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And as always, great to spend some time
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every month with Wharton ameritus
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professor of finance Jeremy Seagull,
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who's also a senior economist at
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Wisdomree. Jeremy, obviously lots to
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discuss since we last talked. I guess
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let's start with the Scotas's decision
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on tariffs and obviously the potential
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impact that it's going to have uh on the
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markets, on the economy and such. Give
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us your thoughts.
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>> Yeah. Wow. Um, I mean, we we we knew it
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the the prediction market said it was
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going to be NYX, but we didn't quite
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know how. Um, so, uh, let let's say
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where we stand. Um, obviously what he
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has gone to is section 122, which he
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first said was going to put a 10% and
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then he he realized that the max was 15,
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so why not go to 15,
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>> right? % which then he went to on
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Saturday. Um that does lower uh um the
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average a couple of points from what it
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was under the AIPA tariffs. Um uh
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particularly from China and several
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other Asian countries. Of course, it
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raises it on several like uh the UK
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which negotiated a 10% raise. Um uh uh
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remember Trump likes to go in with a big
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stick and and then go down from there.
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>> Um so now his at least by using that his
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his big stick isn't quite as big.
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However, he has lots of other powers. I
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mean he has powers to dequery embargos
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on certain uh um uh goods. He has a
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number of other authorities that he can
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use. One of the scariest authorities you
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can use is the section 338 that goes
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from the smooth holoy tariff of of of um
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of of 1932 which of course was one of
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the most damaging tariffs we've had that
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allows up to 50% with no uh requirement
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of federal agency and no limit on
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duration. Now that would be extreme.
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Yeah. But he has that in a back pocket
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if he wants to use something like a
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hammer
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>> uh to do that. Um, let let's let's talk
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about what the consequences are likely
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to be. I I don't think the final
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tariffs are going to be all that much
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different from what they would
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negotiated.
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Uh, I know there's some I think the ones
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that haven't negotiated will go through.
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Um, he can still, as I say, say, "Hey,
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listen, I have other powers that can be
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much more than 15% if I want to use
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them." and and therefore I think he's
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going to proceed along those same lines.
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A um a big question mark of course is
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the um uh the refunds which was uh
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unfortunately not specified by the
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Supreme Court and by the way this
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decision should have come 6 months ago.
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I mean there was no there was no
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evidence they had to find a search for
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anything like that. I mean it was right
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in the text to begin with and we would
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have avoided a lot of hardship and and
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mess as uh uh Justice Kavanaaugh in fact
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used that very word. So there's a whole
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question of the refunds um that could be
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litigated for months if not years. Um so
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there's more uncertainty because we you
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know exactly what rates are going to be
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and how are things has been put a monkey
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wrench. However, I don't think the final
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outcome is going to be all that much
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different.
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>> And um uh I think the economy actually
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looks fairly good looking forward.
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>> Yeah. And and since the last time we
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talked to you, the Dow has crossed
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50,000. Uh the S&P I think dipped across
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7,000 in an intraday and then headed
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back. uh the the markets have been
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fairly resilient to all of the stuff
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that has gone on out there whether it be
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the tariff impact or you know some of
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the global events that have gone on as
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well.
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>> Yeah. I mean the big event coming up I
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think is Iran obviously and how he's
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going to act on that. That's the next I
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think really significant thing that
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affects oil and a lot of others. We
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don't know what he's going to do and how
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he's ne negotiate that. one of the the
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speed bumps uh as we know Kevin Worsh
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being appointed is a favorable sign. So
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uh you know uh and the government
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shutdown was avoided in Maine but
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there's still TSA uh you know and
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flights uh that could be disrupted if
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this go on for several months but that
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is sort of in the background. The
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government is uh funded outside of
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Homeland Security all the way till
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September 30th. So that's more on the
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back burner. I would say the Iran thing
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is the big thing coming up. Uh I wish I
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could predict what's going to happen,
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but I cannot. Um I think the tariff
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thing is is really going to fade into
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something that is is not going to be
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that much different uh than um what the
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levels we would have seen under AIPA.
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>> Since you mentioned Kevin Worsh, let me
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ask you your thoughts on Mr. Worsh the
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next Fed chair, assuming that you know
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the that his nomination goes through in
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Congress.
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Um
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I like him. I liked him as among the
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four choices. I thought he was the best.
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So I was pleased that Kevin Worsh I mean
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he's a man that's been on the Fed for
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quite a number of years during the
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financial crisis under Bernani. Um he
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he's he's a smart guy. uh how he won't
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take over the meeting until the June
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meeting uh which is quite a bit from now
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when we're going to have you know
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there's so much that can happen between
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now and then uh we we don't know how we
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how we going to react. Uh I I will stick
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with my feeling that I had I think in
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the in the last month. I still think we
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have a ways to go down on um the uh uh
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Fed funds rate. I would like to see two
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more cuts. I'd like to see the Fed fund
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rate in the low 3s. right and going
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forward. Um but if whether it's done,
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you know, next meeting or two or three
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meetings from now is is not that
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significant. Well, and and interesting
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you mentioned that because there were
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comments by Christopher Waller uh
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earlier today as we taped this on a
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Monday. Um that uh he can see that if
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there is some some issues with the labor
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data the next you know couple of times
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we get reports uh that he could see uh
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you know the Fed going to a move to a
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cut. So it seems like
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>> Oh absolutely. I mean it is it's
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completely data dependent. But if we see
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some weak data now we see some weak
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labor market data which we have not so
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far.
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>> Yeah
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>> we have not seen weak neighbor labor
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market data. I mean those those jobless
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claims are remaining in there. Um you
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know ob we we think the equilibrium
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amount of monthly payroll gains is
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somewhere in the neighborhood of 40
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50,000. we've been in that area, but it
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could deteriorate certainly uh you know
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uh and and if it does deteriorate there
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would be no question that there would be
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a cut. Um but I think they're holding
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firm if we t see the type of labor
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market data that we have actually seen
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over the last 3 months.
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>> So obviously Iran is the top thing on
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your on your radar right now. Anything
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else that is really drawing your
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attention as well?
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Yeah, I think I I think I think Iran is
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is is definitely the big thing. I mean,
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there's going to be a lot of churning
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and little bit more uncertainty as a
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result of of these terrorists, but I
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would not, you know, I I would use that
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uncertainty I think is is a buying
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condition. I think that I think the
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market is still going to go up here in
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2026 because I don't think the final
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outcome of the tariff, in fact, I think
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it's welcome that there was a limit put
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on the president. and he can't just
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throw around any rate that he wants.
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Again, in his back pocket, he has a few
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nuclear options here with this Mudhalli
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tariff and embargos that he uh could use
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as a big stick, but at this particular
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point, doesn't look like he is uh uh
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wanting to use those.
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>> Jeremy, always great to catch up. Thank
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you very much, sir.
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>> Thank you very much, Dan.
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>> You got it. Jeremy Seagull, who is
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professor emeritus of finance here at
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the Wharton School and senior economist
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at Wisdom Tree.
