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How all of these flip flops within the volatility and the price action of markets.
I think it's more likely that we revisit the lows than we done.
It turns out that's the beginning of the volatility in bonds, not the end.
So the next ninety days is going to be quite volatile in the bond market.
What's happened generally lowering the risk in the portfolio. In this type of environment. Rather than a strong bed on you want to be in bond's and equities, you want to bring risks down.
What we're looking for is a very choppy year, unfortunately.
This is Bloomberg Surveillance with Jonathan Ferroll, Lisa Bromowitz, and Anne Marie Hordern.
Live from New York City this evening. Good evening, good evening for audience worldwide. Bloombag savandid Stats right now wrapping up a wild week in financial markets, investors getting their hopes up following the biggest weekly gain of the year so far, the White House unveiling what appeared to be tariff exemptions for big tech, only for COMMAS Secretary Howard Latnik to reign on their parade.
They're exempt from the reciprocal tariffs, but they're included in the semiconductored tariffs which are coming in probably a.
Month or two.
President Trump doubling down, writing there was no tariff exception announced on Friday. They're just moving to a different tariff bucket. So we enter a brand new training week with a very brief sigh of relief.
Is this a sigh of relief? Do we have a sense of what the tariff is? We moved from one bucket of one hundred and forty six percent to maybe twenty percent, which is the fentanyl bucket, which is where electronics fit in. Look, this seems like President Trump coming out and trying to push back against the idea that he pivoted, while still offering some support to the idea
of electronics. It is clear based on what Davison Greer as well as Howard Lutnik said that they are looking to move forward with an additional framework of tariffs for semiconductors.
Are we negotiating with China or negotiating with ourselves? And after a week like the one we just saw a six percent rally almost on the S and P five hundred, is this a policy pivot or not from this administration?
What was the policy?
I think that that is the bigger question right now, and there is a level of exhaustion. Is this the ultimate goal? Is this all according to plan? Because that's what a lot of people were saying right now. People are exhausted, People on Wall Street are exhausted. The uncertainty itself is going to drag on growth and that is what you see in notes pretty much across the board.
Did we get clarity, Yes, we.
Got one note of clarity, and that is that this is a president who is watching the treasury market, but the sort of input there is still unclear.
The first trade this morning in the equity market this evening rather positive by zero point nine percent on the S and P five hundred. Coming up this hour, Bob Michael a JP Morgan as bond market moves spook investors worldwide, Lebby Cantrell of Pimco as this weekend's policy confusion continues, and Stuart Kaiser city on why we need good news
and we need it quick. We begin this out with our top story this weekend, Apple and Nvidia appearing to score a major win and for the white has to reign on the parade, joining US now from the nation's capital, Bloomberg's tyn of Kendo Tyler, you need to explain just what happened this weekend.
Yeah, hey, John, good evening. Well, it's unclear how long this for pre will last because it does appear that these tech imports will be subject to a Section two thirty two investigation, which could take weeks or even months. We have to keep in mind that when President Trump signed that initial executive order on April second, it always excluded chips, as well as some other key industries like lumber, pharmaceuticals, and copper that could be subject to Section two thirty
two tariffs on the basis of national security concerns. It now appears that these other tech imports, including consumer electronics, will fall under the sector specific umbrella instead of the so called reciprocal plan umbrella. As you said, President Trump,
just saying that this moved from one bucket to another. Now, with that said, when this White House has invoked Section two thirty two before, including on steel and aluminum imports auto imports, they've implemented a twenty five percent tariff rate.
Let's just say for the sake of the example, that ends up what goes into effect that would be considered to be at least an initial of victory for big tech, because that is so much lower than what could have been the now one hundred and forty five percent tariff in across the board when it comes to Chinese imports. But still some really big questions here, not just on the timeline uncertainty, but also how is the White House going to look at the full scope of these electronics,
for example? Or are they going to tariff of the value of an iPhone on its whole, or are they going to tariff just the value of the chip inside of the iPhone. Questions like this are going to keep
coming up. But John, I will just quickly add the one thing that remains the through line here is that President Trump doubled down in his post that this really is about China, reiterating that all of these products are still subject to that twenty percent baseline tariff that Washington imposed back in February.
It's Tyler Knda with the lightsis down in Washington, d C. Tyler, thank you stay close as always you are looking for that first trade. This evening. The Sunday Evening Equity features here it is positive by one full percentage point with more his Donny Berger hate Donny, and.
More than that when it comes to tech, John, you're looking at an AZZAK one hundred future session that's up one and a third percent. Maybe it is by now, ask questions later. There's signal in the fact we are trading this as something of a relief rally, So one percent for the S ANDP just under one and a third for the NASDAK or small cap session so far with trading just underway seven tenths of one percent. Calling this a relief though, might be a misnomer because we
have seen some huge swings. What is one percent when we've seen stocks up and down ten percent on some days. So let me just show you where we came from to get to this future session. The past five trading days was the best week for the S and P five hundred since November of twenty twenty three. Why did it not feel like that? It's because of this volatility that we've seen. In fact, in the five days through Thursday, we saw a trading range of more than six percent.
That streak has only happened two other times in history. One was March twenty twenty the COVID epidemic, and then the other one was October of two thousand and eight, the peak of the financial crisis. John, I think a lot of traders are going to be relieved that we're heading into a holiday shore trading week coming.
Up, Danny, We can't wait, Danny Burger. Thank you. More from Danny later on this hour. Wild swings in the equity market, wild swings in the bond market too. Here's the big take on Wall Street this evening, Bob Michael a JP Morgan Asset Management right in the following. Over the last couple of weeks, investors have been searching for science, for anything that broke. At the end of this week, the most unlikely of candidate surfaced the US treasury market.
The glob I had a fixed income joined us. Now for more, Bob, good evening, It's good to see you.
Yeah, happy to be here.
Two sundays in a row. Let's wrap up this week. The move we saw this week in the bond market. Yields up by forty to fifty basis points on a tenure and thirty year maturity, the dollar down by close to three percent. Everyone's got the same question. Evidence of bond trades blowing up, or are you starting to see people distance themselves from dollar assets.
I think that's a great question for from our perspective, we're seeing a complete deleveraging of positions and that's what's been driving it. So, whether it's been swap spread trades, where it's been the treasury basis, whether it's been investors who sold Germany and bought the US, all those things have begun to unwind and it's put a lot of
downward pressure on treasury prices. Two things happened at the end of the last week that make me feel a lot more positive this week than going into last week. The first is Susan Collins came out and broke from the FED script of the only thing we're watching is inflation and talked about will be prepared. We're watching the market. If we need to step in, we'll step in. The other thing that we saw was the FED report that showed that actually foreign central banks and reserve managers weren't
selling treasuries as was widely rumored. They actually even added a little bit, and in our conversations with overseas investors, they're not being shaken out of treasuries if that's.
The case, and how concerning would it be to you if treasuries didn't rally this week.
I think there's still a bit more of a washout to go. I think there are still the investors that are coming in overseas that have seen the downward price moves and may be unwinding some positions. But I feel pretty good that we're putting in a low and price and a high end yield here.
So this is the ultimate question right now.
Can this be a haven asset at a time where the dollar didn't get that bid and the Treasury didn't get that bid going forward? How much has to happen for the Fed to come back into play Given the fact that Neil Kashgari over the weekend came out and said, ultimately where the yield ends up isn't going to.
Really be a determined of the Fed.
It's going to be about these policies when people can understand what the new normal really is.
Yeah, and I think he also threw in inflation being anchored. It's funny to me how the entire FOMC and we'll see more this week, are coming out and just highlighting inflation. When a month ago, their chair j Palll discredited at the press conference and called a transitory again. He's going to be right this time that it is transitory. It's a one time price reset for tariffs that will create
demand destruction and lead us to recession. And when I read Bruce Kasman and Mike Faroli stuff, they still have the probability of recession still up at sixty percent. The Fed is watching two things. They're looking for signs that something systemically broke and that becomes a bigger problem. Right now, we're not seeing that. It eerily feels like an orderly online I think that's good news. The other thing they've got to be watching is the other side of their mandate,
which is the unemployment rate. We think if you get up four point seven percent or higher, that's up half a percent from here, then that will put the pressure on them to come in and bring rates down. Remember they told us this isn't the neutral rate. This is moderately restrictive. Three percent is neutral.
The next meeting my seventh. Last time you sat there, just last week, you doubted whether they could hold on until May seventh. What's your view on things now? Can they hold on until May seventh, and do you think May seventh is the day they pulled the trigger.
Yeah, last week it looked like we were in meltdown phase unless there was a policy response. I think we've seen three soft policy responses. The first came from the administration you already went through. They gave us a ninety day reprieve. That's fine, and they took some of the tariffs off of electronics for the time being. That's okay, that's backing up. The second came from Congress, where the House passed the Senate Budget Resolution, So Congress in a
way gave us something. And then I'm going to say the third is Susan Collins finally sending us home over the weekend, saying, yeah, the Fed's watching this.
We got this list. So we went into the weekend with some pretty dreadful data. You mintioned, consumer confidence came out, sentiment near a three year low, inflation expectations multi decade highs anxiety about unemployment the worse since two thousand and nine. And I think we say, hey, the saving gun into when you tread and wait, thinking about the next phase of all this, the damage that's done already and what it looks like in the economic data in a weeks to come.
That's really the main message.
You can't put the toothpaste back in the tube, you can't put the genie back in the bottle.
We have seen a change.
We've talked about uncertainty, but there is some certainty that things are less good than they were earlier this year, and that this is going to have ramifications for spending and certainly among corporation.
Well, just finally for this part of the conversation with you this hour, can you want to do the damage that's already done and you anticipating a round about of pretty weak data in the weeks to come?
Yeah, I think so. And again, as I was reading for Rolean Casman's pieces over the weekend, it's really hard to change the confidence of businesses and households, and hence that probability of recession is still up there at sixty percent. It's not one hundred percent because you can see an overwhelming policy response. How many times have we been here during COVID or during during the regional banking crisis, when for sure we were parleling into recession, but the aggregate
policy response was sufficient to stop it. We may see that this time, but for now we're on path to recession this time.
To get that response, you need to see the data break Lisa, and that job's report for this month that you'll see in early May. I think a lot of people are going to put a lot of weight on that particular print.
But how quickly can you get some sort of layoff wave given the fact that so many companies are still scarred from the experience during the pandemic, and we've seen this in note after note is going to lag behind and that is a complication for the Vetero's a.
Difference between langoff and just not hiring. And given how many times we've heard people say wait and see, wait and see, you have to imagine for a lot of people, they're just going to pause hiring, aren't they for the next few weeks, next few months.
Which is the reason why I watch the quits rate. Watch how many people stay on the unemployment claims for longer as that number goes up. These are some of the peripheral data points that people are watching.
If you're just joining us, welcome to the program. Good afternoon. SeeU Equity Futures Training and we are positive by zero point nine percent Michael A JP Morgan will be sticking with us. Up next on the program, the White House keeping the pressure on.
What President Trump is doing and his vision and his leadership is to completely realign the world economy, but in so doing put America first.
The President is on it.
Up next on the program, we'll get the view of Libby Cantrello PIMCO live from New York City. This evening, good evening, the first trades underway. Equity futures at the moment positive by zero point eight percent on A S and P five hundred on the NASTAG up by one point three and the savannahs This evening, the White House attempted to keep the pressure on.
The President is on it.
It's very very important for people to understand, you know, why we're doing what we're doing.
What President Trump is doing and his vision and his leadership is to completely realign the world economy, but in so doing put America first.
The world cheats us.
They've been cheating us for decades.
We have been living under a teriff regime, but it has been the regime of other countries.
More importantly, they cheat us with the so called non tariff barriers.
It's the VAT tax, is dumping, the currency manipulation.
We can't be relying on China for fundamental things that we need.
What's going to be up these countries to come to the table, continue coming to the table and make these kinds of offers.
So here's the license, the saving, the White House pushing for change, the President of right saying, nobody is getting off the hook. We will not be hal hostage by other countries, Lisa, especially hostile trading nations like China will There was.
No teriff exception announced on Friday. These products are subject to the existing twenty percent fentanyl tariffs and they are just moved to a different tariff buckets. We need to understand the tariff buckets, and the twenty percent tariff bucket does apply to what we're.
Seeing in China. Got that good? Is it now thirty percent?
If you've got a ten percent base that comes out, is it going to be added to the one hundred and forty six?
You know, you can explain that.
Just what is the number? Paul Ashworth of Capital Economics how to go at this and said the increase in the headline tariffray on China specifically remains at one hundred and forty five percent, but the effective increase once those exemptions are accounted for, it's now closer to one of six.
You got that clear as mud.
I mean, look, this is the difficulty for so many people is that the layers of tariffs just become incredibly difficult to even start to calculate, to the point where people start to discount them entirely. Amazon had a note where they came out and said, if we calculate this correctly, the numbers would be so ridiculous that we couldn't even come out with those estimates, which is what we're hearing pretty much across corporate America.
Let's get to the take from Libby Cantell of Pinco right in the following. We should not underestimate Trump's ideological commitment to this issue. So while the worst may have been avoided, trade policy uncertainty should be priced in going forward and places. The Libby Joints is now for more Libby. Good evening, we go again. Here we go again. It's
good to see it, least get to see you. After last Sunday, a lot of people started to believe there was a policy pivot, a ninety day pause and into the weekend some exemptions, then we got the pushback over the weekend. Has that been a pivot or not from your perspective, Yeah, I don't.
Think there's necessarily been a pivot.
Maybe some practicality has has has sort of trumped the ideology, if you will. However, I think a couple of important points. One is that this Section two thirty two investigation on semi conductors that has been that was previewed at the beginning of this administration. They are very committed to this. Ambassador Greer reiterated this in front of st of Finance
and Ways and Means this week. So this is coming, however, and I think your earlier segments alluded to this, it will likely be a much lower tariff schedule for these for semiconductors, potentially for phones, potentially for consumer technological products. And so that means they're going from one hundred and forty five percent tariff maybe down to a twenty five percent product traff plus those twenty fentanyl that's forty five percent. These are still incredibly draconian.
Right.
If you had mentioned any of these types of tariff levels the beginning of the Trump administration, I think the market would have obviously gotten you know, had some indigestion. The second thing, though, I think really importantly is that the actions over the weekend, I believe make this AEPA authority, this emergency economics powers authority that the President is using more vulnerable to legal challenge because he is using this with the declaration that this is a national emergency. Well,
is it or not right? If you're actually carving out exemptions a sort of Swiss cheese approach and Ambassador Agre you're actually had said about two weeks ago. If you're doing that, then then it kind of undermines the entire basis for IEPA. So in some ways, I think actually the real story is that this is already a legally vulnerable kind of maybe specious use of AIPA authority, probably is more vulnerable given the actions of the weekend.
Okay, hold on, This is actually fascinating to me. Who would then sue President Trump? And how long would it take for this to be undermined in a court of law and would it be followed?
Yeah, So a couple of things. One is that there is already litigation and process. There are some trade associations that have already filed kind of the first steps towards litigation in terms of questioning this use of AIPA. But to your to your question, and this is obviously very pertinent to markets. This will take a while to go through the judiciary. There's not likely to be an injunction because you'd have to see a reparable harm. And that's I think that threshold is very very high.
I'm no lawyer, but you play our trade.
From what our trade attorneys are telling us, it is that the threshold is high. However, however this is and again I think a lot of trade lawyers, those who are actually attorneys, would say that this was already a very aggressive use of this statue. And again I think today or you know, today's or this weekend's actions make this more vulnerable.
A lot of traders would become lawyers overnight. You know that. But Michael might become one too, Bob. How would this market respond to legal challenges in a week's to count?
It wouldn't like it because that's more volatility, that's more uncertainty, that's more confusing.
Negative.
I do think it's negative. I think that at this point the markets would like to see some sort of agreement on where tariffs are going to settle, be able to model them and move on the other thing. I wonder when I listened to Libby, we're talking about Trump having an ideological view about rebalancing trade. I also think he likes the revenue. Now when you listen to him, whatever they're modeling on tariffs, he doesn't want to give that up. And I wonder how sustainable that actually is.
So this raises a question, Libby, about what exactly was the point of putting out the tariffs as they did, if they were going to carve out exemptions a couple of days later, and whether this was planned.
You always start your letters. I'm going to just sort of give you your cheat sheet what is going on, and then you list things that are going on.
You don't have to actually listen anything, and you just say what is going on and send it out.
At this point, but ken of a sense of.
What exactly led to the shift and the exemptions being announced or was this already planned?
Do you have any insight?
So I think that this is I mean, I think this is the White House, and we'll say this that the President Trump is his own economic advisor. From our understanding, there were several sort of avenues which he could have explored, or he could have pursued. On Liberation Day, he picked arguably the most draconian, the sort of the most ideological, the most extreme, and I think again sort of the most legally specious. But there were other avenues that he
could have pursued. And I think that maybe we're kind of going to one of those other channels.
Maybe more moderated.
And now, of course, I mean what we are economists have said is, and what Bob had said earlier, I mean, this is still regardless of these you know, even if these exemptions hold, this is still an incredibly high effective teriffrate. You were looking at effective tariff rate in like a twenty percent potentially on all imports. Now, if if imports collapse from China, that's effective terraf frate goes down. There's obviously a lot of friction from an economic perspective, and
that does increase recession risk. So we're definitely not out of the woods yet. I do think, actually, I think a legal challenge would probably be welcomed by the market. I mean, I think they would really like that. However, and I think this is maybe to Bob's point, is that the President has a lot of unilateral authority around tariff. So if it's not AIPA, then it's Section one twenty two.
If it's not, you know, I it's not necessarily it's Section three thirty eight of the nineteen thirty ter Effact. The point stands is that Congress is basically delegated a lot of authority to the White House, and he can do a lot without Congress.
Here, there are a lot of people after the weekend looking forward to going into the trading wait to get a lib bit long apple after the announcement. So over the weekend, get limit long site and video. Can we just sit on sectorial tariffs? Now, what's the base case? It's the one, Yes, it would base.
So I would say, you know, our base case is a ten percent baseline tariff is here to stay. And to Bob's point, they like the revenue associated with that. That also sort of fits with the ideology. So ten percent universal tariff and then these sector tariffs on semi's, on pharma that are forthcoming, on autos, on steel and aluminum, and then a higher terra fright on China. I think the big question is like how high is that? You know, I think my view is probably doesn't stay at one
hundred and forty five percent. Does it go down to thirty forty fifty percent? Obviously this is all speculation, but some sort of mix of that is our base case. Again, that is a really high effective terror freight that will have real economic and inflationary outcomes, but again less draconian that what we've seen over the last two weeks.
Bobby said that markets wouldn't like uncertainty, and if there was some sort of legal challenge, it would just prolong the uncertainty. Are you talking about bond markets too, given the fact that you still think that they have their haven status?
Two words? Doge elon right, that's where we last had the legal challenges. Where did that get you? What's happened there? Nothing?
Well?
Okay, creative respect to the bond market as enjoying this uncertainty, if it's accompanied with some slowdown and growth, if it's still cann act as a haven.
Absolutely, I do think the bond market, the US treasury market, it is a haven. The bond market is a haven. I think legal challenges will actually push people into the bond market. I think we're finishing that wash out process. It may continue into the start of this week, but I think everything that needed to de lever has largely run through that process. I think the bond market's in a pretty good spot.
Big week coming out for fixed incer Bob, thank you, sir, you're going to stick with us. A special thanks to Libby Cantrell of PIMCO. Libby, thank you, Thank you. If you are just joining us, welcome to the program. Equity futures right now just about positive. The first few trades of the following week, the brand new trading week are on and we're positive by zero zero point five percent. In just a moment, we'll catch up with Stuart Kaiser City and what he calls the least enjoyable five percent
rally in recent memory. Like from New York. This is Bloomberg thirty minutes into the trade in week correctority market looks like this. We're positive just about by zero point four percent. Maybe not the games are anticipating after the headlines around exemptions over the weekend. The nana's that camp by zero point eight percent with more let's crossover to Danny Berger Hate Danny.
It may be a market that's trying to trade off headlines. John but this could change as we enter the week. We're about to get into the thick of the earning season. Julian Emmanuel saying, but I think a lot of people have said the results don't themselves, don't matter. It is the guidance and how they're navigating terrorists. You've already had a bit of a hint of that over the past week. Of the earnings we've heard from so far, the general consensus we've gotten is it seems like every company is
handling this in a different way. Walmart's saying we can't raise our prices. Value is important for our customer. We're going to take the short term. Or there's someone like a Fastenal saying the map doesn't work, we have to raise prices, like a five below this value discount store saying that they're just not getting anything from China they're pausing all shipments, or some of the European carmakers saying we're not going to have exports into the US markets.
So if one thing that's important is navigating tariffs, the other thing is guidance. Again, the consistent thing here is no consistency. Delta Frontier, the airlines, we've heard some from so far just have completely done away with their guidance, saying we don't know what it's going to look like, not giving numbers, or you get a car max that says we still have these long term goals, but we are removing the timeframe for which we think we're going
to reach them. We also heard from Walmart, which for their part, just increase the range of possible estimates, or you can do the le Levi's model, which again this was an interesting one. They catch their guidance unchanged with a big caveat, saying this assumes that nothing changes in the macro or consumer environment, and we're going to assemble a team to try to figure out exactly what tariffs mean.
John, Hey, Denny, thank you. I have to say I like the Levi's approach. Just say, based on our assumptions, things are going to be okay. Assumptions haven't changed since the tariff headlines hit.
And guess what, we've got a task for us that they'll handle it, and you know what, we're not going to be responsible.
Good luck to them, sort of finger up in the eletronic gates. What you know which try the windskyn and what the temperature.
Is Honestly, I think that a lot of people are going to be saying something similar because guess what, this is your free ride, So that's what people are.
Going to do. Sue at Kansra City has this to say. This is a case of tail risks reduced or delayed as opposed to removed. Stuart joins us now for more as he says, good news is needed and quick Stu, it's good to see you. How are you get any of that good news over a weekend?
Yeah, I think we got some of it, you know. I think the ninety day tariff delay and then you know, try to exempt some of the tech stuff is incremental progress. I think that stuff trims the tail a little bit, but you know they quickly walk back, you know, the positive response. If this was a weekday, we probably would have had a five percent rally in there to three percent so off. Luckily we were closed on Saturday, so we didn't get that.
It's progress.
I mean, it's either an acknowledgement that they had gone too far and or a little bit concerned about you know, market functioning, or you know, they're just trying to deliver a little bit of good news but without a doubt they've trimmed some of the tail off. It's still a long tail, but I think they've trimmed a little.
So went they got thrown around in the past week. Negotiation, We got to negotiation. I thinknic guy shame with them. Sounds of the moment. You know, it's a little hard to say.
I mean, a lot of trade delegations are supposed to supposedly in town and they're talking. It does seem like they negotiated themselves on the way up and on the way down. China's basically said we're done, you know, with the tit for attached stuff. So it does a little bit feel like they're kind of responding to shadows and to what's going on in markets as opposed to sitting out across the table with someone actually you know, triminal numbers.
Well you say markets, but it seems like they're looking at one market.
It's not your market. Do you feel left out?
I mean, is there a sense that basically it doesn't matter how much stock sell off as long as the bond market is stable, that's not going to be a limiting factor for this White House.
Well, we actually got it right this time. Actually, I think Lisa, I mean, I remember a couple of weeks ago you said, credit s brets have it widened, So this equity response is overdone. You know, equities actually moved first, so I would say that we were kind of the winner of the clubhouse, so to speak, on a master's thing. And you know, look, without a doubt, I mean, I don't think this is a trump equity put. If there is a put, it's associated with the credits or the
credit or bomb market's full stop. If you look at what happened to credit spreads and applied volatility on HyG or QD the last couple of weeks, you can see that being being very, very aggressively priced. So yeah, I would agree. I mean, if it's an equity put, it's it's still quite a bit lower than here.
I would say, well, Bob, do you get the sense right now that the bond market truly is king and if there is some sort of bid into the bond market that could free up to more policy uncertainty, because essentially, if that's the only thing that matters, well, if it's calm, let's go first.
Thanks to you for dragging us out with you down into the swamp.
Credit stops.
The credit was doing great, it was holding in corporate profitability looked okay, and there when the equity market and credit spreads had to widen.
I think for us, when we look at how businesses are going to respond to the environment, one of the things we're looking at is when you get through the quiet period, forget about what they're saying about hiring and labor, are they actually going to be back in buying their shares and does that create some sort of support. If that does, then the bond market will follow. Certainly, credit spreads will come in ste What do you think?
I think that's right me.
You know, Broadcom last week announce a pretty sizable buy back. You know, you guys went through you know, case by case. You know, you may say I want to go to Levi's approach. I would say, look at the Levi's stock price that day and tell me if you still want to know do that approach?
It was?
It was pretty tough.
So look, I know, it's like we've talked about this multiple times. If you're gonna kind of kitchen sink it, you're probably going to have a buyback or something announced alongside that, you know, to kind of underwrite it a little bit. I do think if you say we're good, you better have a lot of evidence, and if you just pull guidance, I don't think that's the right way to go, right.
What do you think of the approach of the banks so far? We get more bank counties for the week, We've heard from several players on Friday. What do you make of that approach?
Look, I think bank earnings and looking very early but kind of largely is expected. You're in a volatile environment, so trading stuff looks good m and a pipeline has been kind of kinked, so you're not going to see a lot of response there, and obviously by private wealth, AUM in a declining equity environment is going to look a little lower. So I think the results are as
you would have expected. They're clearly going to have to signal some caution on the loan side of things because it would be kind of irresponsible for them not to. So it feels like they're kind of managing things, you know, about how you would expect.
So it sounds like earnings matter for everything except for tech. And I do wonder at this point if US tech is not uninvestable or but just a lot more difficult to invest in given the fact that there's been so much volatility. They are a beta trade, and they also are facing potentially a special focused type of tariff to make sure those products get reshort, whatever that means.
According to Howard Lutnik this weekend.
Yeah, I mean it's you know, tech earnings are vital obviously, you know, I think the risk coming into the year, the risk was tech is very expensive and it's extremely over owned. I think you would probably say it's not quite as expensive and not quite as over owned as it was, but there are clearly a cute risks to the earning side depending on how the tariffs go. You know, I'm a surprised Nazec isn't up a little bit more
at least on the open. So that's a little bit, you know, a little bit troubling perhaps, But look, if you saw it last week when the good news came out, what worked. Tech stocks bounced, growth stocks bounced. I think the ability to get into those stocks at a lower valuation is enticing people. And also, what's your other alternative, Like, people do not want to buy cyclicals here because they're really worried that the next leg of downside would come
from recession risk. So I think what you're seeing is people are trying to stay in large cap tech and growth right now. If they're kind of dipping their toes in, and I don't know that those toes are that dipped in.
How when insulates, do you think those tech names are from the cycle, from the international cycle, not just a domestics story here in the United States.
Well, I think the question there is if they are insulated to some degree, do you get a knock on effect into capex and into buybacks? Right Like, if you look at buybacks, historically, for instance, you buy back more when you're earning more, right So, if you're earning less, you're probably going to be buying back lass. There's a lot riding on capex guidance from you know three or for these big stocks. If you're a little bit worried about earnings and foreign demand, you pull back on that.
CAPPAX and I think those would be your two biggest concerns going into tech earnings. What would be from those two sources, How do they view their earnings profile going forward? How much does that impact their intent to spend both on capex and buybacks Related to that.
I'm glad that you brought up John the cycle, because right now this is really the ultimate question. How much is the cycle going to get accelerated to the downside on a global basis when you have essentially a lot of pressure from the tear for the trade war around the world.
And I just wonder at what point.
We could see that, and Bob, we're going to get a host of data this week, like retail sales. Does it start to matter at that point to get a sense of where we are in the cycle.
I think it does. I think what is going to be interesting is to see if consumers hit a pothole, if they have pulled back on spending, if they feel that things are uncertain, if they feel that prices are going to reset so much higher, they just want to stop and say. If they have equity exposure, maybe through their retirement plan, and they see that's been reset lower, it's not the kind of environment that you want to
go out and spend. I keep going back to when you look at tariffs, it's taxes on businesses and households. And I don't remember an economy that taxed its way to prosperity.
No doubts of run Mac just Ryan said, Neil, thanks for watching, says the following, I feel like the limit of how much Trump can escalate, that part of this is over. As the Chinese have rightfully said, it's a joke at this point.
Well, that has been the feeling.
The question is whether the escalation takes another form, because we did see, for example, China putting some.
Limits on some of the rare Earth's metals.
Over the weekend. They said this is a good first step. Let's see if they still think so given some of the other things. And then it's less bad because you're taking the tail risk out. But if you have this level of escalation for a long time, does it take on a different type of contour in the economy?
Just a final word, Hey, you've taken a conservative approach to trade and over the past number of months waiting for that data to break, and I remember you saying that repeatedly over the last few months. What's the approach now into this week, into things like retail sales.
Look, I mean our view is kind of the the risk in the near termor probably tilted a little bit to the upside, because if you're going to get good news from negotiations. I think that has to happen in the next two to four weeks, and if you don't get good news on negotiation by then, then to Lisa's point, you have to start pricing downside risks to the economy via recession. So excuse me if you want to get bullish,
I think it's actually kind of a tactical trade. If we're sitting here six or eight weeks from now and they're still like diddling around with negotiations, I think you're going to see numbers significantly lower.
Scott Crohner on our side.
You know, cut his EPs number to two fifty five for the S and P from two seventy, and I think you would argue that that's probably pricing in tariffs alone,
not really a full recession. So it you know, the one is the data crack you know, who knows you missed on Friday was certainly not encouraging to see sentiment, you know, hit in that way, and so I do think you're going to need to see like real progress in the new next two to three, two to four weeks before the market really stars and cut numbers, and.
Then I'm as Friday with dreadful Curt Gray Moss twat Kaiser sits straight. Thank you got to see you. Bob's going to stick with us. Let's get you an update on stories. Ask where the savening with your Bloomberg brief lest crossback cover to Danny Berger, Hey, Danny, Hey John.
The Trump administration has exempted smartphones and other electronics from its so called reciprocal tariffs this past Friday, a major reprief for global tech manufacturers like Apple and Nvidia. However, officials say that they are still subject to a twenty percent levy on China related to fentanol. However, this morning, Commerce Secretary Howard Lutnik said that those tariff exemptions will
be temporary. He said the administration is creating a new set of tariffs targeting popular consumer electronics and hopes to announce them in the next month or two. Meanwhile, President Trump doubled down on coming tech tariffs in a truth social post this afternoon. Elsewhere, Minneapolis Fed President Neil Cashkari has ruled out a rate cut as an insurance policy against an economic slowdown, saying the priority is inflation as the labor market looks strong.
Cash Carr express.
Confidence that markets will remain orderly despite trade uncertainty. And that's your Bloomberg brief, John.
Danny, thank you, Feed officials. Pramo not blinking here, not blinking at all.
Yeah, I mean some people are trying to hang their hat on Susan Collins, but other than that, pretty much they're like, look, this market's functioning.
It doesn't like things.
It's volatile, but volatility is not breaking, so we've seen no problem. Good luck.
What did the kids say? Not my monkey, not my circus. It seems to be the last week.
Not my bag baby.
Equity features this evening positive by zero point seven percent. I'm next on the programs and final thoughts, heading into a brand new trading week line from New York. You're watching Bloomberg TV. If you want to just chaining again, welcome to the program. We are life, of course, on a Sunday evening, once again looking for better news to savening. Equity futures are positive by zero point six percent with
a deeper look at the markets. Let's cross back over to Danny Berger for more eye Donny, hey.
John, We've also had effects markets trading for about the past four hours, and if you're hoping for reprieve or at least a decisive reprieve for the dollar. Maybe shut your screen off and hope for something better tomorrow morning. You're looking at a euro which is weaker versus the dollar, but it has started to peter out. When the currency markets first opened, the euro was weaker versus the dollar
about three quarters of a percent. But as you've got that truth social post for Donald Trump, the dollar then again started to lose steam. It's that ominous link between risk assets selling off and a weaker dollar that seems like it might persist into next week. Speaking of risk assets, just a quick look at some other commodity markets this evening. You are looking at oil, which opened higher again, unable
to sustain onto those gains. We're not really seeing anything convincing in markets both beauty, IM Brent down about a third of one percent. Gold, of course, this hit an old time new Hight still is holding about thirty two hundred. That's also lower by about half percent.
John, Hey, Danny, thank you. The most exhausting rally ever in a past week. Just think about what we delivered again of almost six percent on the S and P five hundred. If you ask someone what equities did over the last week. Do you think they've come up with that the best week of the year. I don't think so.
I don't think it felt like the best week of the year, and I don't think anyone has confidence that it's going to stick.
That said, there is this feeling that we have gained a lot back.
If you said that we had all time highs just a couple of weeks ago, I also.
Wouldn't believe you.
It feels like such a roller coaster and people are exhausted.
The all time hig on February nineteenth feels like a lifetime ago.
Right, It was a lifetime ago.
The most we've seen in the bond market since just this week, fifty basis point moved on a ten and a thirty, and the dollar was weaker, not stronger. A lot to figure out in the week to come, and your week to come looks like this. So here's the
Canada on Monday. Earnings from Goldman on Tuesday, more earnings from City Bank for America and United Airlines on Wednesday, US retail sales and comments from the feed chat japound look out for that Thursday, an ECP right decision and another round of jobless claims before wrapping up the training week early for the Good Friday holiday, Let's sat down to Washington, DC and catsch up with Tala Kendo in the nation's capital. Tyler, Let's wrap up the weekend and
think about what's still to come this week. What are you in the tame looking for in the dice to count?
Yeah, hey, John, Well we could get a better sense on how negotiations are going when it comes to the tariffs. On Thursday, the Italian Prime Minister will be here at the White House as the European Union in particular tries to find a path forward here when it comes to negotiations,
considering that all those countries were tariffed as a block. Now, people familiar do tell Bloomberg News that Italian Prime Minister Maloney will propose to President Trump eliminating all tariffs on bilateral trade between the EU and the US, something actually Elon Musk had floated earlier this month. But it really remains to be seen if that's something that this White House would seriously entertain, or what sort of concessions they
would need to entertain it. Of course, we hear a lot about those non tariff barriers like the VAT and digital services taxes, which Italy have. So we'll try to see if we can glean any details, particularly when it comes to the European Union next week, because john as you know, they were supposed to put into retaliatory impacts this week but ended up holding off on that reprieve once this White House put into effect that ninety.
Day pause, Tyler, before you go, when can we change the conversation from tariffs to taxes? How quickly can we achieve that?
Right?
So that's one of the big questions here. Of course, of both the House and the Senate ended up going on recess on Friday after they had passed that critical
Senate budget blueprint through the House chamber. But there's still some big questions here, and trust me, lawmakers are going to hear a lot from their constituents, particularly when it comes to spending cuts over the next two weeks, and that could potentially impact the conversation going forward, because as you know, the Senate ended up passing four billion dollars
in spending cuts, the House plan wanted two trillion. They ended up coming together on the pledge from Mike Johnson that there will be one point five trillion dollars in spending cuts, but that is raising questions about what that will mean about the future benefit programs like Medicaid. Lawmakers are going to need to come together to figure that out.
House wants to get their version passed by May. As of now, that seems pretty ambitious, but we'll have to see as President Trump ramps up the pressure because this White House wants to get cashed into consumers pockets and quickly, because this is all linked to that tax cut agenda.
Tonna, thank you, great work. We'll see you early tomorrow morning. Thank you very much for some fun of thoughts around the table of the savening. Jpmulkin's Bob my cope buff. Let's wrap it up. How will you and the tabe approach the coming week?
Well, when I left last Sunday, I was extremely concerned about the week, what the week held, and that proved to be right. When I leave tonight, I feel much more optimistic. I feel that we're in a market that's going to be stable. I expect treasury yields to be stable and actually drift a bit lower. I think a lot of the de leveraging has occurred. When I listened to Stu, I think he's right. I think we're in the negotiation phase of the tariffs and that will be
pretty positive for the next couple of weeks. I need the equid market to do better, for credit spreads to do better. I think that's going to happen. And when I think about our client base, I think about the pension fund and insurance companies that have been looking for a five percent thirty year and wider credit spreads to get into this market, They're going to have it. So I think this week will be one of stability.
This week of stability.
Does it depend at all on any of the granular data we get out, whether it's retail sales, whether it's the earnings, Well, let's market respond to those things, or is it focused squarely on the White House and what we hear there.
I think the data will be overwhelmed by what's going on with the trade negotiations. So if there's good news that comes out of that, people will dismiss the data. If there isn't good news that comes out of that, and if we hear more noise out of the administration about ever higher tariff levels on all the things that haven't been addressed yet, yeah, then the market's not going on, Well, what do you.
Think change the story from when we all last spoke? What changed it? Was it the bond market? What was it?
I think the insane amount of volatility and trading. I think the deleveraging that we know occurred throughout the bond market, the things that didn't make sense unless they were deleveraging trades. And then I think the administration coming in and putting in place ninety days of negotia.
Their response to that. Does that give you confidence that you know there is a pain threshold and you can identify where it actually is.
It does give me some level of confidence. And there are many other pieces of the puzzle. Talking to our non US clients and seeing that they are structural holders of US debt and they're going to remain structural holders of US debt. All of those are positive things and dismiss the narratives that were created out there that have no basis.
There is a quote out on X and thank you, Hank Reardan, Hank MF. Reardan, You are a king until the bond market takes your sceptor. And this was the feeling in Marcus this week and the reason why some people are saying that we do have some certainty now, Is that there is some response to some market pain
that this Trump administration will listen to. Is there a level of certainty that we have today that we did not have last Sunday when we sat here waited for futures to open, saw them open, wanted to shut our computers and go home.
Well, it is true that funding pressures on not only businesses and households, but also governments can bring people to the bargaining table pretty quickly. So that is true. I agree with the writer of that. Do I think that things are stable and have been resolved? I think they're stable. No, they haven't been resolved. Will know that over the course of this month.
Buon Vigilanc's on a new concept. What's newest to see this in the treasury market. So I think that's what's surprising is something you've talked about for months and months. If not yet waiting for that moment, then maybe that moment would develop in the treasury market. And to some extent, I think you can make the argument it has to Bob's point, though, this week's been a really interesting one.
So you've had the price move and people have attached to it a theory and narrative that international investors are moving away from dollar denominated assets, that it's threatening the safe haven status. The treasury markets will no longer provide what we call on this program, those risk mitigation characteristics. How much longer do you need to really get that
definitive answer have you had it already? How much longer do other people need to get that final answer on that, because those are the kind of things that don't happen overnight. They take weeks, months, years, and sometimes they take decades.
I think we've seen enough. I think the FED report on Friday showing that there were actual net foreign buyers of treasury securities is one answer to that. I think if that changes down the road, yeah, then I might change my view. But right now, I don't see an alternate reserve currency to the US. I don't see an
alternate save haven asset to US treasuries. I can understand the price movements, and actually where we are on ten year treasuries is about the average yield since the start of the year, so there's been a lot of volatility around that. But we've moved a lot and really gone nowhere.
You said a couple of months ago, or maybe it was less that you could see this whole yield curve in the US be below three percent, maybe even by the end of this year.
Do you still believe that?
I do. I think I'm going first off with the FED telling us before all of this their neutral rate was three percent. I'm going with our probability of recession is still above sixty percent, and our expectation is that businesses and households do retrench and do some saving. And I'm going off of a belief that the FED is talking tough now, but when unemployment goes up, they're going to step in and bring down rate a lot. And I think three percent isn't the floor of where they're going.
I think that could be the ceiling. We'll see what other policy responses there are.
Bob, it's going to see. As always, thanks for doing this again. I appreciate your time. Thank you, Bob. Michael a JP Morgan. Asset management language is important, Bob said, when when unemployment goes up and there's a failing gets when and not if at the moment.
If it goes up though later in the year, does the FED have the air cover to respond to quote Mohammad al Arian. But this is the feeling right now, consensus across the street as they ratchet down their expectations.
See it's morrow morning.
I guess again, this is going to be great.
We'll sleep on the under the table. Look, ultimately, this is going to be a tumultuous period.
People are exhausted.