Can Consumers Drive Markets Higher?

May 15, 2025

Michael Darda, Chief Economist at Roth Capital Partners, shares insights on decreased recession risks spurred by new trade deals. He discusses how recent tax increases might not derail economic stability. Elizabeth Economy, a senior fellow at the Hoover Institution, dives into the complex dynamics of U.S.-China trade relations, emphasizing the importance of navigating tariffs and technology independence. Together, they explore consumer resilience in the face of economic uncertainty, highlighting how high-end spending affects market trends.

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INSIGHT

Impact of China Tariff Reduction

The recent China tariff reductions eased trade tensions but still represent a significant increase from pre-administration levels.
High tariffs previously acted like a trade embargo, so scaling back to about 30% is crucial for economic growth.

INSIGHT

Receding Recession Threats

Recession fears have lessened as high-yield debt market signals improved and jobless claims stabilize.
The Fed likely monitors these indicators closely to gauge economic resilience.

INSIGHT

Fed's Flexibility Amid Tariff Changes

Tariffs could lower the neutral interest rate, risking a Fed misstep if they don't adjust policy timely.
With tariffs scaling back, the Fed has more flexibility and may lower rates after reviewing several months of data.

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Bloomberg Surveillance hosted by Tom Keene & Paul SweeneyMay 15th, 2025
Featuring:
1) Michael Darda, Chief Economist at Roth Capital Partners, talks about a decreased recession risk as trade deals begin and why Trump's raising taxes and increasing the marginal tax rate won't necessarily lead to economic and financial upheaval. Traders are looking ahead to a speech by Federal Reserve Chair Jerome Powell and a slew of economic reports to gauge the sustainability of the recent equity rally, with billionaire Steve Cohen predicting a 45% chance of a US recession.
2) Gene Seroka, CEO at the Port of LA, joins for a discussion on shipping and why normalizing relations with China won't lead to a surge in imports. Recently, Seroka has noted that the US-China tariff truce likely won't cause businesses to frontload inventory.
3) Michelle Meyer, Chief Economist, North America at the MasterCard Economics Institute, reacts to retail sales and talks about her outlook for the consumer. Market participants have a downbeat view of retails sales heading into the day, but alternative measures of spending suggest tariff frontrunning has continued during the month. Signs of a resilient consumer could continue to support stocks.
4) Elizabeth Economy, Hargrove senior fellow and co-director of the U.S., China and the world program at the Hoover Institution at Stanford University, talks about the "total reset" in the US' relationship with China, whether the US or China are winning in trade negotiations so far, and whether we'll see meaningful change in Chinese market practices. In a sign of discord today, Beijing has pushed back against a US decision aimed at curbing Chinese-made artificial intelligence chips.
5) Lisa Mateo joins with the latest headlines in newspapers across the US, including a Financial Times story on Gen Z changing what it means to be a reader and TripAdvisor's top destinations for travelers.

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