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Rally to Run Until US Economy Hits a Wall: 3-Minute MLIV

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Bloomberg Apr 25 18:00 · 14.6k Views

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  • 00:00 This week has been strong for risk assets.
  • 00:03 Equities are on the front foot.
  • 00:04 You got the dollar bouncing back.
  • 00:05 We've in many cases started to recoup significant portions of the losses made
  • 00:10 since
  • 00:11 the the big tariff announcements from the Trump administration.
  • 00:15 How much good news is now priced in?
  • 00:17 How much of how much of
  • 00:19 this is still to go?
  • 00:21 How much more of a driver can we see
  • 00:23 coming through in the next week or so
  • 00:25 from these kinds of narratives?
  • 00:29 Yeah.
  • 00:29 Good morning, guy.
  • 00:30 Great questions.
  • 00:32 I think, you know, one thing to keep in mind is that
  • 00:35 Trump has this wonderful ability to propose something that's so absolutely outrageous that nobody would have even thought of it.
  • 00:41 And when he pulls back, what's left is still something that a few weeks or months ago would have been quite preposterous, the
  • 00:46 extreme to most people's views, but suddenly seems a lot better.
  • 00:49 And so that might be the situation the markets are looking at right now where we had the tariff proposals that had a lot of people with their jewels on the floor.
  • 00:56 You know what, boy, What is he?
  • 00:58 What is he thinking?
  • 00:59 Then we, we had the pull back.
  • 01:00 Now we've got this sort of negotiation.
  • 01:03 And the potential for some sort of reset.
  • 01:05 Maybe we have a reset with no tariffs, but maybe we have some tariffs sit in place that might have been,
  • 01:10 you know,
  • 01:11 unimaginable or unthinkable previously.
  • 01:13 And, and suddenly that looks like good news.
  • 01:15 So
  • 01:16 short term, maybe the market has more potential for a rally if we start to see some of these agreements coming into place now.
  • 01:22 Doesn't seem like you need to do that much
  • 01:24 to give a get a satisfaction
  • 01:27 or a nod from the US administration.
  • 01:30 But longer term, you know, we're going to have negotiation periods.
  • 01:33 We're going to have some more fractious
  • 01:35 moments for sure.
  • 01:36 And we're going to have some tariffs remaining on
  • 01:39 sectors that are exporting to the US.
  • 01:41 So,
  • 01:42 you know,
  • 01:43 I guess short term, you could see an extension, but longer term,
  • 01:46 there's going to be those doubts hanging over things still.
  • 01:49 Well, Paul, on China specifically,
  • 01:51 Trump says there are talks.
  • 01:52 We don't know who with.
  • 01:53 China says there are no talks.
  • 01:55 Then we get this news
  • 01:57 on stimulus this morning.
  • 01:58 China vowing to fully prepare emergency plans for external shocks.
  • 02:02 How should the market take all of that?
  • 02:06 Yeah, really interesting.
  • 02:08 I think what the market is
  • 02:09 feeling is that there's some sense of de escalation here.
  • 02:12 So whether there are direct talks going on, whether, you know, Trump and China are talking past each other a little bit,
  • 02:19 the fact that there is, you know, a little bit of retrenchment coming in
  • 02:22 and it sounds like that the US is preparing to de escalate further potentially at some point.
  • 02:28 Market seems to be taking as good news.
  • 02:29 China, by the way, you know, seems pretty unfazed by things at the moment.
  • 02:33 It's not taking extreme action.
  • 02:34 It's not really pumping up efforts to support the economy just yet.
  • 02:37 I think you know, kind of
  • 02:39 from that perspective,
  • 02:41 there's still a lot of long term risks,
  • 02:43 but it does need you get the sense that at some point there's going to be something that's going to show us a little bit more of a coming together and that's the way that the market is trading it at the moment.
  • 02:52 Absolutely.
  • 02:52 We need to see some of this showing up in the hard dates.
  • 02:54 We need to get an idea of what is going on.
  • 02:56 Paul, we get payrolls next week.
  • 02:58 What do we know about what's happening in the States right now?
  • 03:00 I'm listening to consumer companies talking about recessions already.
  • 03:06 Yeah, we, well, we hear that sort of thing.
  • 03:07 We've heard,
  • 03:08 you know, the, the, the Trump was told that the supermarket shelves might be empty in a couple of weeks as well.
  • 03:12 Doesn't seem like he like that very much.
  • 03:14 We're hearing, you know, sort of initial reports that shipments to the
  • 03:17 US that
  • 03:18 the, the expectations for arrivals of ships of her truck traffic is starting to fall out.
  • 03:23 But I think it's going to be two or three more weeks before we really start to hit that wall in terms of the economy and the import picture.
  • 03:28 And that might give us a clearer view.