Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, Corplay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

Bloomberg Audio Studios, podcasts, radio news. You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, Corplay and Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

Sorry, let's get back to the policy that's coming out and d see fast and Furious. Nathan Dean, Bloomberg Intelligence Senior Policy Analyst. Okay, so if we get this news out of Mexico that Trump and Shamebaum spoke and they're going to delay tariffs by a month while they work out other stuff, does this mean that we know why tariffs are being put. They're being put as a negotiating tactic, full stop. Is that now correct?

Sorry, let's get back to the policy that's coming out and d see fast and Furious. Nathan Dean, Bloomberg Intelligence Senior Policy Analyst. Okay, so if we get this news out of Mexico that Trump and Shamebaum spoke and they're going to delay tariffs by a month while they work out other stuff, does this mean that we know why tariffs are being put. They're being put as a negotiating tactic, full stop. Is that now correct?

So?

So?

I certainly think you can think about it from President Trump's point of view in terms of his goals. You know, obviously, when he's talking about, you know, our trade and balance or our trade relationship with Canada Mexico, He's mentioned three things in his truth Social posts, all.

I certainly think you can think about it from President Trump's point of view in terms of his goals. You know, obviously, when he's talking about, you know, our trade and balance or our trade relationship with Canada Mexico, He's mentioned three things in his truth Social posts, all.

Border security and the economy.

Border security and the economy.

But from the Canadian and Mexican perspective, it's much easier for them to go to President Trump and say, look, we'll do something on fentanyl and border security today. We could take a longer term approach to the economic imbalance. That's certainly something that President Trump still wants, but from a negotiation perspective, I wouldn't be.

But from the Canadian and Mexican perspective, it's much easier for them to go to President Trump and say, look, we'll do something on fentanyl and border security today. We could take a longer term approach to the economic imbalance. That's certainly something that President Trump still wants, but from a negotiation perspective, I wouldn't be.

So I'm all.

So I'm all.

Surprised by this because it was what they could give President Trump in the short term. And we'll see what this meaning with Justin Trudeau today at three pm. Maybe Canada has a very similar proposition for the president.

Surprised by this because it was what they could give President Trump in the short term. And we'll see what this meaning with Justin Trudeau today at three pm. Maybe Canada has a very similar proposition for the president.

So, I mean, I'm not even sure where to go here, but I guess as you kind of phrase it there, Nathan, this is a president that likes to negotiate, likes to He's transactional, and it seems like if the counterparts are equally transactional, then maybe you could avoid a wider trade war. Is that kind of expectation for the folks down in DC.

So, I mean, I'm not even sure where to go here, but I guess as you kind of phrase it there, Nathan, this is a president that likes to negotiate, likes to He's transactional, and it seems like if the counterparts are equally transactional, then maybe you could avoid a wider trade war. Is that kind of expectation for the folks down in DC.

Yeah, So if you're part of the bull case, I think in terms of that, you know, President Trump is the negotiator and so forth.

Yeah, So if you're part of the bull case, I think in terms of that, you know, President Trump is the negotiator and so forth.

This is fitting into that narrative.

This is fitting into that narrative.

I mean, obviously you do have to prepare for tariffs, because we do think tariffs are coming, but it just really depends on the sectors and also the broad impact of those tariffs. So let's just say that if Justin Trudeau, the Prime Minister of Canada, and President Trump make a deal today at three o'clock and it follows the same timeline as Mexico, you get one month. President Trump is eventually going to come back and say, okay, well, let's talk about those trade and balances. Let's talk about in his truth selles through posts but making Canada the fifty first state. But you know, again, it's about extracting concessions. So what do we have to do for us in the market sides? You certainly have to prepare for it, but also at the end of the game, you know, it's very difficult to call because it's just one man's decision, and so we're just gonna have to stay tuned and see what happens.

I mean, obviously you do have to prepare for tariffs, because we do think tariffs are coming, but it just really depends on the sectors and also the broad impact of those tariffs. So let's just say that if Justin Trudeau, the Prime Minister of Canada, and President Trump make a deal today at three o'clock and it follows the same timeline as Mexico, you get one month. President Trump is eventually going to come back and say, okay, well, let's talk about those trade and balances. Let's talk about in his truth selles through posts but making Canada the fifty first state. But you know, again, it's about extracting concessions. So what do we have to do for us in the market sides? You certainly have to prepare for it, but also at the end of the game, you know, it's very difficult to call because it's just one man's decision, and so we're just gonna have to stay tuned and see what happens.

All right, So that's a great point, stay tuned. What are you standing us staying tuned for? Like, what are going to be the key phrases, the key words, the key pressors that you're gonna be watching out for to tell you what the reality is going to be.

All right, So that's a great point, stay tuned. What are you standing us staying tuned for? Like, what are going to be the key phrases, the key words, the key pressors that you're gonna be watching out for to tell you what the reality is going to be.

So I'm actually looking for whether or not Canada and Mexico fall through or at least threaten to fall through in terms of their exports. For example, potash not something many people talk about, but ninety percent of potash in the United States, which is very important for our fertilizer industry, comes from Canada. So if Canada wanted to imfact, you know, put on ecademic pain on a certain aspect of the American system, and especially a system that has voted for President Trump, I certainly want to look for something like that because for me to see the changing of the guard, or at least a pressure on the president, I have to see it coming from the trade associations here in Washington, not the big ones like the US Chamber, but smaller ones like the National Association and manufacturers are the fertilizer or the farmers, they're the ones that can put pressure on their allies on Capitol Hill to go to the White House and say, President Trump, you need to step back.

So I'm actually looking for whether or not Canada and Mexico fall through or at least threaten to fall through in terms of their exports. For example, potash not something many people talk about, but ninety percent of potash in the United States, which is very important for our fertilizer industry, comes from Canada. So if Canada wanted to imfact, you know, put on ecademic pain on a certain aspect of the American system, and especially a system that has voted for President Trump, I certainly want to look for something like that because for me to see the changing of the guard, or at least a pressure on the president, I have to see it coming from the trade associations here in Washington, not the big ones like the US Chamber, but smaller ones like the National Association and manufacturers are the fertilizer or the farmers, they're the ones that can put pressure on their allies on Capitol Hill to go to the White House and say, President Trump, you need to step back.

So retaliatory tariffs is not something we talk about.

So retaliatory tariffs is not something we talk about.

Here a much in the United States in this context, but that's really what I want to see if President Trump eventually would move away from these threats.

Here a much in the United States in this context, but that's really what I want to see if President Trump eventually would move away from these threats.

How about China, Nathan, I mean, we have, you know, obviously generally very good relationships with Canada and Mexico, and presumably that that helps in some negotiations like we saw with Mexico this morning. How about China. What's the feeling within the Beltway about how the US may approach China.

How about China, Nathan, I mean, we have, you know, obviously generally very good relationships with Canada and Mexico, and presumably that that helps in some negotiations like we saw with Mexico this morning. How about China. What's the feeling within the Beltway about how the US may approach China.

Yeah, that's a great question, because a lot of the airtime right now, and certainly a lot of time in Washington is spent on this Canada and Mexico relationship. But it should also be said that China received a ten percent increase in tariffs as well. Now we saw the response from the Chinese government that was more mooted. In particular, there wasn't any retaliatory tariffs at this point at least, but I think that's certainly going to be part of a broader discussion. I think the folks here in Washington feel that when it comes to the US China relationship they can at.

Yeah, that's a great question, because a lot of the airtime right now, and certainly a lot of time in Washington is spent on this Canada and Mexico relationship. But it should also be said that China received a ten percent increase in tariffs as well. Now we saw the response from the Chinese government that was more mooted. In particular, there wasn't any retaliatory tariffs at this point at least, but I think that's certainly going to be part of a broader discussion. I think the folks here in Washington feel that when it comes to the US China relationship they can at.

Least take a breath.

Least take a breath.

Things aren't going to be moving at lightning speed they are in North America. There can be a little bit slower aspect towards those negotiations. But again, this is certainly coming and don't be for you know, European Union, they're most likely next as well. I mean, President Trump has a lot of areas around the world that he wants to move into in terms of tariffs. You know, Canada and Mexico and China just happened to be the first one on his list.

Things aren't going to be moving at lightning speed they are in North America. There can be a little bit slower aspect towards those negotiations. But again, this is certainly coming and don't be for you know, European Union, they're most likely next as well. I mean, President Trump has a lot of areas around the world that he wants to move into in terms of tariffs. You know, Canada and Mexico and China just happened to be the first one on his list.

But if we're learning anything from the market action in relation to these headlines, it's that don't trust your first reaction. I mean, you're just looking at it. And if you look at the S and P mini futures market that takes into account yesterday, this morning, and then now today trading, it's a whole different world. So how should a market participant think about this?

But if we're learning anything from the market action in relation to these headlines, it's that don't trust your first reaction. I mean, you're just looking at it. And if you look at the S and P mini futures market that takes into account yesterday, this morning, and then now today trading, it's a whole different world. So how should a market participant think about this?

Yeah, so there's a lot of sentiment right now, and I agree with this sentiment that you know, in terms of these threats, we're beginning to see that it's just the same playbook of that transactional president that he's willing to negotiate. You know, it's obviously difficult for those of us in the markets to try and figure out what President Trump wants from those negotiations. But I think anytime you see one of these tariff threat slash opportunities that come up, always just keep in mind that there is going to be a negotiation that takes place. Whether President Trump is talking about fetnol border security. Those are things that the Canadian and Mexican governments can easily control, like Mexico's example of sending ten thousand troops to the border. If President Trump's number one demand is an economic imbalance, like with the European Union in terms of increased share of GDP spending for its defense, that's a longer term thing that the European governments would have to put in place. So I would just say, what is President Trump's number one goal here? What can the other countries give in exchange? And can there be a negotiation timeframe that's long enough to not spook the markets?

Yeah, so there's a lot of sentiment right now, and I agree with this sentiment that you know, in terms of these threats, we're beginning to see that it's just the same playbook of that transactional president that he's willing to negotiate. You know, it's obviously difficult for those of us in the markets to try and figure out what President Trump wants from those negotiations. But I think anytime you see one of these tariff threat slash opportunities that come up, always just keep in mind that there is going to be a negotiation that takes place. Whether President Trump is talking about fetnol border security. Those are things that the Canadian and Mexican governments can easily control, like Mexico's example of sending ten thousand troops to the border. If President Trump's number one demand is an economic imbalance, like with the European Union in terms of increased share of GDP spending for its defense, that's a longer term thing that the European governments would have to put in place. So I would just say, what is President Trump's number one goal here? What can the other countries give in exchange? And can there be a negotiation timeframe that's long enough to not spook the markets?

Well, tariff certainly has the market's attention today, but tomorrow is another day. What from a policy perspective, are you and folks in DC kind of looking towards this Congress, this administration to move forward on what are the important ones coming up?

Well, tariff certainly has the market's attention today, but tomorrow is another day. What from a policy perspective, are you and folks in DC kind of looking towards this Congress, this administration to move forward on what are the important ones coming up?

Yeah? So this week obviously we have confirmation hearings.

Yeah? So this week obviously we have confirmation hearings.

I mean, I think most people think are going to get through Telca Gabbert I think is the one that if she were not to get through, I wouldn't be surprised by that. You know, Jamison Greer, who is the US Trade representative of his confirmation hearing is on Thursday, certainly important because he's going to be one of the most important voices in this administration towards tariffs. So a lot of questions may be asked, Hey, why would you know we do this if potash and those farmers are going to be harmed? But I would also point out that the House Budget Committee is trying to come up with their reconciliation blueprint about trying this is the instructions for this major multi trillion dollar techs extension bill, and if they can't get it done, that serves our narrative that this is going to take a lot of time to work out and if you lose any votes. And for example, the Republican Study Committee has already said they're not going to support anything that doesn't decrease the deficit. Well, how do you include things like no taxes on tips without decreasing the deficit. It's an extremely difficult question, and so I think we're going to be looking to see what those negotiations take place as well.

I mean, I think most people think are going to get through Telca Gabbert I think is the one that if she were not to get through, I wouldn't be surprised by that. You know, Jamison Greer, who is the US Trade representative of his confirmation hearing is on Thursday, certainly important because he's going to be one of the most important voices in this administration towards tariffs. So a lot of questions may be asked, Hey, why would you know we do this if potash and those farmers are going to be harmed? But I would also point out that the House Budget Committee is trying to come up with their reconciliation blueprint about trying this is the instructions for this major multi trillion dollar techs extension bill, and if they can't get it done, that serves our narrative that this is going to take a lot of time to work out and if you lose any votes. And for example, the Republican Study Committee has already said they're not going to support anything that doesn't decrease the deficit. Well, how do you include things like no taxes on tips without decreasing the deficit. It's an extremely difficult question, and so I think we're going to be looking to see what those negotiations take place as well.

Can we just switch gears for a second and talk about the Elon Musk and the government and what we've seen from him and Doge in the last twenty four hours.

Can we just switch gears for a second and talk about the Elon Musk and the government and what we've seen from him and Doge in the last twenty four hours.

Yeah, so obviously, you know, we've seen reports over the weekend that the Doge Committee is in Treasury accessing Treasury payment systems. This is with the idea that eventually they could cut off payments in wake of the federal freeze executive order that was then rescinded. And this is an idea about empoundment. And I think this is something that's coming to the courts. And even if you listen to the Elon Musk last night on his Twitter spaces or his x spaces, he even said that he may need the courts support in this this idea of impoundment. Let's just say the Congress decides that if they're going to give one hundred million dollars to the Department of Education, President Trump could just come back and say, now, I'm not going to pay for it, but somebody is eventually going to sue over that that will eventually get to the Supreme Court. And there are already laws that put in place about empowerment. So it's sort of unclear does the president have the ability to say we're.

Yeah, so obviously, you know, we've seen reports over the weekend that the Doge Committee is in Treasury accessing Treasury payment systems. This is with the idea that eventually they could cut off payments in wake of the federal freeze executive order that was then rescinded. And this is an idea about empoundment. And I think this is something that's coming to the courts. And even if you listen to the Elon Musk last night on his Twitter spaces or his x spaces, he even said that he may need the courts support in this this idea of impoundment. Let's just say the Congress decides that if they're going to give one hundred million dollars to the Department of Education, President Trump could just come back and say, now, I'm not going to pay for it, but somebody is eventually going to sue over that that will eventually get to the Supreme Court. And there are already laws that put in place about empowerment. So it's sort of unclear does the president have the ability to say we're.

Not going to spend this money.

Not going to spend this money.

But look, if from Elon Musk's perspective, there's a lot of regulatory red tape, there's a lot of bloat in the US government. We should certainly try, and it looks like they're starting with the USAID first.

But look, if from Elon Musk's perspective, there's a lot of regulatory red tape, there's a lot of bloat in the US government. We should certainly try, and it looks like they're starting with the USAID first.

What's the feeling in DC about doze here? Is this a credible I don't know. Effort, if you will, organization, if you will, will actual change happen.

What's the feeling in DC about doze here? Is this a credible I don't know. Effort, if you will, organization, if you will, will actual change happen.

So I think if you talk about like the internal structures of the US government, and specifically within the executive branch, so agencies like the USAID, President Trump and the DOGE Committee can do a lot of work in terms of restructuring it and also, going back to that impoundment fight that I just mentioned, shrinking it. I think you have some Republicans who are completely on board with that idea. You have also some Republicans who are sort of uneasy about the idea that the White House would then have the power to just take back this spending, because look, eventually we will get a democratic president back, and when a Democratic president comes back, he or she be able to say, well, you know what, I'm not going to spend these policy goals that Congress has implemented as well. So I think there's some unease amongst the Republican Party that he's doing this, but also supporting the narrative that there is a lot of blow in the federal government and so I think it's just one of those. Again, stay tuned and see what happens over the next few months.

So I think if you talk about like the internal structures of the US government, and specifically within the executive branch, so agencies like the USAID, President Trump and the DOGE Committee can do a lot of work in terms of restructuring it and also, going back to that impoundment fight that I just mentioned, shrinking it. I think you have some Republicans who are completely on board with that idea. You have also some Republicans who are sort of uneasy about the idea that the White House would then have the power to just take back this spending, because look, eventually we will get a democratic president back, and when a Democratic president comes back, he or she be able to say, well, you know what, I'm not going to spend these policy goals that Congress has implemented as well. So I think there's some unease amongst the Republican Party that he's doing this, but also supporting the narrative that there is a lot of blow in the federal government and so I think it's just one of those. Again, stay tuned and see what happens over the next few months.

All right, Nathan Deane, thank you so much. We appreciate that stay tuned. Every day is a new day in this news flow.

All right, Nathan Deane, thank you so much. We appreciate that stay tuned. Every day is a new day in this news flow.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple Coarcklay and Android Otto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple Coarcklay and Android Otto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

All right, let's take a look at what you do in this market.

All right, let's take a look at what you do in this market.

Now.

Now.

I'm taking only the S ANDP mini futures contracts. We are all the lows of the session that we hit earlier in the morning before the cash show, and so keeping that a little bit in mind, Carol Pepper, founder and CEO of Pepper International, joins us. So Carol makes a question, do you buy this dip? Yes?

I'm taking only the S ANDP mini futures contracts. We are all the lows of the session that we hit earlier in the morning before the cash show, and so keeping that a little bit in mind, Carol Pepper, founder and CEO of Pepper International, joins us. So Carol makes a question, do you buy this dip? Yes?

Well, as you guys know, I manage money for families with over one hundred million dollars who are typically family offices and I would say wait a little bit longer to see how much the dip is going to dip.

Well, as you guys know, I manage money for families with over one hundred million dollars who are typically family offices and I would say wait a little bit longer to see how much the dip is going to dip.

This is a dip. It's a two four percent dip.

This is a dip. It's a two four percent dip.

Not bad.

Not bad.

You can buy this dip if you want to, but we may if it looks like these tariffs really will be implemented.

You can buy this dip if you want to, but we may if it looks like these tariffs really will be implemented.

This is just the beginning of a dip, right.

This is just the beginning of a dip, right.

Well, just a red headline crossing the Bloomberg trumbinal right now. Mexico's shinebaumb says tariffs delayed for a month, so we'll have more reporting on that. Apparently the Mexican president had a conference call early today with President Trump, so perhaps some relief there. Carol, As we just kind of step back here and think about some of the volatility or the news flow that tends to come out of a President Trump administration, how do you tell your clients to kind of deal with that?

Well, just a red headline crossing the Bloomberg trumbinal right now. Mexico's shinebaumb says tariffs delayed for a month, so we'll have more reporting on that. Apparently the Mexican president had a conference call early today with President Trump, so perhaps some relief there. Carol, As we just kind of step back here and think about some of the volatility or the news flow that tends to come out of a President Trump administration, how do you tell your clients to kind of deal with that?

Well, I think you have to again keep your eyes on a longer term prize. What sectors over the long term are going to do well, not within the first thirty days of a brand new administration, but what trends that have been true for years are continuing to accelerate, And I think those trends will work no matter what comes out of the new administration's strategic statements in the first month as they're trying to put their stamp on the government.

Well, I think you have to again keep your eyes on a longer term prize. What sectors over the long term are going to do well, not within the first thirty days of a brand new administration, but what trends that have been true for years are continuing to accelerate, And I think those trends will work no matter what comes out of the new administration's strategic statements in the first month as they're trying to put their stamp on the government.

So if you look at things like defense.

So if you look at things like defense.

Technology, the entire world has burned through a lot of weapons that is going to continue to be upgraded with AI. There's going to be more robotics, there's going to be more drones, there's going to be.

Technology, the entire world has burned through a lot of weapons that is going to continue to be upgraded with AI. There's going to be more robotics, there's going to be more drones, there's going to be.

More data centers. AI is not going to go away.

More data centers. AI is not going to go away.

Consumers are going to continue to switch and shop on Amazon rather than.

Consumers are going to continue to switch and shop on Amazon rather than.

In bricks and mortar stores.

In bricks and mortar stores.

All the things that we've been talking about still apply today with the threat of tariffs if they're now or in a month or two, So you still have to keep your eye and then think about entry.

All the things that we've been talking about still apply today with the threat of tariffs if they're now or in a month or two, So you still have to keep your eye and then think about entry.

Point when should you enter these stocks. And so that's really what we're doing.

Point when should you enter these stocks. And so that's really what we're doing.

We're not changing our basic thesis because we do believe it is going to continue as we suspect it.

We're not changing our basic thesis because we do believe it is going to continue as we suspect it.

There is more risk off in the market.

There is more risk off in the market.

That means that's going to depress the growth stock priceis, which is good.

That means that's going to depress the growth stock priceis, which is good.

News for you if you're long term ball. Your long term ball, you kind of like this time to have an entry point. It even a little bit more slippage.

News for you if you're long term ball. Your long term ball, you kind of like this time to have an entry point. It even a little bit more slippage.

Maybe we'll get a five or six percent down on some of these big names.

Maybe we'll get a five or six percent down on some of these big names.

Wouldn't it be nice to enter five or six percent lower.

Wouldn't it be nice to enter five or six percent lower.

You know, a week ago we also speaking of AI, we would have been talking about how the AI hyperscaler spending theme is pretty intact no matter what happens with tariffs and that got disrupted. Is that still sort of a major core theme for you?

You know, a week ago we also speaking of AI, we would have been talking about how the AI hyperscaler spending theme is pretty intact no matter what happens with tariffs and that got disrupted. Is that still sort of a major core theme for you?

Yes?

Yes?

Absolutely.

Absolutely.

I mean I talk to a lot of folks who are busy building data centers. There are energy, energy and data centers are getting very intertwined. So people are off taking energy that before they might have made carbon credits out of it and capturing it and making data centers in places like middle of the country, in Oklahoma, in places like this, So those themes are going to continue. Wealthy families are piling into the construction of data centers, whether the chips are in Nvidia or someone else. The data center construction isn't something that takes a few days. That will continue to create jobs. So data centers are still a good play. They're already started, they're already under contract, and they're not going to stop just because a teriff is implosed.

I mean I talk to a lot of folks who are busy building data centers. There are energy, energy and data centers are getting very intertwined. So people are off taking energy that before they might have made carbon credits out of it and capturing it and making data centers in places like middle of the country, in Oklahoma, in places like this, So those themes are going to continue. Wealthy families are piling into the construction of data centers, whether the chips are in Nvidia or someone else. The data center construction isn't something that takes a few days. That will continue to create jobs. So data centers are still a good play. They're already started, they're already under contract, and they're not going to stop just because a teriff is implosed.

Carol about on the fixed income side, how are your clients playing fixed the come these days? They can actually clip some pretty competitive coupons these days, that's right.

Carol about on the fixed income side, how are your clients playing fixed the come these days? They can actually clip some pretty competitive coupons these days, that's right.

I think it's so hard to tell in fixed income because we really don't know yet what are going to be effect of the tariffs on potential inflation and what Powell can or can not do. Obviously, real estate to me is still a sector at risk. It's been holding on by its fingernails now for a few years. You know, extend and.

I think it's so hard to tell in fixed income because we really don't know yet what are going to be effect of the tariffs on potential inflation and what Powell can or can not do. Obviously, real estate to me is still a sector at risk. It's been holding on by its fingernails now for a few years. You know, extend and.

Pretend that might have to go on a bit longer.

Pretend that might have to go on a bit longer.

Now if we have a situation where inflation ticks up, if they're R and D tariffs and posed, that's going to make it very hard for Powell to lower the rates and therefore give some relief to real estate.

Now if we have a situation where inflation ticks up, if they're R and D tariffs and posed, that's going to make it very hard for Powell to lower the rates and therefore give some relief to real estate.

So that's a sector I think people need to kind of watch out for.

So that's a sector I think people need to kind of watch out for.

It's I don't think we're out of the woods yet on real estate, but you're right, and the short term as well, not a bad time to have a little bit of fixed income, but more on the shorter side because the swings on the long end are not worth it for most individuals. That's much more an institutional play.

It's I don't think we're out of the woods yet on real estate, but you're right, and the short term as well, not a bad time to have a little bit of fixed income, but more on the shorter side because the swings on the long end are not worth it for most individuals. That's much more an institutional play.

What about safety plays? Like, what do you recommend to your clients that just need a portion of their investment portfolio that's saved. It's liquid, like, it's cash still the place.

What about safety plays? Like, what do you recommend to your clients that just need a portion of their investment portfolio that's saved. It's liquid, like, it's cash still the place.

Money markets and cash some people like gold. Bitcoin was looking exciting, but look at what happened with ethereum.

Money markets and cash some people like gold. Bitcoin was looking exciting, but look at what happened with ethereum.

It just collapse now that.

It just collapse now that.

The environment looks a little bit more risky. So yes, I think cash is still king. It's always been king, it will continue to be king. And US dollar cash is still the king because it is still the.

The environment looks a little bit more risky. So yes, I think cash is still king. It's always been king, it will continue to be king. And US dollar cash is still the king because it is still the.

World's reserve currency.

World's reserve currency.

Other countries might try to take that position, but I don't think it's going to happen anytime soon. So sitting in cash is no shame, and making some decent returns into your money market fund while the dust settles absolutely straightforward.

Other countries might try to take that position, but I don't think it's going to happen anytime soon. So sitting in cash is no shame, and making some decent returns into your money market fund while the dust settles absolutely straightforward.

Play Carol, thank you so much for joining us. Krol Pepper found and CEO of Pepper International, joining us again.

Play Carol, thank you so much for joining us. Krol Pepper found and CEO of Pepper International, joining us again.

You're listening to the Bloomberg Intelligence Podcast. Catch us live weekdays at ten am Eastern on Apple, Colocklay, and Android Otto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube.

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The story today for global markets, Global Wall Street are these tariffs and the economic impacts that they may or may not have. Brian Whalen joins US. He's a chief investment in the generalist portfolio manager at tc W in Los Angeles. Hey, Brian, I know you and your team you think kind of about global markets here, How do you guys think about kind of just tariffs in general. We're not really sure what degree they'll be imposed for how long? How do you guys factor that into your calculus?

The story today for global markets, Global Wall Street are these tariffs and the economic impacts that they may or may not have. Brian Whalen joins US. He's a chief investment in the generalist portfolio manager at tc W in Los Angeles. Hey, Brian, I know you and your team you think kind of about global markets here, How do you guys think about kind of just tariffs in general. We're not really sure what degree they'll be imposed for how long? How do you guys factor that into your calculus?

It's hard? What a morning? Huh? Yeah? Can you can you believe deep steak was just a week ago? Right?

It's hard? What a morning? Huh? Yeah? Can you can you believe deep steak was just a week ago? Right?

Monthly?

Monthly?

Look, I think you know the term we've been using around here. We're using the term fat tails, which is just kind of a reflection of like in a traditional investing environment, you've got your base case scenario, maybe you've got a seventy percent probability assigned to it, and then you got your two other options. You know, you got fifteen percent of the downside fifteen percent the other way. I mean, you know, with regards to you know, this new administration and the volatility, fat tails for US means we still have our base case, but you know there's a lower probability on that and then we've got, you know, maybe something like a fifty in the middle, and then twenty five we have this US exceptionalism, high growth, low inflation. On the other side, maybe a lot of this towerst for instance, cause I'll pull down on both domestic and international growth and it up ends the job market and maybe we have a recession.

Look, I think you know the term we've been using around here. We're using the term fat tails, which is just kind of a reflection of like in a traditional investing environment, you've got your base case scenario, maybe you've got a seventy percent probability assigned to it, and then you got your two other options. You know, you got fifteen percent of the downside fifteen percent the other way. I mean, you know, with regards to you know, this new administration and the volatility, fat tails for US means we still have our base case, but you know there's a lower probability on that and then we've got, you know, maybe something like a fifty in the middle, and then twenty five we have this US exceptionalism, high growth, low inflation. On the other side, maybe a lot of this towerst for instance, cause I'll pull down on both domestic and international growth and it up ends the job market and maybe we have a recession.

And so for us as portfolio managers, what we.

And so for us as portfolio managers, what we.

Think about at TCW is like, you still got.

Think about at TCW is like, you still got.

To instruct around your base case.

To instruct around your base case.

But in an environment, particularly one where it's not that expensive to buy optionality, volatility is still low, at least the priced one. You try to do things that you know help your portfolio not lose so much and if it goes one way, or maybe even gain if it goes another. And that's kind of the things we've been doing the last couple of months, have to do about putting things in place in the portfolio that actually help even if our base case isn't realize.

But in an environment, particularly one where it's not that expensive to buy optionality, volatility is still low, at least the priced one. You try to do things that you know help your portfolio not lose so much and if it goes one way, or maybe even gain if it goes another. And that's kind of the things we've been doing the last couple of months, have to do about putting things in place in the portfolio that actually help even if our base case isn't realize.

So, Brian, why is volatility And I'm just looking at the move in next with the JP Morgan volatility and next, why is it low?

So, Brian, why is volatility And I'm just looking at the move in next with the JP Morgan volatility and next, why is it low?

Well, a lot of that, I think you know what's transpired, you know, from the FED, particularly once we got into the late months of twenty twenty four, and even what you just heard them say, you know, powisay last week, which is basically, you know, we're good, which is, you know, we kind of like where you know, the FED funds is right now.

Well, a lot of that, I think you know what's transpired, you know, from the FED, particularly once we got into the late months of twenty twenty four, and even what you just heard them say, you know, powisay last week, which is basically, you know, we're good, which is, you know, we kind of like where you know, the FED funds is right now.

We still think it's restrictive.

We still think it's restrictive.

But given all the other volatility going on prickly tariffs for instance, we're going to kind of.

But given all the other volatility going on prickly tariffs for instance, we're going to kind of.

Sit here and kind of watch things. So what that's done is it's anchored.

Sit here and kind of watch things. So what that's done is it's anchored.

It's provided stability to the front end of the yield curve and particularly somewhere between like two years and five years. It's anchored there, and it's left the rest of the curve, the ten year and the thirty to kind of move up and down. And so you know, with the fact that the Fed has moved into this kind of pause slash easing mode, it's led to the implied volatiler in the rates market to be relatively low. However, what I would say is, and we can get back to tariffs and other things going on the market, It's like that's conditional upon risk assets performing well. And if we get moves and risk assets, particularly to the downside, you could see that implied ball in the rates market could go away and rates.

It's provided stability to the front end of the yield curve and particularly somewhere between like two years and five years. It's anchored there, and it's left the rest of the curve, the ten year and the thirty to kind of move up and down. And so you know, with the fact that the Fed has moved into this kind of pause slash easing mode, it's led to the implied volatiler in the rates market to be relatively low. However, what I would say is, and we can get back to tariffs and other things going on the market, It's like that's conditional upon risk assets performing well. And if we get moves and risk assets, particularly to the downside, you could see that implied ball in the rates market could go away and rates.

Move abruptly if we get down.

Move abruptly if we get down.

Drafts and equity markets are widening and credit spreads.

Drafts and equity markets are widening and credit spreads.

So talk about credit here, Obrian. How much credit risk are you guys taking these days? When you look at it, you know, to your treasure you're still getting four and a quarter percent. How much above and beyond that do you want to take in terms of credit risk?

So talk about credit here, Obrian. How much credit risk are you guys taking these days? When you look at it, you know, to your treasure you're still getting four and a quarter percent. How much above and beyond that do you want to take in terms of credit risk?

You know, one of our favorite trades right now is not to have that on.

You know, one of our favorite trades right now is not to have that on.

It's not to take credit risk.

It's not to take credit risk.

You know, I think, I think you know you're being you know, fairly well compensated to take no credit risk, which is which is effectively you know, treasuries, and you know you've never been paid less, and that's hard to believe given you know, deep seak a week ago and terror volatility of the last twenty four hours, and you know, Trump's being Trump, and all of a sudden, you know, we spent twenty four hours cranking through the models to determine how these tarifs are going to impact inflation and growth, and all of a sudden we get a big you know, just kidding, you know, and that creates of all So you've never actually gotten paid less to take credit risk right now, you know, to get paid, you know, to take it, to take exposure to kind of average, high quality companies. Right now, it's about extra zero point seventy five of a percent of yield over treasuries and that's never been that low. So look, you win by buying that right now if there is no VALL. You know, if the next six to twelve months it's very low ball and you don't get uncertainty and markets don't move around, and that's that's the carry trade.

You know, I think, I think you know you're being you know, fairly well compensated to take no credit risk, which is which is effectively you know, treasuries, and you know you've never been paid less, and that's hard to believe given you know, deep seak a week ago and terror volatility of the last twenty four hours, and you know, Trump's being Trump, and all of a sudden, you know, we spent twenty four hours cranking through the models to determine how these tarifs are going to impact inflation and growth, and all of a sudden we get a big you know, just kidding, you know, and that creates of all So you've never actually gotten paid less to take credit risk right now, you know, to get paid, you know, to take it, to take exposure to kind of average, high quality companies. Right now, it's about extra zero point seventy five of a percent of yield over treasuries and that's never been that low. So look, you win by buying that right now if there is no VALL. You know, if the next six to twelve months it's very low ball and you don't get uncertainty and markets don't move around, and that's that's the carry trade.

You win. You lose if.

You win. You lose if.

We do get bouts of VALL and things bounce up and down. Are particularly wider because when you buy, we get in such a little premium of compensation for risk. When spreads go from seventy five to maybe just one hundred basis points one percent over treasuries, that's going to impact the value of your holdings.

We do get bouts of VALL and things bounce up and down. Are particularly wider because when you buy, we get in such a little premium of compensation for risk. When spreads go from seventy five to maybe just one hundred basis points one percent over treasuries, that's going to impact the value of your holdings.

And you'll be wishing you saved your dry powder. You'll be wishing you.

And you'll be wishing you saved your dry powder. You'll be wishing you.

Bought treasuries instead of corporate bonds because you'd wish you could buy them at cheaper levels.

Bought treasuries instead of corporate bonds because you'd wish you could buy them at cheaper levels.

All right, we really appreciate it. You're awesome. Brian Whale and CIO and generalist portfolio manager at TCW's Fixed Income Group. Great perspective on the fixed income market.

All right, we really appreciate it. You're awesome. Brian Whale and CIO and generalist portfolio manager at TCW's Fixed Income Group. Great perspective on the fixed income market.

This is the Bloomberg Intelligence Podcast, available on app, Spotify, and anywhere else you get your podcasts. Listen live each weekday ten am to noon 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.

This is the Bloomberg Intelligence Podcast, available on app, Spotify, and anywhere else you get your podcasts. Listen live each weekday ten am to noon 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.