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I think the narrative in this market is, you know, we've got a new administration, We've got some new trade policy focusing on tariffs that's creating a certain amount of uncertainty in the market. Maybe immigration policy changes pending also in bringing in some uncertainty into this market. And we've been told since day one the market's stole on uncertainty. So net net, you've got the SMP kind of pulling back about seven eight percent from its recent peak. You've
got the dollar a little bit weaker. But it's the end of the day. What does this really mean for the economy? I guess we have to wait and see. But Tiffany Wilding, we're gonna ask her that question. She's an economist in covering the North America for PIMPCO. I was with her colleague mister Clarida last evening up in Stanford, Connecticut,
talking about these markets. So got the pimp COO view for mister Clarida Tiffany at the end of the day, when you plugged these things into your model, whether it's tariffs and we'll find out more, I guess April second, on tariffs, whether it's maybe some tweaks to the labor market in terms of less migrant additions to the labor market. How's it changed your economic outlook for twenty five.
Yeah, I mean, I think the bottom line for US is is that, you know, although you could have you know, medium term better outcomes with more investment in the United States, as a result of these various policies, there's going to be some near term disruption. And that's simply because you know, tariffs raise costs, so they raise costs on investment as
well as consumption. So if you're you know, trying to get more investment in the United States at the same time you're making it more costly, you know, that is potentially problematic. You know, But I think the bottom line for US is is that there is some adjustment period that that will happen.
You know.
The teariff policies that we've seen have been I think much more aggressive, you know than anybody has expected there will be some near term price level adjustments, some near term inflationary pressures from that, and we'll also see you know, growth and labor market outcomes, you know, really accelerate as a result.
Tiffany, what did you make of the numbers we just got.
Yeah, so so we'll have to obviously dig into the details on the income data, but I didn't want to. You know, I do think the spending data, you know, was a little bit weaker here. You know, we we got some of this from the retail sales report, which
was incredibly strong. As I mentioned, consumers and so the fact that today's data, which includes everything not only good spending but services, today's data suggests that consumers are shifting away from services at this point and spending focused much more on on goods types of spending. And you know, we've we definitely think that is the result of their expectations that you will get higher tariffs, and so they're
trying to front load ahead of that. And I think, you know, that kind of belies, you know, this kind of underlying weakness in the economy. You're getting a front loading behavior that's sort of propping up spending for now. But that's not going to last forever, you know, so the question is it win does.
That wane and how much?
You know, when we do think that the higher uncertainty you know, plus higher prices, you know, will result in consumers, you know, really taking a step down in terms of growth and the it's been the high income consumer that has really been driving consumption growth over the last couple of years, and we think they are poised to you know, just kind of take a step down here as as we have this higher uncertainty, lower equity prices, and we will see that moving forward.
How long do you think, Tiffany, that the lag effect is when I don't know, tariffs go into effect and then the other countries slap tariffs on our goods, And how does this kind of play at in econyes? Is something that's a three, four, five, six month time type of process.
Yeah, well, I think it's different for different variables. So I think for inflation. You know, what, what we've learned over you know, the pandemic, and I would say the last several years, you know, is that with the increased digitization of retail and commerce, you don't have these quote
unquote menu costs anymore. So that was you know, kind of economist jargon for when you want to change a price, you literally have to print a new menu, and there's some cost to that, so you might not change as quickly. But now you don't have to do that. You can literally change in real time, you know, if you have a digital platform, and so that results in you getting
much quicker passed through, potentially to higher prices. Now the you know, one of the things with us that the businesses will have to be optimizing for is that when you raise prices, you usually reduce volumes, and so they'll have to be you know, again optimizing for that. I think there's some question around the extent to which these
tariffs can actually be passed through to consumers. You know, consumers are not as strong as they were several years ago when they had big fiscal you know, paychecks in their accounts that you know that helped fuel spending despite higher prices. So, you know, I think those are the kinds of things that we'll be looking for in terms
of the labor market effects. You know, I think it's really a question of how businesses and how this impacts their bottom line, how much of that price passed through how much of the price increase can they pass through? You know, if there's you know, much more margin compression, then they might be looking towards you know, optimizing, you know, reducing you know, some of their labor inputs and so that you know, I think will take a little bit more time to play out as we see how this goes.
But you know, we we think in the manufacturing sector in particular, you could see some you know, some furloughs and things like that, you know, as these things are sort of passed through, you know, through through the you know, through the hopper.
All right, Tiffany, thanks a lot.
We really appreciated Tiffany Wilding economists over at So let's just get a recap on these numbers. Right, you had personal income for February jumping eight tents of one percent, but the spending slowing a bit to four tenths of one percent versus expectations. Then you had the PCE index. So that is what the FED winds up looking at on a year on year basis, coming into two point five percent and the core so you're backing out the more volatile numbers that's coming up on a month on
month basis to four tenths of one percent. So as we digest, want to get more on this with Stephanie Roth, chief economist at Wolf Research. All Right, Stephane, first, blush, what's your takeaway from these numbers? What stands out?
Yeah, I'm going to give two things. One is on the price perspective. We're starting off at a fairly elevated place and this is before teriffs have a big impact. So we're in a tough situation. Just given the extent of the tariffs that are likely to put in place, they could have an impact of nearly a percentage point on price inflation.
For the next year.
Of course, Powell last week made it sound like they wanted to look through it, but at some point this could become a real challenge for the Fed. And then you are seeing a more sluggish consumer on the spending side as well. The income numbers are a little bit overstated. Some of that came from rental income and some other sort of one off stuff from government, So I would look at the income as slightly less than the numbers
would suggest. But all in all, you're looking at a consumer that is pulling back a little bit and that's likely to continue even more so as the consumer becomes a little bit more concerned about the backdrop.
Stephanie, how do you think the Federal Reserve will look at this data? Will that give them maybe a little bit more confidence to maybe just kind of sit on their hands for a while.
Yeah, I think they're going to want to sit on their hands kind of either way. The policy backdrop is so complicated. There's two main things that they're likely to be looking at when we're thinking about what's going to happen in the next couple months. On the tariff side, of course, what gets implemented, and then how do inflation expectations react as a result. This is the primary transmission
mechanism to which the Fed would initially become concerned. If you start to see consumers really become worried about the inflation outlook, which you miss, inflation expectations started to show a little bit of a flavor of that, that's going to make them want to become more hawkish than would otherwise be the case. And then they're also going to want to look on the immigration side, which people aren't
talking about enough. But Trump this week ended the visa status for five hundred thousand people from Cuba, Haiti, Nicaragua, and Venezuela effectively overnight on April twenty fourth, and that's going to be felt both from a real labor market perspective but also in the non from perials data.
So okay, to that point, though, what's the transmission mechanism in that we get the sentiment kind of rolls over? When does that actually feed into the hard data? Because if you take a look, like a lot of President Trump's polling is still really strong, So there is this like divergence in terms of maybe where individuals feel the country is headed and then.
How they feel about their pocketbooks.
Yeah, and there's been a big discrepancy between consumer confidence and spending for a number of years at this point, so it's not as if confidence is going to be predictive of but in this instance, I do think at least directionally, it's telling you that people are getting more concerned. When does it feed into the real data. That's probably when the price is actually take effect. So when things
become legitimately more expensive. Based on our analysis, it looks like it takes about three to six months for prices from TERFF implementation in implementation to prices actually showing off at the stores. So I would imagine over the summer is when consumers may really start to feel the pain, and that's when you really could see people pulling back even more materially.
Stephanie, is it I hate to go to labels, but is it fair to label this teriff price increase that may occur in this US economy as transitory or is it something more than that?
I wouldn't use the word transitory, and to be fair, I'm surprised that POW will use it as well, just given the whole background with that word. I think it's right that it's a price level shock. The problem is
similar to the last supply shock. Transitory was expected to be of a short term thing, called it less than a year, and we're likely to see the effects of this for for way more than a year, because if you start to see the supply chain and autos get get sort of snarled to some extent, then that feeds through into motor vehicle insurance. And we saw how long that took to feed its way into the inflation data.
So I agree that it's a price level shock. It's not a sort of an ongoing inflationary spiral type of thing. But transitory kind of implies at this point that it's going to be very short lived, and that's that's perhaps a little bit too optimistic.
But I feel like the distinction though, is like it's a one time price hike and then it stops versus keeps going up. And if it keeps going up, then that's obviously going to be more harbinger for the FED. If it's just a one time price increase, the economy is still growing, We're still in a good spot even if we go one point six one point seven percent. Can we handle it?
Yeah, I think we can, and I think the ultimate ultimately, the Fed's gonna have to cut as a result, because we're going to see the economy weekend on the back
of caraffs uncertainty. We're hearing, you know, capex is stalling starting to stall out pretty materially, So realistically this is likely to be a growth shock, in which case the FED can react uvishly, but they can't react until the data start to show that real weakness and we're several months away from that, which is just a challenge for markets at this point because the FED kind of has to sit on its hands for a little while until they can actually react and come out a bit more rubbishly.
What it's proved that this is more like a price level shock and the impact on growth is notably softer.
So, Stephanie, have you in the good folks over at Wolf have you materially changed maybe your GDP forecast, your inflation forecast to account for what appears to be pretty steady tariff policy here.
Yeah, we have.
So coming into the year we were a little bit above two percent. We were more optimistic on the growth once we realized that Trump was much more serious on doing tariff, certainly earlier in the year we were expecting it to be later once the DOS layoffs started to well, they didn't actually play out, but the headlines weren't great. Once the negative stuff started to happen, more so than
anything positive that could potentially play out. We changed our outlook from two point two to one point six on GDP, it's inflation from two three to two seven. And realistically, the risks are that we might have to do a similar type of you know, move again if you start to just see more of an impact from it from a tariff perspective.
I mean, yeah, it's not negative.
I'm just saying, Oh, it's not negative.
Okay, I'm trying I vacillate between like glass half full of glass half empty.
So it's like has a good.
Point, which is companies adjust, consumers adjust, market suggest you have to give everybody smart credit.
Yeah, well, but I think that's right.
I think the economy will adjust and we're not. I think we'll still grow, it's just a slower pace we were. We've been growing in an environment where growth has been three percent or above for the.
Past couple of years. Yeah, and it just has to have a level shift down.
It also just depends on what that transition period looks like, like is it a couple months, is it a year, like?
Is it six months? Like that?
Really then depends on how maybe you ask it allocate or like what that grow trajectory winds up looking like, Yeah, I.
Think that's fair for through much of this year, I would be sort of concerned. From an equity perspective, I think we might see a lot more volatility. At some point it might be abundantly more clear that there's a lot of sort of risk price into the markets, and then it would make more sense to take a sort of a stab at it, right now it just doesn't feel like enough is in the price, just given the tariff news that's likely coming.
Stephanie, thanks so much for joining us. Always appreciate getting your thoughts there. Stephanie Roth, chief economist at Wolf Research. She got a master's in statistics. You couldn't get pay me, literally, you could not pay me nil money to get a master's in statistics.
Wow.
I had one course at business school and statistics first quiz, I got a seven out of twenty. Why because I don't like statistics? And b I slept out the entire weekend of Cameron into Or Stadium to get season tickets to Duke basketball.
Well, I mean, like this priority totally totally worth it. I think I took a statistics yep. And I say think because like I actually don't remember. I think it was my best friend and her boyfriend, and I think.
That maybe he helped us. Yeah, but that's in the testing.
You can't do that for a little bit, all right, joining us now in our studio, which is a treat a larn Goodwin, chief market strategist that New York Life Investment Management. So we got some inflation data today kind of came in line with expectations. Anything on the economic data recently that's jumping out of you and maybe changing the way you're thinking about these markets.
It's really difficult to take the today economic data and tell us much about the markets moving forward because we're in a really interesting and awkward in between spot. We know that policy uncertainty is changing the way that businesses can and consumers think, we don't know the extent to which that will impact the hard data, and so as we think about asset allocation, we're thinking about a couple
of different themes in relation to data like this. One is how do you build resilience in the near term to what we expect to be a RelA relatively meager equity market backdrop? And the second is what do we see happening that we can really anchor on long term? And as we approach Liberation Day as it's being called, I think investors could be forgiven for not feeling particularly liberated.
But as we approach liberation.
Day, even if tariffs disappeared from the policy framework, there are mega trends in place related to supply chains and AI that are on their way. These are things that we believe we can allocate around regardless of the near term volatility.
See, I feel like Lauren was someone who definitely had did well in statistics.
I did, I did, I did really well in statistical Yeah, this in no way surprises me. When when when you got into like the seventh eighth order, like apply to conumetrics, that's when I was calling.
Yeah totally, I mean that's like for me that, I mean, I actually sailed past that part. It was the next part that no, I'm kidding, know what you're talking about. Okay, So then the question that I've kind of been wondering, and I should point out that futures are around the lost of the session right now. Will Wednesday be a clearing event, like will we have will be clearing event for the market, or it's just going to be more volatility and adaptation after that.
I think many of the answers that I've heard from the program already today suggests that it can't possibly be a clearing event. It could be a clearing event for Wednesday and Thursday, and then on Friday we get a labor market report that's going to start to show the impact of government layoffs, and so it's again, I honestly think that if you gave me a spreadsheet that said these are the tariffs that are going to be implemented
on these countries on this timeline. I've heard investors say that's all we need, then we can do the math.
I don't agree.
We don't know how countries are going to react. And frankly, there are places in the world that have a lot of leverage on the US economy. And so even though some clarity over the path of tariffs, if we receive that can be helpful for those next steps to start locking into place. Just the mere fact that we are on this path towards more regionalized supply chains, more energy and tech independence. That's a capital intensive trend that's on
its way. It's going to happen regardless, and so I'm not really angering on feeling better on Wednesday.
Have you been rebalancing your portfolio, reallocating your portfolio, de risking it, what have you done anything that kind of your recommendations.
We're in the camp of recommending actually pretty significant changes to a multi asset portfolio. And just to give a little bit of backdrop, if you look back in the last fifteen years, knowing what we know now, your ideal asset allocation would be ninety percent US large cap growth equity, and frankly, even in twenty twenty one twenty two, we the investing public were starting to say, oh that lower for longer interest rate environment is changing. The world might
look a little different. The AI boom bought us a little time of by the think about US large cap
growth equity before all that's changing. We're looking forward at a market environment that is more volatile, more inflation aware, more capital intensive, and that's an environment where I believe we need to be building more resilient equity portfolios, closing international underweights, looking to generate income within the equity portfolio, because we probably can only expect five to seven percent on US equity this year, So what does that mean?
Well for starters. Many of the investors, despite some of the news we've seen out of Europe, and frankly, despite a much more a much quicker interest rate cutting cycle, have ignored the cyclical uplift in international equity, and so
we're calling on investors to close those underweights. We're staying focused on quality in large caps, dividend payers, those that are lined up for stock buybacks, but we're also taking more equity like risk in credit, and the reason for that is as you see economic risks rise, or if we see that, certainly spreads will widen. We're already seeing
it a bit. But on a two to three year forward looking basis, I have very little concern that the US high yield market, especially in the higher quality issuers, won't be able to pay back their debt. And so as a buy and hold strategy, getting six to eight percent on a high yield bond portfolio, from my perspective, that's a real source of resilience in a multi asset portfolio.
And how much duration would you typically like to take in this environment? Most people, I guess a lot of people have said kind of the belly of the curve, which is a term I learned from Lisa Bromwitz years ago, kind of five six, seven years, that kind of thing.
Lisa Abramowitz was also probably very good at statistics. I think we can agree.
I can see that.
We are neutral on duration. So I just mentioned that from a credit perspective, we like shorter duration exposure, and that's because of the payback timeline. But in a portfolio as a whole, we have very low conviction of which part of the three and a half to five percent treasury yield range will stay in for any amount of time. I just think we're going to see more market volatility, market interest rate volatility as these policy changes come into effect.
And so we're balancing short duration credit exposure with some structured product and also with a little bit of exposure in long duration municipal bonds, which is where infrastructure is funded.
So you're not worried about the tax break going away for munies.
Not particularly, No, And that's it.
I am paying attention to that.
I know.
Well, okay, let me just so.
Usually we have a show from ten to twelve, which I won't be on today, but we have a Muni segment every Friday. And when we started doing the show together, that was like Muni's man, I can't this is too hard, And then finally Paul got me into it. So now when I see a Muni headline, I'm like, oh my gosh, maybe the tract is going to go away.
This is going to be terrible. Anyway, that doesn't worry.
You, No, Our teams feel high conviction that it's just highly unlikely to take place. But this is a part of the credit environment issuers in state and local governments
that need funding for things that they are doing. That when though you may see how yields gap out, for example, in the event of a major tax policy change, you still have a quality of issuance and an opportunity that we feel as meaningful and interestingly and perhaps more to the point, long duration municipal bonds that twenty to thirty
sort of infrastructure twenty to thirty year infrastructure focus. Those are taxable bonds, and so that's something that we're seeing not only for a retail investor base sort of thematically, but also for institutional investors who don't benefit from the tax breaks anyway.
Interesting. I'm looking at the wrp GO function on the Bloomberg terminal the World intst rate probability. It looks like the market's counting a couple of rate cuts this year. I don't know, maybe the data today influences kind of your viewing. How do you think the FED will behave this year.
I think that the FED is incredibly constrained by inflation numbers like this. There's nothing wrong with them, it's just very difficult to cut rates until we see a further deterioration in the other side of their mandate, the employment side of their mandate, And so I expect we'd either need to see significant disinflation, which I don't believe is likely, or meaningful deterioration and employment, or at least a twenty percent drawback in the US equity market for the FED
to cut more than one time this year. And so I do think that they will cut that one time. I think that staying on a path towards neutral is really important to them, but I think it will be challenging in this inflation backdrop to do much more Before.
I let you go, Where do you.
Guys think of like Gold, for example? I mean, I just I can't get over this. I don't record move and I look back and what gold was doing back in twenty sixteen when we had another bat of uncertainty with President fromp and it's like half of what it is now. I wonder how you guys talk about it.
So on a personal basis, we of course are very very careful with our personal accounts as sort of institutional investors. But this was one of my buy and holes that I placed in September, and I'm feeling really.
Good about it night.
But for institutional portfolios. For the average retail investor, we are advocating a satellite exposure to gold actually as a function of inflation and volatility awareness. Effectively that in an environment where you just you can expect more geopolitical dynamics a little bit of concern about inflation, that that satellite exposure makes sense. However, it really should be treated like
a satellite exposure. This is a volatile and multifaceted asset class that most investors frankly don't have a ton of understanding on, and it's very impacted by central bank policy, which is also on the move. So we if you put it in the bucket of making an equity portfolio more resilient to the changes that we see going on, that's how we classify gold.
Lauren so great, She's the best. Yeah, thank you so much. It's so good to see you. Lauren Goodwin, chief market strategist at New York Life Investment Management.
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.
Seventy Balafas, CEO of goal List, a goal Vest Advisory based here in New York City. She joints is here in our Bloomberg Interactive Broker studio. So coming in studio on a Friday to gold stars for you. So I'm just letting you know that's big. So how do you think about that app performance? Sebasty of European markets, international markets or many international markets visa be the US this year. Is this something that's sustainable from your perspective?
First of all, it's been very welcome for a long time. As you know, the US markets have outperformed European markets, and will it last over the long term. I still am a believer in US large tech long term, but over the next twelve twenty four months, I do think that spread between the USO performance and the international or European performance, that spread narrows. Of course, the big investment in trillion dollar investment in defense is certainly going to
help those economies in those markets. But the same reasons why we didn't love or weren't out overweight Europe six months ago, some of those reasons still persist. So we do see that spread narrowing. I am a believer in long term US but over the next twelve twenty four months do see some more room for growth in Europe.
Is the belief in US stocks really tied to the AI trade?
Think it broadens?
It absolutely has broadened. I mean even if you look year to date, of course, the S and P five hundred is down, the large cap tech is down, the MAG seven is down, but you're seeing strong healthcare performance, the dividend stocks, those are up year to date, and I do think that continues. So I do see a broadening happening.
So peak to trough. We had earlier this year about a ten percent corrections pull back in the S and P five hundred. How did you view that? Was that something that's just kind of a welcome, healthy part of a longer term bull market or does it signal something more for you?
Ten percent is normal? Actually more like fourteen fifteen percent is average intra year decline on any given year. Right, So the ten percent pullback, we can't forget. We had the twenty plus percent in twenty twenty three, the twenty plus percent in twenty twenty four, so it was almost par for the course. It wasn't unexpected.
I thought it was just me being a great investor. Oh well, I looked at my four one k I said, how boy, you're good.
I know.
I mean that's just the market lifting all both.
Yeah, No, that's kind of happened to me. And then my husband who's now freaking out a little bit. I'm overstating. But so when you take a look at the benefits, though, where do you hedge you the risk at the moment, Like we to give it to him about gold gold stocks doing really well, Like even if you have your long term theme, even if you think European defense stocks will do well, where's that safe haven bid?
Yeah, that's a great question.
A couple of things.
I in terms of having conversations with clients who ask me exactly that, it's a couple of things. So those conversations with clients that have cash needs coming up cash has been great for us. We've put money aside that's already been done. So anyone that has distributions coming up cash aside.
We have that.
And in terms of longer term growth investors, so we still have our neutral weight equity allocation, but we have become more defensive by using those dividend stocks as an example, the other areas in private markets, so private credit, for example, you're not going to see the volatility that you have been seeing in the public equities markets. Private credit and then other securities, other alternative investments like structured notes for example, that do well with volatility.
All in the structured notes. Unfortunately, there's some taxis issues there, SEVESSI stay right there, You're gonna hang with us. We're gonna get the market open right now, Lise Miteo, and.
It's opening Bellerport brought to you by Oppenheimer. Oppenheimer focuses the powered they're thinking on you, creating customized plans to.
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Put the power of Oppenheimer thinking into your investing, wealth management, capital markets, investment banking. All right, and these markets are open, and we've got read on the screen. S and P five hundred down two tens percent sixteen points five thousand, six hundred and seventy seven, the Downtown to ten percent seventy six points forty two thousand, two hundred twenty one, and then NAZAC down four tens a percent seventy eight points at seventeen thousand, seven hundred and twenty two. The
two year yield. Let's head over there. The three to two point nine six percent, that's down two basis points, and the yield on the tenure four point three zero percent down five basis points. We have the Bloomberg Dollar Spot Index. That is a little change after point comex goal three one hundred and twelve dollars an ounce. Now, as far as Bitcoin, it's down about two and a half percent, just above eighty five thousand. That is your Bloomberg opening bell report, all of Alex.
All right, thanks so much, Lisa, Sorry I jugged you on that, No problem. I was going to talk about that sectors too. You got utilities and real estate doing well. When those two are doing well, you know there's a little bit of a save haven bid in the market. Tech, consumer discretionary industrials, communication services, so tech and the cyclic goals.
Under performing just a touch.
What are your clients asking you right now in terms of the tariff uncertainty and how to navigate that, And if it's a huge structural portfolio shift or just trimming around the edges.
It's trimming around the edges for us, it's not a big structural shift because frankly, we don't have all the information yet. The announcement on auto tariffs the other day was a bit of a surprise. By the next day we had additional information on that. So there's more and more information coming out, and the questions are around is this going to last? How long will it last? Is this a negotiating tactic? What will we really see? But in terms of restructuring portfolios, it's tweak on the margin
because we've had diverse fried portfolios. We're adding a little bit more, as I said, to defensive, but not making large changes. We just don't have information yet.
Yeah, let's talk a couple of names here. Progressive Insurance. Now, when I got into VESPA, yeah, the guy said, the salesman, who is also a Progressive agent, said go get your quote from your insurance company. I got it over the phone. Huh, he says, I guarantee I can beat that by like thirty forty percent. Sure enough, Progressor came through and it is so easy. The app is awesome. So I've become a fan of Progressive Insurance because they insure the VESPA.
It's huge.
It's huge.
You know.
It's funny talking about insurance companies. We'll get to the actual stock pick in a second. But this on streaming, A lot of the insurance companies actually advertise, So my daughter now can sing and it's into all the insurance jingles, so Progressive, Geico, all State, like she knows them by name, and I was like, what, it's.
Such a competitive business that they advertised, like crazy talk to us about reasons to own Progressive.
Well, exactly what you said.
You sold it for me, exactly what you said. So they are great with digital technology, that's certainly true. Number one. They're growing, so it's not only auto insurance, but they're really good with bundling the cross selling, so you mentioned some of that as well. And right now when we talk about staying allocated to equities but being more defensive Progressive. Progressive is a wonderful name. Expected double digit earnings for
this year. We've seen solid earnings from them in the past, even in down markets like twenty twenty two, actually they were positive. So it's a name that even if we're into a recession, you're still paying your insurance. It's a name that we like to have in the portfolio.
That's a good point. All right, thanks pot, We really appreciate it.
It's really great to get your perspective on how you're navigating this environment.
Thank you so much for coming into the studio too.
We always love that when people come in a SEVESTBA office joining a CEO of Goldfest Advisory.
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Market's really been whipsawed by the news coming out of Washington, DC. The folks there seem to be having the narrative here as it relates to financial markets. So we figured, let's get one of these folks on. Michael harrodappolisk play and screw it up too badly. Republican representative from Florida in
the US Congress Joints is here in our Bloomberg Interactive Studio. Michael, how do you guys think about Are you guys aware in Congress that when you guys and when the White House talks about tariffs and economic policy, boy, that has a big impact on global financial markets. How do you guys think about that well, like it absolutely, and now one of my long term goals is offer a certainty instability to the markets. What I led the Florida Senate
twelve years ago, we had a very challenging economy. We wanted to offer certainty stability. We said, no new taxes, no new fees, We're not going to make it easier for people to sue people. It really consolidated the Florida market. People flocked to Florida. We need to offer the same thing in Washington. But as you see with these.
Tariffs, there's a lot of whipsaws you put it.
So the idea behind this right, and I think that the Trump administration has been really clear, is to move from an economy that's reliant on fiscal spend to an economy that's reliant on private spend. And that is going to be a really difficult transition from anyone that you talk to, And I guess how much pain are you guys willing to take as that happens.
I think the words turbulence there's going through. The turbulence you've already seen in the market. Has been a little bit of a slip from this high mark earlier this year, and I think what the President's attempted to do is say, we all learned during the COVID crisis that we're too reliant on foreign markets.
We want to bring some of those jobs back. We also, of.
Course, want to offer the great the middle class once again those manufacturing jobs can do.
But I think that challenge is there.
Our Secretary of the Treasury has talked about making that transition. As you put it perfectly, I think you're going to see some challenges over the next few months. But one of the ways we do that is to reduce government spending so that people have more money in their own pockets to make those capital decisions, as opposed to the let's just say the government making some of those big decisions.
So what do you think is is is Congress sits comes back here? What do you think it's the to do list for Congress these days?
From your perspective, Well, I think the great news.
First of all, I'll talking about the good news and the challenges first and foremost, we realize that the border crisis was simply enforcing the laws. We've reduced the border crisis by ninety eight percent, and I like the idea that means we could actually maybe make some changes in
the immigration law. There's some folks we need to bring in for what to be seasonal workers and agriculture, like mind state of Florida, let alone people working at hotels and restaurants that are needed to some Americans just don't want to do those jobs. That said, I think the bad news is there's going to be challenges because the President is saying we want reciprocal tariffs. Why are we still treating other nations like is nineteen forty five and
stead at twenty twenty five. These nations are up on their own feet right now. The EU economy is almost the size of the United States. We want to be treated fairly, whether it be on autos or food, and I think that's a common sense approach that we get treated fairly, especially how generous we are around the world, whether it be are support in the Ukraine or of course whenever there's a crisis overseas, we always step up.
That said, I think that the challenges is can we actually reduce spending or at least focus on things that really matter. And I think one of the things that we're most focused on is how do we protect something that people have earned Social Security and Medicare, and how do we also agree form a program like Medicaid. I know it sounds great, but remember medicaid is welfare healthcare and these folks pay nothing into the system. But we want to protect those folks on Medicaid or disabled or
in a nursing home. But folks who are able bodied, they need to get into this economy and contribute because we're all paying a little bit artificially higher in let's just say insurance rates for healthcare. Because one third of the population is getting free healthcare. There's going to be a cost shift when that takes place.
Yeah, with any of the jobs, I mean, some of them have jobs, they just don't pay a lot, so it's not like they're just hanging out at home and like collecting medicaid at this point.
No, I don't think that's the case. I think you're right.
I think that we do have things like the CHIP program that's where you if you're working, you don't qualify for Medicaid, and did the chip programs you can provide at least low cost health insurance for your kids. I think those are the transitions we're looking at, and I think with Obamacare that does exist today. At least you're paying Most people are paying something into the system.
How do people in Congress like yourself look at Doze and Elon Musk. I mean, you guys have spent your whole getting to Congress. You guys are are the bomb. They got this dude coming in who elected him to anything? How do you guys think about that in Congress?
About you? Based on your question, I might be the anomaly. I love what they're doing. Here's why.
When I was the leader of the Senate, we literally put everything online, from what we took in to what we spent to the people who got the contracts.
I wanted to have that transparency. We are the Sunshine State on legislation. I think the same should hold true for spending.
It shouldn't just be Elon must get to be all of us looking at where this money is spent. Every one of us works hard at this table to earn those dollars. The government should think as strongly about that same position. When you see them spending some money, let's just say some dubious programs. To be generous. You're wondering, is that really the best use of our dollars? You brought the question of medic it, I think it's a
legitimate issue. Those people who are on it, a lot of them desperately need it because there's no other way. When you take money and that this is not such great programs, and you take away from needed programs, and you undercut the confidence in the government. So I think dose is a smart way to make people think. When my wife says, hey, let's look at our credit card bill, I know I'm only spend on my credit card bill. Really,
I just be spending on notts of extra items. I think that that transparency is essential to gain trust in the government, which is so lacking today. And as far as your question the political question, Look, I'm a former state legislator.
I hated it when this.
Federal government tell me the little brother to the big brother, Hey, you got to do it this way. I think that all of us who came to the state leg league to remember, we didn't like it when Big Washington told us what to do. We should not be hypocrites when we have that opportunity in Washington. Let's have those block grants back to the states.
They're smart folks.
They can make good decisions on healthcare, education, transportation, the environment. They don't have to cycle it through Washington to get the AOK.
Are your constituents freaked out at all by the uncertainty? I mean, look at any sentiment data. Republicans, Independents, and Democrats are all worried.
Well.
I think part of that in not just ubick, is a lot of a media build up. Remember, there hasn't been no, no, no no. There has not been a single cut to Social Security or Medicare at this point. We have not changed the Medicaid program at all.
And so when you.
Hear us talking about like a trillion dollars worth of cuts, like, we know where that's going to come from. It's going to be coming at had some point from entitlements.
It is going to come from. First of all, the entitlements, the ones you've earned, are not going to be touched. Social Security and Medicare. Every one of us on this portal today have paid into that our entire working life.
That's a pledge you made. The folks.
Medicaid's a little different program, and there's almost one hundred million people on Medicaid. All we've said were we really focus At least I have is saying people who are able bodied and are choosing not to work, should not.
Be on medicaid.
But it's not just that it's tariffs, right, it's the worry of higher prices, even in the short term, and it's across the board. So are people coming to you and being like, look, I'm freaked out what's going on?
I think people are freaked out a little bit.
Sure, there's a big change coming government, but come on, when we run a trillion dollar deficit, what kind of responsibility is that we Again, what I love is we're having this discussion finally of what is the role of government. Should we be spending in this program or that program?
And let's all take a look at it, because some of these programs that have been identified by DOGE would have never passed the smell test if you actually brought some of those expenditures before a government committee.
Florida. Everybody in this greater listenership here, Greater New York City is seemingly gone to Florida.
Paul's just jealous.
I mean, what's the attraction? I mean, it's this summer's hot. I mean, so talk to us about what's the Is it still growing down there?
Is it appeals? I live in fantasyland. I love where live. My wife says, I say, what, what are you crazy? You're going to Congress. We lived in Florida's the first place in the world.
Remember, we have budget surpluses, we have one of the best education systems in America, we handle hurricanes when they do come.
And it's just a fabulous place to live. And so we love it there. And I'm a former New York myself grew up in Garden City along Island.
And so when I experienced a winter in Florida after going to college with Blase called stats and I said, I found home, and it's hot ed where folks in August. Let's be honest, and I'm willing to take one and a half really bad months for ten and a half great months in Florida.
Come on down. Eventually. You're all going to come.
Yeah, yeah, exactly. That seems work.
No, I'm too pale. I can't do Florida.
You can't to Florida.
No, well, no, I'm sick in state Jersey Shore. But no, there's a lot of folks heading down there. Michael Hiradoupolis, thank you so much for joining US Republican and representative from the Great State of Florida in US Congress. Thank you for coming to our studio. Appreciate it.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Apple, Coarclay, and Android Auto with the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal.
I'm looking at the thirty year fixed mortgage as per the Mortgage Bankers Association, six point seventy one percent. It's down from over seven, you know, kind of back where we started the year. So it's come down a little bit, but it's still not at a level that a lot of folks say will free up this market. I don't know. Some have chief economists core Logic. She does this stuff here. She worries about the mortgage markets. So you see some of the economic data here over the last couple of weeks.
How does that inform kind of where you think the Fed is going to go with their interest rate policy this year?
First of all, slight correction. Core Logic is now cautality. So we have our brand name change here.
Oh nice, Yes, I will go ahead and blame Eric for that.
Some consultants somewhere along the way came up with that. You know, that was their job. They got paid to do that.
Okay, okay, And what's the new firm name?
Brutality of Fatality?
All right, ol In. So what do you think about our fed reserve here? Semma?
Yes, well, thanks for having me on. Well, Federal Reserve is a really it's in a pickle in a sense because you know, it's trying to maximize employment while stabilizing prices, and either one is moving in the direction reel in which they would want to. At their last meeting last week, they were talking about higher inflation going forward, so they don't expect reaching that two percent target until twenty twenty seven.
At the same time, concerns are building around the job market, meaning that we can have a higher unemployment going forward, and you know, when you're talking about large layoffs, that never bodes well for consumer sentiment. And so consumer sentiment has weakened at the moment, and that is not good for the housing market. We did see mortgage rates come down lower over the course you mentioned from that seven
percent in January. That is very helpful. And what's also helpful is that mortgage rates have been stable over the course of last month, because there's nothing worse than mortgage rates going up in the middle of spring home buying season, and that is what we saw last year. So mortgage rates at least are a little bit helpful in terms of the housing market at the moment.
Putting I mean, you really can't put mortgage rates aside, but how's affordability aside from mortgage rates, Like our price is coming down to reflect this uncertainty that consumers feel.
No, home prices are still stable. They've been pretty flat for the course of last seven months, and we did see this little bump in February reflecting entry into spring home buying season. It was a little bit weaker than we traditionally see in February, but it's still going up. And there are still markets where you guys are up in the northeast region of the country, where home prices are up some nine to ten percent on a year over year basis, so where incomes are strong, we do
continue to see relatively strong home price appreciation. The weakness is really in the southern markets in Texas and Florida, where we've talked about this over the course of last year. Markets and the demand for homes have really weakened, and that's reflected in lower and declining home prices.
Home affordability, I mean, and that's a term that I've really come to understand a little bit more fully over the last several years. It kind of goes to the issue of, Hey, the houses are expenses out there, and now we've got mortgage rates high. That makes home affordability really really difficult. How long do you think that's going to persist, Soma, Well.
I think we're already seeing pressures building up, and that's why the rate of home press appreciation has slow don and home prices have been flat, because it's really difficult for people to make that new mortgage payment. Our estimate is that mortgage just principle and interest over the course since the onset of the pandemic has gone up some sixty two percent on the same home, exactly the same home. Your typical mortgage payment is now up sixty two percent.
But the other issue, and that's really causing concerns for some markets that are more prone to natural disasters, is that you have cost of insurance increasing so much, and also in some markets that have seen a lot of appreciation, you now have much higher property taxes. So that's the component that's variable, it's not fixed, and that's really starting to weigh on some more on affordability in some markets.
Some before I let you go, this is not taking into account lumber, steel and copper and aluminum tariffs. How much will that increase new homes.
Yeah, so we did an estimate and we think about ten percent increasing material costs over the course of next twelve months. Now, it's interesting, you know, there are different components for residential. The biggest concern is applying is for commercial, the biggest concern is steel and cement. But commercial sector has been slowing, particularly when you think about multifamily, that
has been slowing. So the pressure on those prices is going to be a little bit less simply because the demand for those type of products is not as high as it was over the course of the last few years.
All right, Sama, heep, thank you so much. We appreciate that. Sma. She is the chief economist and the new firm is Cutality.
In you go for.
This is the Bloomberg Surveillance Podcast. Listen live each weekday starting at seven am Eastern on Applecarplay and Android Auto with the Bloomberg Business app. You can also listen live on Amazon Alexa from our flagship New York station. Just say Alexa play Bloomberg eleven thirty.
Right now, let's hit the newspaper segment, the always popular newspaper segment with Lisa Matailisha, what do you have for today?
Okay, Paul, I know you're not going to know this, but Alex, did you notice what Oprah was wearing to the Oscars?
No, but I want to know talk. Wait was it a suit?
Yes, you're onto it, You're onto it, You're onto it. Okay, wasn't an evening gown? So she was wearing this long black skirt to thetotype laser white shirt with a tie. And the tie was like the staple because women wearing ties. It's it's not something new. I remember Diane Keaton like she wore the all time. Yes, yes, but it's seeing this resurgence. So you have like Zendaiya, Zoe Saldanya like they're starting to do this. So I was on the
twenty twenty five runway. So the Wall Street Journal really gets into it. They have like a bunch of listings. How they can be as high as two hundred and fifty five dollars. Some as cheap, you know, maybe twenty eight dollars, but they get into the history behind it, like in the eighteen thirties in Paris, women needed permission from the police to wear a tie.
Oh my god, that's amazingly wrong.
But I don't know. I think I would kind I like the thin like, yes, I think you would do that. Like I've seen people here wear it.
Too, John far and he wears it very well, but you just wear it very well.
I would totally. I would totally do that.
No, I don't like it. Sorry, you don't like the women tie thing?
No?
No, can I ask it an adjacent by the way.
But that's fine.
You can have your opinion, but that's my opinion.
Yeah, can I ask it an adjacent oprah question?
Yes?
Do we know is she has been reported whether she's doing like theozepic kind of we govy things.
She talked about it because you had the whole special right.
Yes, Okay, so she's okay, okay, just wonder phenomenal. Yeah she does. Okay, great tie.
Oh yeah, what else are you looking at?
Okay?
President Trump's childhood home. I didn't know this, but he had this. You know, he lived in a tall jewelry twenty one undred square foot it's like a tutor style residence in Jamaica States in Queens until he was like four years old. His father actually built.
It in nineteen forty area.
Yeah, but it was sold at a steep discount.
Okay.
The reason why, Well, it was sold for eight hundred and thirty five thousand dollars. Right, it was less than half of the two point one four million that it was sold for back in twenty seventeen. But it's been unoccupied, right, it's run dad, And you said the area is nice, So the neighbor are like, this is a nysore. This
is horrible. So they started trying to keep up with like a lawn and then you have like thirty straight cats that are like wandering around this house and they are feeding the cats because they and it's become this whole thing. But the person who owned it before, they actually used to rent it out as like an Airbnb for like eight hundred and something dollars a night.
I love they owned that. The neighborhoods started. I love that is.
So the neighbors were like pitching in. So now it was finally sold after being abandoned for a while.
But it was just gonna be.
You put a million dollars into that thing, which somebody will and it can be.
And they're totally They have the dumpsters out there tearing everything down. So yeah, so that's interesting. I didn't even know that that that he lived there.
He was like years old exactly.
For those of you, are you guys on Facebook, I don't know you're not, okay.
I mean I think I have an account, okay, but I think I haven't been on it for five years.
I know I haven't either. My daughter says, only old people do it. So so Mark Zuckerberg athlete, wants to bring down back like the og Facebook, like when you you would talk and we'd see content from your friends instead of all these recommendations that you get. So they're introducing this friends tab. It shows your friend's stories, reels, birthdays, you know, all that kind of stuff what it kind of used to do. So it shows how they're going
back to their roots a little bit. I mean, they've been trying to get popular, they've been falling to like all the other social media platforms.
So what is it now? Feed basically versus a friend.
Few, it's like the recommend date, like you gets recommended on the algorithm, like what you they think you would like, and they put that on your feed. So if you click on this friend's tab, it'll go directly to only what your friends are posting, so you can see that.
And there's something very weird about this, isn't it.
I don't know. I'm looking at you're going back to the OG way. I'm looking at the stock one point five trillion dollar market cap up three percent year to date, up twenty four percent over the trailing four months. This has become a story that used to be all driven by subscriber growth and growth and growth, and then it became a cost cutting story, which worked great for the stock. And now that we're going to how to MoMA, ties, Instagram, WhatsApp, all that kind of stuff.
Now it's an a I play too for like.
A high press another exactly right now. Now they've got the AI think go ahead, all right, very good, lisha miteo with the newspapers. We appreciate that.
As always, this is the Bloomberg Surveillance podcast, available on Apple, Spotify and anywhere else you get your podcasts. Listen live each weekday, seven to ten am Eastern on Bloomberg dot com, the iHeartRadio app tune In, and the Bloomberg Business app. You can also watch us live every weekday on YouTube and always on the Bloomberg terminal