield is like, seriously, eight year, ten years, twelve year duration? There are three and a half years.
Wow, that's what we've heard, yeap, Margie.
So as we step back here and if someone were to ask you, is this a healthy pullback in an otherwise decent equity market or is this something more?
What do you tell them?
I don't think it's anything more.
Even last fall, when we had the market really just spike up to really incredible levels, I think most people felt the market was a little top, a little overpriced, so it was really set up perfectly for all the uncertainties and negative things have appeared in this part of the year. So you've had a big correction and non Nasdaq is down I think about ten percent year to day standard and Poor is about five percent, So that's
not really bargain territory yet yet. But considering that the Fed is basically said we'll have stability was likely cups.
That's really not a bad level to look at the market.
The average pe is I think about twenty two to twenty four times.
Margie, generous for you to be with us today. Thank you so much for Boston with Allspring, Margie Kutel.
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We wanted to nail the math of the moment. You do that with Stephanie Ross. She says wolf right now. And let's go to partial differentials here. The core equation is why well see pluscyplus G plus NX. You told me off the mic. The consumer matters, tell me about the dynamics of the consumer into a sub two percent GDP call.
So if we think about the drivers of upside growth in the past couple of years, it's been on consumption, partially driven by the wealth effect. Now that's going the other way to some extent. And even though it's not all erodent, I mean it's been trillions of dollars, there still is that sentiment. And then on top of that, we're starting to get hit by tariffs. We basically had double the China trade war in the last two months, then from the twenty eighteen trade war, and that's kind
of going unoticed to some extent. And then that doesn't confector Canada. Mexico doesn't affector reciprocal tariffs, which are likely.
Coming next month.
So this tariff thing is is a big deal likely to knock off fifty basis points off GDP this year.
Yeah.
We just saw this this morning of the companies's reporting earning to day. The consumer facing companies like the sporting good stores, Dick's, Cohle's, a big department store, the airlines all reporting weaker than expected outlook forecast.
Is that already reflecting some of.
The uncertain people we're seeing in the marketplace?
Yeah, I think it's it's certainly starting to The data so far shouldn't have a material impact, but looking ahead, that's definitely the case.
Uncertainty is high.
It's a problem for consumer facing companies, and it's also a problem on the capital spending side of the economy. How do you invest you don't know the tariff rates and you don't know what the fate of the economy is going to be in the next twelve months.
I want to emphasize when Stephanie Roth, the heavyweight, comes in here and she says, we knack half a percentage putting off on tariffs. I'm using a lower number out of Yale University. But the answer is you take point five, folks, and divide it by whatever your guestimate was before so point five divided by two point five, this is stan Fisher one oh one is a twenty percent marked down in the growth rate. That's a lot of angs. Can
you bring that over to the labor economy. Are you willing to give me a five percent unemployment rate?
No, I'm not willing to give you that. I think what we'll see is we will see a bit of an uptick in the unemployment rate. I don't think we're getting to five percent. I think at that point the FED is going to certainly be stepping in. And then the dog layoffs are not that big. They add a couple of tents at most, so it should be let it should be more just a stall speed in terms of hiring, which is why we're not forecasting our session.
So and that kind of goes to the administration is making the points these days when they're challenged on some of these economic uncertainties that are in the marketplace near term pain for some longer term gain. Are you fact whether it's extension of the tax cuts or just some other economic policies that are drive growth in the back half of twenty twenty five, Are you reflecting that in any of your GDP work The.
Problem is the short term pain doesn't necessarily make obvious long term gains in the sense that the tariff policies, a lot of the tariffs that are putting put in places are not going to bring forward manufacturing into the US. We don't really have the capacity nor the desira ability to produce low cost goods. Putting tariffs on that, putting tariffs on agg it doesn't really produce long term gain,
and we still feel the near term pain. And then when we're talking about the tax cuts, it's not really tax cuts.
We're just extending.
Current policy with maybe a little bit of tax cuts on tips and a couple other things.
But it's net growth negative.
Servaining wrong through this on your morning Commune with Wolf Research across the Nation on YouTube. Thank you for subscribing to Bloomberg Podcast. T RC first time caller out on YouTube. We're up to forty two listeners. It's it's amazing. TRC says, good morning, all right to Stephanie Wroth.
So, Stephanie, what do you how do you think the Federal Reserve is kind of monitoring these developments here as it relates to potential slowing economic growth, potential for higher inflation.
How do you think they're looking at that?
Well, certainly this week's CPI print is probably not going to be that important for them because it doesn't factor in that. They're going to be thinking forward, forward, ahead at this point.
So the things they're going.
To be looking at are going to be unemployment rate, is that starting to rise? Are they going to get are they getting uncomfortable with that? The pace of hiring? And then inflation expectations is going to be another key one. And what's different this time versus the last one trade war in twenty eighteen is inflation expectations long term are driven mostly by your recent experience with inflation in twenty eighteen, recent experience with inflation.
Was we had none.
This time people are going to be a lot more concerned about inflation because they just experience.
How do you measure inflation expectations and the anchoring of said expectations. Do you do it with Michigan or do you look at it another way?
I mean, the Fed does look at Michigan.
The survey is not great, but they'll be looking at it, agreed, They'll be looking at New York Fed and then market based inflation expectations will be important too, so it'll be a whole host of inflation expectations measures. I do imagine you miss will still get attention, even though perhaps it's not the best reflection.
New York Fed is probably a better one.
So where do we go from here? In terms of thinking about this economy? Here are you forecasting that a recession is possible?
Here?
What are your odds of that?
Odds of recession right now is about thirty five percent, so certainly not the base case. I think the market is just pricing in the more elevated chance of recession. I don't think it's it's necessarily going to price in a full recession, but right now, wasting our models, we're looking at the market pricing in a recession about twenty four percent. I think it probably has to get closer to our thirty five percent before the cell offs.
On policy, I mean, your calls, which are brilliant, can they all be amended adjusted by one comment from the White House? That's sort of where we are, aren't we to some extent?
And that's why we had to have make such big changes to our forecast in the first place, Because this is all policy related. The thing is what we're hearing, and the actions that we've seen so far are that they really believe in the tariffs. They're going big on them, unlikely for them to reverse in a big way, and they don't seem to have much concern about the market or near term pain. I mean Trump has said this over and over again over the past couple of weeks.
So it talk to us about the inflation.
Well, I don't know, like you know when I'm going back and forth with Eric right now saying I want to get an economist on who really believes and it can articulate that Trump policy, because that is there's the story is you know, okay, near term pain for some longer term again, and that's great.
I just want to see how it's going to play out.
Here, brilliantly said Instep, The heart of the matter is we've run out of capacity to do growthiness because of our debt and deficit. That's the fundamental difference from eighty years ago.
Right, Yeah, we're not able to do tax cuts from degrees of freedom exactly.
I mean Trump was able to do massive tax cuts the last time. So the setup is very different. They're not good, They're just trying to extend them which is costs four trillion dollars to do, just just to prevent a large tax increase on the consumer.
Remember the exam where you had degrees of freedom and Kai squared on the same exam. You did it all later and finishing vodka right like titos, Stephanie, that was brilliant. Thank you so much. Don't be a changing Stephanie Roth driving the market lower here with Wolf Research right now. We thank her for that.
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This guy is Frankly, who Doug Ford should talk to in Ontario. He is expert on trucks. Paul, why don't you bring in our esteemed guests.
Absolutely, but there's all this talk about trade tariffson, the impact on growth and the uncertainty being injected into the e comm One of the areas we're likely to see it initially will be in just the supply chain. I'm thinking about the ships coming over from Asia. I'm thinking about the railroads, the trucks, the air freight. What are those folks saying, Well, we've got somebody who's an expert
in all that kind of stuff. Lee Clascal, Senior Transport analysts for Bloomberg Intelligence Joints, is here in our Bloomberg and Director Brokers studio. Lee, what are you hearing from some of your transportation companies as they think about how this economy may unfold for the remainder of the year.
It's really about uncertainty unfortunately. I mean, after the election, I think the animal spirits will woke it up. People thought that the economy was going to be humming along, lower taxes, less regulations. Obviously that's good for the economy, good for freight. Fast forward to today, it's Tarris Tarris, Tarris, tarrifs on tarras offs, you know, and people don't know
how to plan and that's really difficult. And we're not even talking about you know, like your last guests mentioned the inflationary impact on the economy and the consumer, and the consumer really appears to be buckling, which really is not good for freight to man. And it's kind of giving us some concern about the outlook because in the beginning of the year. We're pretty optimistic that truckload rates could increase by mid single digits.
You're expert at this, we're not. Paul and I are clueless. Tucker's even worse. Okay, we are. Our idea far west is the border of Pennsylvania New Jersey. Right, let's go to I forty two North Carolina, Goldsboro to Kinston to Newbern and then down on south from there. There are these manufacturing corridors, and your World Trucks makes them go. What do the tariffs mean to the I forty two manufacturing corridor in North Carolina?
Well, interesting enough. Like you know, there is a long secular trend of bringing more manufacturing back to the United States, and that's obviously a good thing, but it takes time. So just because tariffs go on doesn't mean there's going to be a light switch and manufacturing is going to start, and that's going to just increase demand for trucking. So what you're going to have really is not so much
the industrial sector. The industrial sector is going to be impacted because of lack of demand, and we're seeing that in flatbed rates. So flatbed rates are usually tied to the industrial economy, and they've been pretty weak uh recently.
So that's what I was I was going to go to because in your world, probably the shortest duration stuff is trucking rates, right as opposed to long term freight type negotiations. So in that spot market, are you seeing that yet?
Are you seeing kind of?
So spot rates are up, like excluding fuel search charges a year of year by like two or three percent, So yeah, but you know they're still they've been coming down recently and and that is has to do with some seasonal weakness, but it's also I think has to do with what's going on in the overall economy.
So I'm Mountain Ariel Tuna, Pennsylvania where there's that big.
It's like great in there, and.
There's like two trucks and I'm going to get sandwiched. You know, are those trucks profitable now? Are?
It depends who's running them. So if it's an owner operator they got into the business during the pandemic when rates were five or six dollars a mile, those people aren't making money because they've bought a very expensive truck and now rates are two dollars a mile, and that
is obviously impacts your operating costs. A lot of those kind of truckers have been on life support in part because of the stimulus that was available to them from the government during the pandemic and the savings that they were able to create during those boom times. And so we're seeing that capacity slowly leave the market. You know, the Nights of the world and the JV Hunts of the world. Yes, they're making money.
What are the big the maritime shippers, the global you know shippers that you talk to, are they expecting that these tariffs are going to be on on for a long period of time and in fact will impact global shipping.
I was at a major Transpacific conference last week. It's TPM every it's held every week and every year in Long Beach, and I got to speak to a lot of shippers and really they don't know.
Wow.
And that's what that's the problem. No one knows because you know, in the morning there's a tariff, and then the afternoon it's there's no tariff.
If your journey I saw across the nation in your morning career, Lee Clasgow, where this is absolutely definitive for Bloomberg Intelligence and all this infrastructure stuff led by trucking. I think it was I'm going to say Prudential or Biche or both, I can't remember. It would publish and I would just look at it and just stop, and you'd read every word of Classgo. This is a few years ago, folks. What would you say to Doug Ford of Toronto, Ontario, the leader of Ontario. He holds the
electrical switch for I think three states? Do they have powered? When you when you look forget about you Carne and the election and all that, when you look at the provinces what are they called? The states? The provinces, the provinces of Canada, Do they have a lot of strings.
So much this morning?
Yes, in relation to the President Trump and tariffs, that's that's that's way above my pay grade. I have no idea about that. I mean, obviously, you know, if you're if you're willing to charge a lot more for electricity, it's going to annoy a lot of your voters. So I think they do have some power.
Warren Buffet owns a railroad, he does, and his railroad is really predicated upon that trade from Canada through the US down in New Mexico.
What are we hearing from that company.
Burlington Northern Santa Fe. They are more exposed to the Transpacific trade, so they're big with stuff coming into the Port of La and Long Beach bringing that stuff across the country. Also, they're obviously big in coal an ag. You know, the rails have been doing okay. We've seen some volume growth of low single digits.
Which is which is good.
The railroads, whether it's you know, Bien or the other class ones, they have pricing power still, so that's good.
The one that's most exposed to the.
Tower noise is really Canadian Pacific, Kansas City, that's the one. They have a network that spans Canada into Mexico. It's an incredible network. They have a lot of growth opportunities relative to their peers. But that's really going to depend on tariffs. And you know, I personally think that tariffs will be more transitory. I think I said that in that inflation a couple of years ago. But yeah, so don't quote me on that, but you know, it just feels like they're not going.
To be here forever.
It's more or of a negotiating tactic that is to create noise and havoc within the supply chain.
So Canadian National with that wonderful acquisition down the Mississippi River. Yeah, it's a big t folks, it's across Canada and it's down the Mississippi River. How are they affected by tariffs? And for you is not. I don't want to buy hotel, but there is there an opportunity there.
Well, you know, whether it's CP or CN, you know, they are exposed to cross border business. I would say roughly thirty percent percent of their businesses cross border. So you know, it has a big impact on where trade goes. You know, obviously if we're if if we're if Canada is importing less Jack Daniels, Uh, and we're and we're we're importing less maple syrup, then that's going to impact freight flows.
You know.
The thing that.
Concerns me the most, uh, from from my coverage is is the forest products. You know, those tariffs on on forest products are not are really going to impact the cost of housing. And if houses are more expensive, less people are going to be able to afford them. That means they're going to be building less.
That means they're going to be less freight.
So this is really you know, obviously, I know you guys know this. But tariffs are taxes. They're there and somebody has to pay for it, and eventually it's the consumer and that's going to eat up on what they.
Set for John Tucker, sheet of plywood in home depot is going to cost more.
Probably. See there you go ce d X, I don't know.
I only use c d X if I pick up a hammer, people run, that's what I do.
Do you want to do? Trucking terms, Bob have all these questions, reefer, bobtail, deadhead. Yeah, all the trucking terms.
Refer a refrigerated truck so that will haul produce or maybe even pharmaceuticals and sometimes even electronics. It doesn't have to be cold, it just needs to be a certain temperature, so you know, So that's reefer. It's also I guess you can.
Well we know, yeah, and then deadhead. You know that has a good segue.
Refer to deadhead what an empty truck?
I guess right, yeah, yes, the deadhead. The dead head is how the distance that a truck travels without freight.
And then a bobtail is are you done?
No?
This is what we go on forever. Bobtail is without a trailer, just a cab itself.
Okay, there you go. Thank you. That's the most important, so much.
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