Bloomberg Audio Studios, podcasts, radio news. We said, good morning across the country. It is an April First ritual. And I do this because you should see my new Filson Fishing guide vest Twitter eighty nine dollars. Wow, it's very good. It's designed for anglers to organize gear for a full day out on the tundra as well. On April First. We always speak with Ellen Zettner because they said to Lisa Shallatt, I'm sorry, I gotta do fly fishing here. There's the pre runoff window.
Yeah, like the winter waters.
Yeah, the streams are like what clearer.
Is The fish have been starving all winter and you get them before the runoff, and so they're pretty excited about that. And you don't get a lot of pressure. You don't see a lot of other anglers out there. And actually some of the best fly fishing is going out for Mother's Day, which is actually just before the runoff, but won't make you very popular with mom.
Okay, is this the Arkansas and South Platte? Is it the yellows the jelly stone in Missouri rivers? Where does Ellen Zenner go?
Well, Tom, you're really you're really struggling with this this morning.
Yeah, well, you know it's I think this is important. Like where is your chosen April river in America?
Well, look, we don't ever give away the rivers that we like to fish.
You don't do that.
But Montana is still a big favorite, a big favorite of ours.
Driving so much at Morgan Stanley, Ellen Zander with us today. How is the American consumer? This is how you and I first met.
I know, do you know talking about Apple's fiftieth anniversary. There's a big anniversary for us. Tom is twenty three years ago that I was first on radio with you very twenty three years ago.
You were three years old. Exactly, Yes, nice, exactly.
Well seriously, this is she was sixteen years old out of some high school in Texas. That's what I read.
It was you and Ken Pruitt and I in the studio.
It was the only reason you got on was you and Ken talk and fly fishing.
Paul Sweety with old zenator Ellen, what do you What are the conversations you're having with your clients as you do travel around the US talking to your US clients here, do they want you to really help them think about on the other side.
Of this war?
What do we do here?
Is that?
What are the conversations you're having these days?
I tell you what, There's so much volatility and so much uncertainty out there that it has made the conversations all that much more interesting because they're they're much more longer term focused, so not necessarily when are we going to get beyond this? But it's more of what does this mean in the bigger picture of long term national security and resource nationalism and resource scarcity and defense spending
and all of those things. And so it makes those topics really top of mind for clients because you can't It really gets exhausting trying to figure out when is this thing going to end? Am I supposed to time it? What should I do here? And so it just opens the door to some really interesting conversations. I don't think anyone knows when we're going to be out of this and what does out of this even mean?
And I think we're seeing that maybe an oil marketing. We're seeing stocks rebound, Okay, that's fine, maybe goes to the growth issue, but you know, oil still holding very high levels. That suggests maybe the market saying I'm not sure this straight up where moose things ever going to clear up in the near term.
Yeah, well, even if I mean, what does it mean to open the straight tomorrow?
I mean, let's just assume that's a thing, and that that could happen.
You've still got all of these price effects and shortages in the pipeline, and businesses have to absorb that, households have to absorb that, and some countries are going to be able to absorb it better than others. There are countries that will step in with food subsidies and other assistance like that, but there will be pain. Now does
that mean recession? Not necessarily, but I think the probability of recession here is higher than people think, and I would put it around forty percent, which is meaningful.
It's uncomfortable, right, helping her again with the consumer, and you know, the modern statement is a case shape. You literally invented this as a cottage industry at unit credit. I think it was years ago. I mean, help us here with a fifteen hundred dollars disposable income lift and cost due to a gallon of gas, it crushes how much of America?
Yeah, so it always falls more heavily.
It's very regressive, so it falls more heavily on lower income households. They also have to commute and drive to work, especially in the big driving states. You'll see the bigger impacts and you'll see them change their behavior, but it takes time.
Wait, wait a minute, Morgan Stanley, where everybody grew up in three zip codes and your country girl fishing and all that, we don't understand those driving times.
Those are big driving states.
Yeah, you know, children from the East just don't get it.
No, I spent half my life on the New Jersey Transit, so that's.
Not kind of so you don't understand. But many of your listeners will know the obsession that you have Florida, Texas, California, these big driving states. It is a family obsession talking about gas prices around the dinner table. You pass by a gas station, you look at every single sign to see what the gas price is. You comment on how it's gone up, when was the last time you saw that price, like.
It's a pastime.
Just like for New Yorkers talking about the weather, it's talking about gas prices for much of the rest of the country, and so this is meaningful. You can first, if you weren't buying the cheapest unleaded gasoline, you'll switch to the cheapest. Then after time maybe you start to commute. We did this in two thousand and eight. We started, we started car pooling together. We started changing our altering our behavior on the types of vehicles we were buying.
You've seen all the reports of people now inquiring about evs, for instance, but it takes time to change those behaviors, and so you have to suck it up and pay it at the pump until you can cut costs elsewhere.
That being said, what's your view on a consumer, because it seems like the consumers more than hanging in there.
I guess well, I.
Mean this has been like how many years in a row we've been talking about this. The low income consumer has been in and out of recession. The first recession they went to was when they worked through the excess savings that had been built up during COVID from the stimulus and just not being able to spend income. So they've been in and out of recession. Luckily, wage growth has at least for a time been outpacing inflation. But
the wealthy consumer. We don't need the wealthy consumer to just stop spending spending, And of course, if you've already met a lot of pent up demand. You've been out there spending for years now with this amazing run up in financial assets, you're sitting on a lot of equity in your home, but you're not seeing further gains. It can cause you to pull back on spending. And that's all all it takes.
Let me get this in quickly. What's investment looked like? We never talk about the eye of C plus, I plus and acseccent. What's investment looked like forward?
So business investment had been very tech tech and infrastructure related AI related last year. The big optimism around this year has been with the One Big Beautiful Bill Act. As we turned the corner into this year, there were nascent signs of business investments starting to broaden out. Because it's really hard to not want to take advantage of that. We've done one hundred percent bonus appreciation, but sorry, fifty percent before we've not done one hundred percent, and it's
on infrastructure as well. It's really hard to not take advantage of that.
But is this a false start?
Because now you have the conflict in Iran, You've got energy prices, food or input prices for businesses and they're going to have to eat a good chunk of that. Does that negate some of your decisions that you are going to make to invest I think they will still take advantage of the One Big Beautiful Bill Act.
But this is what as soon as we're able to.
Look beyond the conflict and the Strait of Hormuz, here's what the next concern is. The cliff that we will fall off from having pulled forward all of the demand and tax breaks and everything else from the One Big Beautiful Bill Act.
We have to run. Ellen Zettner, thank you so much. I learned so much today about trout fishing. In the pre runoff, she is with Morgan Stanley