00:00 Speaker a
The consequences of President Trump's comprehensive tariffs are entering the income season. Southwest Airlines, American Airlines and Alaska canceled their full-year outlook on Wednesday, blaming uncertainty and travel demand. Meanwhile, facing higher supply chain costs, Pepsi says it no longer sees profit growth in 2025. Meanwhile, Merck expects to lose at least $200 million in tariffs. This does not include the additional farm tax here. Still, we let Joe Brusuelas talk more. Joe, I've been listening to my sources, they're the market people tell me, well, income, it's better than we thought. all is well. As an economist, how do you read these incomes?
01:26 Joe Brusuelas
No, no, no. Yes. OK, no problem is the problem, because the economic environment is too uncertain to make confident predictions. I predicted to be with the Wall Street Journal group. I am on the board of directors of UCLA forecast. Now, you just can't do it with some confidence. What you want to do is what they do with American Airlines. You talk to investors with appropriate and appropriate measures of humility. We can't project now. What you will see, though, is that the real rapidity of uncertainty will increase strong economic costs. You will see orders begin to ease. Of course, even in the durable goods orders this morning, Boeing orders rose 139%. They are flat before shipping. Again, the tip of the spear. You will see more things. So, actually, when I see a CEO here saying, I know, it's too uncertain and it gives me more confidence in them. I really won't talk about first-quarter revenue. I don't think this is a good place to be now.
03:55 Speaker a
Well, we have to talk about what we see on tape now. You're looking at the earnings, which is a huge relief rally, especially in tech stocks here. Your Nasdaq is up nearly 1.6%, and the S&P 500 is up more than 1%. All of these rallies do flourish on the back of the Fed's speech, Gov. Chris Waller said the job market could prompt a faster drop than expected. Joe, is this the market going to escape, or is it a signal that we are going to recession and then they have to cut it?
04:46 Joe Brusuelas
Yes, there are more hot insurance companies on the market today than I am satisfied with. In my opinion, Governor Waller is trying to do two ways, right? Yes, yes, this could lead to a recession and we might have to cut it earlier. But hey, you know, the president can say everything he wants to do. We will have our central bank independence. Oh, by the way, the internal contradictions you see here are OK. Correct.
05:21 Speaker a
What does this leave us in terms of the economic prospects?
05:30 Joe Brusuelas
OK Therefore, the economy will slow down. At best, it will stop. Worst of all, we will fall into recession. I think we have a very mild garden variety recession, which lasted six to nine months. We must have a deeper and deeper recession. We must encounter deeper policy errors than we have already encountered. Look, if we are to avoid recession, the government will have to rush back on tariffs. They will have to find a safe way to avoid the face. Now, it is not. You know, the real problem with Maddie is that they can't be straightforward. Correct. Internal inconsistencies between macroeconomic policies within governments are indeed hindering financial markets and are pouring into the real economy. We just heard from Whirlpool and Southwest and basically told us the same thing, right? Whirlpool CEO is my favorite. He is a professional tariff, and we reduce tariffs by raising prices. OK, sorry. That's not an relief. This is raising the price, and once we get the price shock that appears over the next 60 to 90 days, it will tell you what will happen. This will lead consumers to say that my disposable income has just turned negative. I need to pull it back. Yes. Yes.
