The markets may be hanging in there but they also held strong in early 2020—right up until Covid hit New York. Meanwhile, tariffs are driving consumer confidence down, firms are talking about cutting back on hiring and investments, and Goldman Sachs is predicting that the U.S. will have the highest inflation and lowest growth of any developed economy this year. Plus, Scott Bessent is not a calming influence, and Trump has a real 'War on Christmas' in the works. The Stalwart Joe Weisenthal joins Tim Miller. show notes Joe and Tracy Alloway's newsletter on how the markets can get things wrong (gift) Recent 'Odd Lots' pod on the coming empty shelves & the War on Christmas Joe's Bluesky post on the War on Christmas
Chapter 1: Who are the hosts and guest of this episode?
We can go see a little music after. I got no plans. We'll figure it out. Come visit us in Nashville. Good excuse. a little spring trip. We have pretty weather in May in Tennessee. On this pod, we've got Joe Weisenthal. We're going to go real deep on economy stuff. He is just the hardest working man in finance journalism. Been following him for a long time.
So I'm looking forward to getting to everything about our likely impending recession. One note on the conversation, we talked a little bit about how Amazon said that they're going to start listing the cost of tariffs on their site, the White House responded to that very negatively attacking Amazon.
Since then, an Amazon Spox has said that they are only doing it on their Amazon haul program, which is for, you know, truckers and kind of long distance material. So that's not going to be on the main Amazon website. Unclear if that was a goof or a step down on behalf of Bezos. That is surely something that we are going to be monitoring closely. in the coming days.
Just wanted to get you the facts on that. This is a great chat. Stick around. Up next, Joe Weisenthal. Hello and welcome to the Bullwark Podcast. I'm your host, Tim Miller. Delighted to have with us today Executive Editor of Digital News at Bloomberg. He's co-host of the Odd Lots Podcast. At long last, it's the stalwart, Joe Weisenthal. What's going on, man? Thanks for having me.
Psyched to finally be here. I've been, you know, monitoring your tweets since, I don't know, fucking I was in short pants. Been a long time.
I feel bad. Some people over the last several weeks, they're like, oh, I turned on alerts for your tweets. And I'm like, oh, shoot. Now I just can't tweet random stuff because I feel like every one of my tweets have to have some important data or a chart or something like that. But thank you for following.
I've had a couple people tell me that over the years. And I'm like, please turn that off.
I know. Just turn it off. It's not that important. It's not that important.
All right, we got so much to talk about. I guess let's just start with the top line economic outlook. Goldman Sachs projecting the U.S. will have the lowest economic growth and highest inflation of any developed economy in 2025. That doesn't seem good, but you wrote this week about the strange calm in the S&P 500. So just kind of talk about the biggest picture.
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Chapter 2: Why does Joe Weisenthal say 'Everything Screams Recession' despite market calm?
Because I do have this sort of like, I don't know, I'm sort of cursed with this efficient markets brain where it's like, I think everything is priced in all the time and we can all see the drop off in shipments from China and we can all see all these surveys. And yet I'm like, am I missing something? Is the market missing something?
And so we are in this weird moment, you know, most of the, quote, hard data is. hasn't reflected much weakness yet. We haven't seen the big layoff wave that everyone is anticipating. So I think a lot of people are sort of scratching their heads, including me saying like, what am I missing here? And I don't know what we're missing. I mean, if we did, that would be really helpful.
You know, the market is down. Stocks are down on the year and they're down substantially from their highs in mid-February. A lot of people are scratching their heads about why isn't the market down more given, you know, what we can plainly see in much of the evidence.
Yeah. Given that my father was a mutual fund manager, and I originally came from the school of Paul Ryan republicanism, the efficient markets hypothesis was right there next to the pocket constitution for me as a college republican. And I'm pretty shaky on how my republican colleagues felt about the constitution. I'm getting increasingly shaky on the Efficient markets hypothesis.
Scott Besson, our Treasury Secretary, had an explanation this morning. He did a press conference, and he said that individual investors are holding tight, and it's just the institutional investors that are panicking. And that's their spin. What do you make of that?
There's something to that. I mean, if you look at sort of speculative flows in the market that we would associate with institution or sort of individual, quote, retail, unquote, investors, there are a lot of signs of that. Not just that they're holding tight, but that they're buying aggressively. You know, one of the things I wonder about is that over the last several years,
traders, individuals have been trained to buy the dip every time. Stocks go down a little bit, buy more. And what you see in a lot of this sort of speculative names, whether it's cryptocurrencies, shares of Tesla, shares of Robinhood, shares of IPOs and SPACs, not only are they doing well, they're actually well above their April 2nd highs. So I think one theory is
is that there is just a lot of flow from households still that are largely still employed, still have money, still perhaps have savings. And so that is going in the market. It still doesn't completely satisfy me because, again, my efficient markets brain, I still think there must be, quote, smart money that would sell more if stocks are obviously disconnected from valuations. If it's so obvious...
that things are going to get really terrible. You think, okay, well, like large institutional holders, hedge fund managers, et cetera, could sell more. So I think there is evidence of Besson's theory out there in the market. It still doesn't totally sit right with me. The one thing I'll say though, is that markets don't always get it right.
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Chapter 3: What is Scott Bessent's perspective on the current market and tariffs?
I think what now is different is, you know, you don't even really know what a victory looks like policy wise. And I think that's like a very different thing. We don't even know what that state is, what that looks like when we say, oh, we are happy with what's been achieved, in part because the ostensible claims of the tariffs are different. Some days it's about reshoring manufacturing.
Some days it's about isolating China. Some days it's about replacing revenue for the government so that we can cut income taxes on anyone making, I don't know, $150,000 a year. So it's hard to know what victory or policy success looks like. When there's so many different reasons stated for the policies being put into place.
I think we're going to bring back all the coal jobs. That's one thing that's going to happen. We're going to have a golden age of America. And I think that's a clear objective, right? We're going to rebuild Scranton. Springfield, but not with any Haitian workers. You know, we're just going to rebuild it just with the whites that live there. That feels doable.
I think there is this like aesthetic aspect of it and coal in particular, because look, one of the real booming industries for the U.S. really like starting under the Obama administration. has been liquid natural gas. It's one of our big, or natural gas in general, and then liquid natural gas emerging as this major source of exports.
But it's very interesting to see the emphasis on coal specifically, because I think that sort of, it certainly gives off a sort of like cultural thing. Men in a certain, you know, in West Virginia. Like a Zoolander. Yeah, yeah. There's an aesthetic element to that.
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Chapter 4: How do tariffs affect U.S. businesses and China’s economy?
He said a couple of times in different interviews that he regards the tariff level against the Chinese as unsustainable. But then he quickly says unsustainable from the Chinese perspective. And obviously, look, you know, that clip, it seemed unsustainable from the American perspective as well. And I think a lot of people feel that. But it's also interesting to think about.
He says China's business model, which to my mind represents a fairly outdated view of what China's business model actually is. Yes, they do a lot of sort of low margin, cheap manufacturing.
But part of their goal over time has been to actually outsource that to other Asian countries while China pursues the more high end advanced technological manufacturing that is the source of a lot of angst in the West. So I don't know when he says that these tariffs strike to the heart of China's business model. Absolutely. In part, there's still a lot of that type of manufacturing in China.
But my perception is that's not where they see the future of the Chinese economy in any instance.
Yeah, I mean, that's not calming to me, right? Let's expand on that just a little bit because the small business owner that he's talking about there was a dog collar manufacturer or something, right? And so it's like, we don't even know if we're talking to she. Seems like we're not. We're kind of lying about that is what's happening to the administration. So there's no negotiations happening.
We have this tariff that's going to cripple some percentage of American businesses. And the theory of the case, according to Besant, is that... If Americans stop buying cheap dog collars from China, then their whole system is going to collapse and they're going to have to come to the table. And I don't think that that theory of the case is in touch with reality at all, is it?
This is a really tough one because so much of the... sort of information that we've gotten out of China over the last couple of years has really been, or several years, has really been focused on China's efforts to move up the value chain. So obviously EVs are a big example and their big electric car companies are selling all over the world, excluding China. the United States.
Huawei, the biggest chip company, which is now perceived to be getting closer and closer to the cutting edge, closer to Nvidia. Again, very big player all around the world, excluding Perhaps the United States and elsewhere.
So I think at least the stated view of what China wants the world to think is that their main focus is on these really difficult tech like batteries, other areas of energy, semiconductors, etc. I'm sure there is still a lot of employment there. tied up in the sort of low end manufacturing like dog collars or strollers or umbrellas or whatever else.
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Chapter 5: What are the implications of the 'War on Christmas' and holiday supply disruptions?
Assault on Santa Claus.
Right. And so you could imagine that not only is there just sort of less to go around, but also that you get this big distribution from small to big. So small businesses, which historically have been one of the most sort of reliable Republican constituencies, really lose out to the giant retailers that can afford to take a gamble and can afford to take a hit.
What did your colleague say about the empty shelves as far as timing? I think I saw Larry Summers on All In podcast maybe talking about this month coming in May. What's your sense?
Yeah, I think the drop in shipments coming into Los Angeles is starting now. So it's hard to believe that they wouldn't show up soon. Like, you know, as you were saying in the very beginning, you sort of scratch your head and it's like, is there something I'm missing here? Is there some way you can have a big drop in container shipments into the U.S.
without it fairly quickly showing up on shelves? It's hard to see not. Maybe some of what's coming in now would be going into inventory, and so it takes a while. But intuitively, you would think over the next couple months.
Amazon is the other element of this. This was something that happened this morning. So Amazon announced that they're going to start showing how much of the cost of each good is coming from tariffs. Timu had already done that on the Chinese Amazon spinoffs.
The press secretary just about an hour ago called this a hostile political act by Amazon and then asked, why didn't Amazon do this when Biden hiked inflation to the highest point in 40 years? Obviously, it's just.
Complete nonsense, right? That was the price of goods. Biden didn't tack on a distinct inflation tax on goods. I'm kind of surprised by the Amazon move. I mean, it is notable. It is going to get a lot of attention. It might make a lot of sense. It'll really be interesting to see how people respond to the visual of that.
And again, it's sort of crazy to my mind that we did have these several years in which inflation, the worst in 40 years, was sort of the central economic story. And then we're right back to this effort to raise prices. You know, it's interesting, going back to some of the Besant comments, one of the things he said, he's been saying it over the last two days.
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Chapter 6: What is the controversy around Amazon showing tariff costs on products?
This is going to have an almost immediate effect on the employment landscape. People graduating from college next month, you would think, OK, like this is going to be a materially more difficult labor market than what it otherwise might have been. So I agree with you.
It's really hard not to see why this sentiment among large and small businesses would not fairly quickly translate into weakening actual economic activity. If nothing else, you know, even setting aside tariffs, just the uncertainty over tariffs, you would presume that this would at least have a temporary pausing effect on new capital outlays, plants, equipments, new store openings, etc.
This is one of the things just about like that, like the tangible impact on the economy and how these guys have a mixed, you know, kind of mixed message on what their goals are. This clip jumped out to me. My friend Michael Moynihan was interviewing somebody who does hiring for shipbuilders. And I just want to play this for you because I think it's pretty like her insight is pretty notable.
I sort of sit at the intersection of two of the Trump policies that are sort of intersecting in my world. I place people, mostly military veterans, into manufacturing and shipbuilding jobs. And so we have an immigration policy that is supposed to be bringing jobs back to American workers and a tariff policy that's supposed to be doing the same in some way.
But in shipbuilding alone, we have to hire 14,000 people a year for the next 10 years just to replenish our fleet now and become competitive with China. And that doesn't even come close to what we have to build to fulfill our contracts with the UK and Australia that we just signed a couple of years ago. There's just no way to do this with Americans. We're doing all we can to train people up.
It's very difficult. There's a pretty good effort actually underway right now. Millions of dollars being spent. But I really haven't heard a lot of talk about this.
I just thought that was such a potent summary.
That's such an interesting comment because it sort of dovetails with another thing I've been thinking about a lot, which is that a lot of these sort of domestic industrial ambitions, you know, we saw a lot under the Biden administration. That was the sort of core of the CHIPS Act, the Inflation Reduction Act, which was in large part about energy subsidies, etc.,
People will be debating for a long time how successful or the efficacy of the design of these programs were. But there was this clear idea that we want to rebuild domestic industry and we're going to de-risk the production. We're going to subsidize it. We're going to try to get alignments right so that private capital worked in concert with public goals.
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