Episode summary
Tariffs and Geopolitics and the Market Intersection | Bloomberg Surveillance
Bloomberg Surveillance
· · 28 min · Hosts: Tom Keene, Paul Sweeney, Lisa Mateo, Michael Barr · Guests: Joe Lavorgna, Emily Roland, Kara Murphy, Monica Guerra
Summary
The discussion centered on a mix of tariff policy, inflation, and how geopolitics is reshaping markets. A guest argued that the White House’s economic theme is still business-friendly taxes, low regulation, and tariffs used as a barrier to encourage foreign capital, even if the precise tariff path is still uncertain. He said the longer the Fed waits to respond to inflation pressures, the greater the chance rates eventually have to rise more, especially with supply shocks and a stronger demand for capital tied to the AI buildout.
The market conversation turned to why equities keep grinding higher despite higher yields. A guest said the S&P 500’s strength is being powered by extraordinary earnings, with reported earnings growth around 70% for the quarter, while dip buyers keep stepping back in. She also argued that utilities, midcaps, industrials, and other defensive or overlooked areas still look attractive because the market is entering a period of tighter liquidity and more rate pressure.
Geopolitics stayed front and center in the final segment. A guest linked the war in Iran, higher oil prices, and affordability concerns to midterm risks for the GOP, arguing that gas prices and energy inflation could weigh on voters. She said political pressure is building, while data-center and AI-related spending remains a major economic force even as investors question how much of that spending will ultimately prove productive.
Key takeaways
- A guest said the administration’s economic mix is still business-friendly taxes, low regulation, and tariffs meant to attract foreign capital.
- A guest argued that if inflation stays above 2%, the Fed may eventually need to raise rates further rather than simply talk inflation down.
- A guest said S&P 500 reported earnings growth is running around 70%, helping explain why dip buyers keep supporting the market.
- A guest said utilities remain overweight because they offer income and inflation protection as bond yields and rate-hike expectations rise.
- A guest warned that higher oil prices and gasoline costs could hurt GOP midterm prospects because affordability is becoming a central issue.
Notable quotes
“the economic theme is to have businessfriendly taxes, low regulation, and put up a tariff barrier so as to encourage foreign capital”
“I don't have a problem with tariffs. The tariffs are argue a bipartisan issue”
“It's a massive bull market that is fueled by some of the most extraordinary earnings that we've seen in modern history”
“On one hand, you have the bond market pricing in two Fed rate hikes, one in September and one in December”
“So affordability is huge here. Layer in energy, housing, you've got an uphill climb”
How the episode opens
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And this is a joy. It's always good to see Joseph Leavo, chief economist, SNBC Niko Securities. Uh, but even better with the incredibly smart note you have, magical thinking.
You are brutal. The idea we're coming back to 2% inflation, it's just not going to happen. You go out to 2028 and say Fed central tendencies are still elevated.
Are we running a Fed policy now for elevated inflation? We're running Fed policy on 3% of the economy, which is housing. It's the only area that's really weak, Tom.
Everything else is very strong. If you look at the consumer, you're going to get huge building and structures, commercial structures, because of the one big beautiful bill, which has temporary expensing for factories. You could expense a factory the year you break ground.
That's going to expire at the end of 2018.
It's like Lyndon Bane Johnson from — To some extent. And of course, you've got massive capex. So, what's weak? and the note and the history show if you're above tren if you're above 2% on inflation show me when it falls give me an example when it falls it's not going to fall unless something happens and in the past it's always been the Fed needs to in increase interest rates and raise the price of credit and money
So the magical thinking part comes you could say as much as you want it's going to go back to two but the words alone aren't going to do it — I'm going to say this with great respect Joe Leavourne is the only one I've seen that's worked within the Trump administration that basically speaks English.
From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- tariffs
- geopolitics
- market earnings
- oil prices
- midterm politics
Companies and tickers mentioned
- MFC
- MS
- SMBC Nikko Securities
- Manulife Investment Management
- Kestra Investment Management
- Morgan Stanley Wealth Management
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Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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