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audio studios. Podcasts, radio,

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news. What do you

0:59

think? Recession or no recession?

1:01

I mean, you had a really good

1:04

piece out this week in the newsletter

1:06

where you made the point, and

1:08

I had made a similar point

1:10

the day earlier, so maybe I'm

1:12

not being so nice, but like

1:14

how much of all the market

1:16

action, all the economic action, I

1:19

guess, was actually dependent on just

1:21

one guy. Donald Trump and that

1:23

you know if he came out

1:25

and said something he could end

1:27

the chaos at any moment in

1:30

time and then on Wednesday

1:32

he actually came out and did

1:34

that and then kind of kind

1:36

of well your point was yeah if

1:38

he does that we can all

1:40

go back to worrying about like

1:43

a slowdown in the labor market

1:45

or deep-seek threatening AI which so

1:47

much capital investment in the US

1:50

actually depends on. There's a

1:52

lot. I did a dead list. I am

1:54

both the most popular trader and

1:57

most successful trader at

1:59

Citadel. going viral? Uh, barges. This

2:01

is an after school special, except I've

2:03

decided I'm going to base my entire

2:06

personality going forward on campaigning for a

2:08

strategic pork reserve in the US. Black

2:10

gold. These are the important questions. Is

2:12

it robots taking over the world? No,

2:14

I think that like in a couple

2:16

years, the AI will do a really

2:18

good job of making the odd lots

2:21

podcast. One day that person will have

2:23

the mandate of heaven. How do I get

2:25

more popular and successful? We do

2:27

have the perfect guest. Welcome to

2:29

Lots More where we catch up

2:31

with friends about what's going on

2:34

right now. Because even when

2:36

Oddlots is over, there's always lots

2:38

more. And we really do have

2:40

the perfect guest. You know who had

2:42

a really good contribution

2:45

to the Oddlots newsletter?

2:47

February 2024th. Basically, the

2:49

market top. Neil data sees rising risk

2:51

to the labor market calling recession risks

2:54

right then, and essentially at the market

2:56

top. We got him back on. Neil

2:58

yesterday after Trump walked him back, by

3:00

the way, we're talking to Neil data

3:03

of Renaissance macro, Trump walked back some

3:05

of the tariffs. Goldman pulled its recession

3:07

call. You sent out an email right

3:09

away. You said, I'm sticking with my

3:11

recession call. Why do you see recession in

3:13

the cards in 2025 still? So remember that,

3:15

you know, for me, it's not really about...

3:18

and N-B-E-R-defined recession. Like that to

3:20

me is not the name of

3:22

the game. The name of the

3:24

game is trying to translate an

3:27

economic view into a market

3:29

call. And even if it's

3:31

not technically a recession, it might

3:33

as well be because the underlying

3:35

problem for the market

3:38

is not going away. And that's

3:40

the issue. You know, all the things

3:42

I mentioned in that newsletter you

3:44

highlighted in February. That's all here.

3:46

That's still here, right? We still

3:48

have a situation where labor incomes

3:50

are slowing and the Fed's not

3:53

budgeting. We still have a situation

3:55

where mortgage rates are high and

3:57

the housing market is weak and

3:59

we still have... state and local governments

4:01

cutting back. And we still have

4:03

a pretty high volume on trade.

4:05

I mean, in terms of tensions,

4:07

just because we dialed it back

4:09

a little bit yesterday doesn't mean

4:12

that the tensions are not still

4:14

high. And I think it's what

4:16

we've basically done is traded, you

4:18

know, you basically spread the distribution

4:20

of costs, I guess, I mean,

4:22

away from everyone just towards China.

4:24

But that's still pretty bad in

4:27

and of itself. I don't think

4:29

it takes a rocket science to

4:31

figure it out, Joe. I mean,

4:33

you're basically trying to break up

4:35

the relationship with us and our

4:37

third major trading partner. There's no

4:39

scenario or that doesn't create some

4:41

issues for the marketplace. It is

4:44

true we've ratcheted down tariffs for

4:46

countries X China, but as you

4:48

say, we've basically gone back to

4:50

what we were worried about before,

4:52

right? And the funny thing, I

4:54

got to say about that Goldman

4:56

note, and it just underscores how

4:58

quickly things are changing in the

5:01

current environment, you know they published

5:03

that. They published the recession call

5:05

basically an hour before Trump did

5:07

his big Wednesday announcement and then

5:09

right after that like I didn't

5:11

realize that within 60 minutes they

5:13

had to come out and say

5:15

actually we're rescinding it. As Lenin

5:18

said there are hours where nothing

5:20

happens in minutes where days happen

5:22

and we've had two minutes in

5:24

now we're seeing a lot of

5:26

that right now. Do you have

5:28

like a little book of Lenin

5:30

quotes that you keep with you?

5:33

Where are you getting this from?

5:35

I also might be mangling the

5:37

quote a little bit. I mean,

5:39

you should trade tensions are high,

5:41

but tariffs are really high right

5:43

now. I mean, that's really like

5:45

the core thing. Well, that's the

5:47

other thing, right, Joe? Is that

5:50

his tension, it's reality? A hundred

5:52

percent. And I kind of sympathize

5:54

with it, right? Like, it's the

5:56

uncertainty that he's creating. No, no.

5:58

is going to weigh on investment

6:00

by itself, right? Because if you

6:02

introduce tariffs and you actually follow

6:04

through with the tariffs, the uncertainty

6:07

around what you're doing is going

6:09

down, the reality of what you're

6:11

doing is what businesses will. respond

6:13

to through growth expectations and they'll

6:15

pull back, right? Because ultimately what

6:17

drives investment is what's happening with

6:19

growth. If real growth is slowing,

6:22

then it's inevitable that investment spending

6:24

will follow suit because largely what

6:26

investment responds to is sort of

6:28

an accelerated effect, right? That's basically

6:30

the idea that is. growth picks

6:32

up, investment tends to rise more.

6:34

So the fact that growth is

6:36

slowing and expectations around growth are

6:39

coming down, that's ultimately what's going

6:41

to pull down investment. So it's

6:43

not so much the uncertainty, although

6:45

that that's probably not good. It's

6:47

also what he's actually doing. Wait,

6:49

just on that note. So you

6:51

sent an email earlier this week

6:53

where you said the S&P 500

6:56

trading like Fark coin is probably

6:58

not a good thing. There's a

7:00

sentence. I never thought I would

7:02

necessarily read out loud. But the

7:04

S&P 500 trading like that. Is

7:06

that mostly a reflection of the

7:08

uncertainty aspect of all of this

7:10

or are you implying that it's

7:13

going to feed into things like

7:15

funding costs and the capital investment

7:17

environment and I guess the wealth

7:19

effect for the US economy as

7:21

well? Yeah I think so. I

7:23

mean I think the stock market

7:25

going down is usually bad and

7:28

I think that'll have effects on

7:30

household psychology for sure. And remember,

7:32

like a lot of the a

7:34

lot of the reason why consumer

7:36

spending ran so much more rapidly

7:38

than real income growth last year

7:40

was because The savings rate was

7:42

going down and one of the

7:45

reasons why the savings rate was

7:47

going down was probably because stock

7:49

prices were going up and that

7:51

was juicing, you know, enthusiasm for

7:53

the high-end consumer. Yeah, I think

7:55

this is really important. Like, if

7:57

you think that consumer spending was

7:59

driving a lot of the surprising

8:02

growth in some respects that we've

8:04

seen recently, then you should really

8:06

focus on what the higher end

8:08

consumer was doing. And most of

8:10

those higher end consumers have stock

8:12

portfolios. Yeah, I think that's right.

8:14

And I guess the other thing

8:16

I would say is, you know,

8:19

there's a whole literature I think

8:21

about, you know, the stock market

8:23

as a passive informant or... an

8:25

active informant, right? So is there

8:27

anything about the share price of

8:29

a company that tells the CEO

8:31

of that company something about their

8:34

firm they don't already know? Usually

8:36

it's probably not, but if you

8:38

get this sort of macro type

8:40

environment, which is kind of where

8:42

we are right now, then the

8:44

stock market takes on more of

8:46

a role of an active informant.

8:48

And you know, then you kind

8:51

of have business, the business community,

8:53

kind of looking at the stock

8:55

market as a, aggregator of macro

8:57

risk. And right now, you know,

8:59

the fact is that stock prices

9:01

are down quite a bit from

9:03

their February highs. And that's probably

9:05

creating a cautionary mood for most

9:08

of corporate America. I'm a big

9:10

fan of this stocks matter, a

9:12

hypothesis. I've been banging the drums.

9:14

Stocks matter. Don't just dismiss the

9:16

stock market as this thing that

9:18

us Wall Street elites, which we

9:20

are. are obsessed with. They actually

9:23

matter. In this family, I do

9:25

not believe in Wall Street versus

9:27

Main Street. I only believe in

9:29

one constant contiguous street that connects

9:31

all roads in America. Neil. Wait,

9:33

wait. Isn't that Neil saying that,

9:35

you know, people say that the

9:37

stock market is not the economy,

9:40

but it's not not the economy?

9:42

Where did you get that? Neil,

9:44

where did you get that? Oh,

9:46

we're going to settle this. Neil.

9:48

I got it from Joe Weisenfeld.

9:50

Yeah, all right. Oh, okay. I

9:52

know. The most painful thing is

9:54

Tracy has to acknowledge I get

9:57

some credit for something. It's a

9:59

good quote. Thank you. That's why

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10:52

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10:54

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10:56

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care and health care? Not really,

11:01

no. I mean, most of the

11:03

growth in employment has been in

11:05

sort of what you would call

11:07

like acical industries like private education

11:10

and health care. You know, when

11:12

you look at the more cyclically

11:14

sensitive areas of the job market,

11:16

I mean, that's clearly slowing down.

11:19

You look at residential construction employment.

11:21

I mean, that's actually down against

11:23

last year. You know, I mean,

11:25

service sector, I mean, the other

11:28

thing, of course, is that if

11:30

the tariffs come on, that's likely

11:32

to push up goods prices, right?

11:34

Given the fact that the labor

11:37

markets are slowing down to the

11:39

extent that people have to allocate

11:41

more of their household budgets towards

11:43

goods, that'll leave less left over

11:46

for everything else, which means they'll

11:48

ultimately have to start cutting back

11:50

on services consumption. and that'll drive

11:52

down the prices for services. So

11:55

that to me is a bigger

11:57

concern because obviously service sector employment

11:59

is huge in the US. That's

12:01

where most of the meat is.

12:04

So, you know, leisure and hospitality,

12:06

you know, things like that, I

12:08

mean, that's going to come under

12:10

pressure, I would think. As the

12:13

quarters go on. We are recording

12:15

this on Thursday, April 10th, and

12:17

we did just see CPI actually

12:19

come in lower than expected, but

12:22

everyone's talking about imminent tariffs impact.

12:24

And I guess my question on

12:26

inflation is, like, a lot of

12:28

people seem to be debating between,

12:31

well, most people agree the terrorists

12:33

will immediately. push-up prices, the big

12:35

question is, at what point will

12:37

enough demand destruction actually kick in

12:40

to reduce demand for consumer goods

12:42

and potentially lower prices? But it's

12:44

really interesting that you're saying that,

12:46

you know, we could have the

12:49

impact feed into services and then

12:51

if you get higher unemployment, that

12:53

would certainly add to the demand

12:55

destruction dynamic. The Fed's policy at

12:58

the moment is to be behind

13:00

the curve. Proceed accordingly. That's all

13:02

I can tell you. I mean,

13:05

they're basically telling you that they're

13:07

waiting for growth conditions to deteriorate

13:09

before they cut. That's all that

13:11

really matters. They're not changing the

13:14

nominal anchor just yet. I mean,

13:16

so that basically tells you that

13:18

their solution to the inflationary consequences

13:20

of tariffs is disinflation. As of

13:23

right now, NASDAQ down 6%, that

13:25

big green candle we got yesterday.

13:27

rapidly melting S&P 500 down 5.4%

13:29

U.S. tenure yields up on the

13:32

date, not a cocktail you want

13:34

to see. What if, um, what

13:36

if this just keeps going for

13:38

the next four years? It might

13:41

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