00:00:00
As we come to the end of November, we are seeing questions about the state of the economy. But we're also seeing some
00:00:05
earnings beating estimates with companies even pushing higher their fullear fiscal forecasts. We're seeing
00:00:12
President Trump continuing to try and develop relations with China's President
00:00:16
Xi. Plus, we have, of course, as always, questions about the path of rate cuts. Joining us to talk about all of it, pres
00:00:24
professor Jeremy Seagull, professor emeritus of finance here at the Wharton School and also senior economist at
00:00:30
Wisdomree. Hi Jeremy, great to chat again. >> Good to talk to you, Don. >> Let's start with the Fed and fiscal
00:00:36
policy. Where do you think we kind of stand right now? Obviously, there's still talk about the impact of
00:00:41
inflation, how much ever there is out there, uh, and a lot of discussion about what we may or may not see in the
00:00:47
December FOMC meeting. >> Yeah. And this is likely to be uh the liveest me liveiest meeting uh that I
00:00:57
can remember because if you want to know the truth I don't it's it's not decided.
00:01:02
It usually is kind of decided by now but because we haven't been getting data and
00:01:07
by the way we're getting as we speak we're just getting a slew of catchup
00:01:11
data and we will be getting more catch-up data uh into the future. Um but they don't tell uh they told us that the
00:01:19
employment report uh for the month of no uh November will not be ready by the time of the December 10th meeting which
00:01:26
is a key report. So we have to rely on jobless claims and indirect reports. So there's so much uncertainty. Uh I think
00:01:34
there's a big split right now and um um uh it you know it could be decided by
00:01:41
the data that comes out in the next two weeks uh to push it uh one way or the other. Right now jobless claims are
00:01:50
still it's it's a it's a the situation of no hire no fire. um uh jobless claims
00:01:58
at 220 is right in that sweet spot, but continuing jobless claims, which means that, you know, people that have to keep
00:02:04
on applying because they can't find a job is at a uh you know, a four-year high uh post pandemic high keeps on
00:02:11
climbing up. So, you know, if you don't have a job now, it's hard to find one,
00:02:15
but firms are not at this point uh getting rid of a lot of uh of uh of uh people saying that the the uh the
00:02:25
outlook is is is dire. So you mentioned about uh the data that we are getting that is coming in the September data
00:02:32
obviously more delayed than what we are normally used to but how much value does
00:02:38
that data still have when you think about that December Fed meeting I mean it's obviously you're talking about
00:02:44
probably what a six week gap in terms of truly understanding is there still some
00:02:48
value or really not >> well you know I September data is an important even October I mean I data I
00:02:56
I've been saying that uh if we're going to see a slowdown um if if tariff increases and you know
00:03:05
we all know that that uh you know Trump is trying to walk a number of these back
00:03:11
but if the tariff increases uh uh increases in place are going to have an effect. It's going to start now as
00:03:20
holiday shopping ramps up. Um so uh you know really the data is is going to be some of it's an anecdotal how how well
00:03:29
is Good Friday going to be. I think it's been watered down because you know everyone starting Good Friday earlier
00:03:36
the day that used to be so uh concentrated now may not be. Uh we're going to hear anecdotal evidence. How
00:03:42
are people reacting to the increases in the stores? We're going to get credit
00:03:47
card data, department some department store data. uh re retail sales we will not get uh you know until after the
00:03:56
meeting. So it's going to rely on uh on that and u uh I think that if if if there's reports of weakness, they're not
00:04:06
seeing the buying that they expect, um I think we're going to have a 25 basis
00:04:11
point cut. However, if those anecdotal or or credit card reports or weekly uh uh department sales reports hold up, I
00:04:20
think there is a good case for a hold and with a willingness to go in the January meeting.
00:04:26
>> What what's interesting for me and I've been following a lot of these earnings
00:04:30
reports the last few weeks and I'll just use one for example as we're taping
00:04:33
this. Dick Sporting Goods obviously a big presence in the United States. Not only did they have some promise for the
00:04:39
quarter they just completed, but they upped their fiscal year forecast. And they're not the only one. So, there is
00:04:44
some optimism, I think, out there that the that even the doom and gloom that's
00:04:50
been kind of talked about like a slowing in the holiday shopping period, a lot of
00:04:54
these retailers still feel like it's going to be a good quarter. >> Yeah. And and and that's true. I mean,
00:04:59
everyone talks about the record beats that we had or nearrecord beats. You have to remember that everyone was so
00:05:06
pessimistic. I mean, actually, Goldman Sachs came into the third quarter thinking, you know, I mean, you know,
00:05:12
after the tariffs that it might be a 1 and a.5% GDP, they're up to almost 4% uh
00:05:18
GDP now. Uh, as well as Atlantic Fed was slightly over 4% for that third quarter.
00:05:24
But third quarter is done. As I've always said, if we're going to have an
00:05:26
effect of tariffs, we'll see it mostly in the fourth quarter. That's why those
00:05:30
that are forecasting good are are you know that's very very very very encouraging. Uh but a lot of these beats
00:05:39
were because going into the third quarter looking from the you know the second quarter looked so bad that uh it
00:05:47
was a it was basically a low bar. That being said, you know, AI, you know, we're get that this is quite interesting
00:05:54
what's going on. uh as you know as we're talking Google's threat to Nvidia uh
00:06:05
you know Alphabet's new um uh AI program Gemini 3 uh you know taking leaps and
00:06:13
bounds over uh you know uh the uh open AI chat gpt wow I mean that competition there is is
00:06:24
is this is heating and this is going to be really important because we all know AI has been the major thing driving this
00:06:30
market. >> So this is this is as we speak tremendously in flux and I think will be
00:06:37
really quite maybe uh uh the topic of what really drives the market uh in in uh in this fourth quarter. Let me finish
00:06:46
up by getting your thoughts. And obviously we see a lot of headlines of President Trump talking with President
00:06:51
Xi about the importance of having a decent relationship, the US having a decent relationship with China as a
00:06:58
trade partner, how important and how valuable that can be. >> Well, it's very important. I mean, I
00:07:04
think he recognized it earlier and that's why we've already had a meeting with Shei that was was good.
00:07:11
There may be another meeting. Uh there's no question that Trump has been sensitized to the
00:07:19
inflationary consequences of his tariffs and with the polls not looking very favorable towards his economic program
00:07:27
and uh affordability uh uh uh you know topic uh which is on everyone's lips right now. uh he is uh
00:07:37
he is obviously wants to make sure that uh we we don't have any further tariff
00:07:43
induced uh increases in in in prices. I mean I I definitely see a reversal there
00:07:50
and um you know that's clearly favorable to the market. Uh I don't you know no
00:07:57
more threats. I'm not saying there won't be any because there'll be political
00:08:00
issues that might come up and he might threaten with terrorists. But nonetheless, there's there's a walk back
00:08:06
here that actually started, I would say, last month with the meeting with with Chief
00:08:12
>> Jeremy. Always great to talk with you and get your insight. We will catch up
00:08:15
again next month. Thanks again. >> Thank you very much. Happy Thanksgiving.
00:08:19
>> You too as well. Jeremy Seagull, professor ofmeritus and finance here at
00:08:22
the Wharton School and senior economist at Wisdom Tree.