Russians Are Now Feeling Real Economic Pain From Putin’s War

Summary

Bloomberg Businessweek Podcast Summary

Episode Title: Russians Are Now Feeling Real Economic Pain From Putin’s War
Hosts: Carol Massar & Tim Stenovec
Date: November 26, 2025

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Overview

This episode centers on the multifaceted impact of the war in Ukraine, Putin’s objectives, and the current U.S.-Russia diplomatic situation. The hosts speak with political scientist Elise Giuliano, economist Claudia Sahm, and other expert guests to break down the evolving economic, diplomatic, and policy landscape. The latter half focuses on the latest Fed Beige Book, market reactions, tariffs, trade policy, and U.S. consumer and industrial outlooks.

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1. Russia, Ukraine, and U.S. Diplomacy: Unpacking Recent Negotiations

Key Segment: [01:57–10:45]

Main Points

• U.S.-Led Negotiations & Alleged Favoring of Russia

  • Details emerge about a call between President Trump’s special envoy, Steve Witkoff, and Yuri Ushakov, a top Putin aide.
  • Witkoff reportedly advised Ushakov on how Russia should approach peace talks with Trump, suggesting Russia initiate a call with Trump before a scheduled White House meeting with Ukraine’s Zelensky.

• Standard Diplomacy or Unusual Alignment?

  • On whether this aligns with normal diplomatic practice, Elise Giuliano states:
    • “Yes, President Trump used the word standard, but…Witkoff actually in a way took Russia's side by telling Russia that they should call Trump…That looks like…choosing the wrong side since it's Russia that attacked Ukraine.” ([04:14])

• Misconceptions About the War’s Purpose

  • Giuliano stresses, “Witkoff worked in real estate…so he seems to me [to] conceptualize this conflict as a war over land…but…that’s not really what Russia’s interested in. What they want to do is destroy Ukrainian sovereignty.” ([04:58])
  • She notes that Putin’s goal is to prevent Ukraine from joining Western alliances and undermine its existence as a sovereign nation.

Notable Quotes

• On U.S. negotiating posture:
  “You talk to your ally when you are trying to negotiate a ceasefire or an end to a war involving your ally…and here…Witkoff actually in a way took Russia’s side.” – Elise Giuliano ([04:14])

• On Russia’s aims:
  “Russia…doesn’t want the land. What they want to do is destroy Ukrainian sovereignty.” – Elise Giuliano ([04:58])

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2. Russia’s Domestic Pain, War’s Stalemate, and U.S.-Russia Relations

Key Points

• Putin’s Motivations

  • Putin is deeply threatened by a democratic Ukraine on Russia’s border and personally affected by loss of influence (“oligarchic friends” were expelled from Ukraine).
  • Claims of shared Slavic brotherhood and denial of Ukrainian nationhood fuel policies like child abductions.

• Impact on U.S.-Russia Relations

  • Relations are “much, much worse” than before the war. Americans are now used as pawns in diplomatic standoffs, and nearly all cooperation has ceased. ([07:30])

• Prospects for Peace

  • Giuliano doubts any quick resolution:
    • “A ceasefire agreement would be wonderful. Ukrainians continue to suffer...but there’s this kind of intransigent position of Putin, which is, again, the goal to undercut Ukrainian sovereignty.” ([08:53])
  • Both sides have reasons to pause, but Putin’s persistence and recent Russian military progress stymie talks.

Notable Quotes

• On Ukraine’s suffering:
  “She sometimes can't go to the hospital for her medical care because there's no hospitals closed, and you never know when it's open or closed. So there's this tragic...ongoing human element.” – Elise Giuliano ([08:53])

• On the war’s end:
  “It’s a war of attrition right now, and it's a drone war…but war is very unpredictable, and Russia is facing a lot of economic problems due to Ukrainian drone attacks on its energy and oil infrastructure.” – Elise Giuliano ([09:55])

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3. The Federal Reserve Beige Book and Economic Outlook

Key Segment: [13:26–23:19]

Main Points

• Current State of the U.S. Economy

  • The Beige Book notes economic activity was “little changed” with some districts showing slight decline.
  • Consumer spending is down, except among high-income households.
  • Employment has declined slightly, causing concern among Fed watchers.

• Implications for Federal Reserve Policy

  • Economist Stuart Paul: “If we have both spending in the aggregate declining, we have employment in the aggregate declining…the balance of risk is skewed towards the Fed needing to undergird the economy, maybe needing to take that additional rate cut in December.” ([14:08])
  • Claudia Sahm expects a “divided Fed” at the next meeting. She cautions December 2025 may bring the last cut under Chair Jay Powell’s tenure ([19:18]).

• Tariffs and Price Pressures

  • Claudia Sahm notes the Beige Book mentioned “tariff” 47 times, mostly linked to price increases—effects are showing up in higher goods inflation.
  • Uncertainty remains as much of the ultimate tariff impact may not be felt until demand recovers.

Notable Quotes

• On Fed’s outlook:
  “I suspect there probably will be a cut in December. That may be the last cut that we see from the Powell Fed...but I think we're going to…see more dissents.” – Claudia Sahm ([19:18])

• On tariffs and inflation:
  “It is difficult to pass on those price increases at a time when you're seeing a period of weak demand.” – Brooke Sutherland ([24:02])

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4. Trade Policy, Industrials, and Corporate Caution

Key Points

• Tariffs’ Ripple Effects (Deere as Example)

  • Companies like Deere face weak demand both due to global trade uncertainty and difficulty passing costs to customers.
  • Brooke Sutherland, Bloomberg Industrial Strength, explains: “You have the companies that are supplying the AI data center boom…then you have pretty much everything else…in a downturn for…a very extended period.” ([25:31])

• Investor Hesitation

  • Capex spending is weak outside of AI/tech due to uncertainty over trade policy, input costs, and demand.

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5. Market and Investment Views: Liquidity, Debt, and Valuations

Key Segment: [31:26–37:39]

Main Points

• Tech Rotation and Market Risks

  • Max Wasserman of Miramar Capital calls out recent rotation into Alphabet and the risk of chasing tech at high valuations.
  • Warns that high margin debt and declining consumer strength set the stage for further Fed intervention.

• Fed and Policy Uncertainty

  • The expectation is that the Fed will provide more liquidity via rate cuts, possibly under pressure from Trump.
  • This risks renewed inflation, and, if the yield curve steepens, could hurt tech valuations.

Notable Quotes

• On Fed priorities:
  “The Fed has told you right now it's less concerned about inflation, more concerned about economic growth and jobs. They've switched their language a little bit.” – Max Wasserman ([36:14])

• On market outlook:
  “Every time the market has a problem, the Fed flinches and gives them low interest rates.” – Max Wasserman ([37:39])

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6. Memorable Quotes and Moments

| Timestamp | Speaker | Quote | |-----------|----------------|-------| | 04:58 | Elise Giuliano | "Russia…doesn’t want the land. What they want to do is destroy Ukrainian sovereignty." | | 08:53 | Elise Giuliano | "A ceasefire agreement would be wonderful. Ukrainians continue to suffer...but there’s this kind of intransigent position of Putin..." | | 14:08 | Stuart Paul | "If we have both spending in the aggregate declining, we have employment in the aggregate declining...the balance of risk is skewed towards the Fed needing to undergird the economy." | | 19:18 | Claudia Sahm | "I suspect there probably will be a cut in December. That may be the last cut that we see from the Powell Fed..." | | 36:14 | Max Wasserman | "The Fed has told you right now it's less concerned about inflation, more concerned about economic growth and jobs." |

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7. Key Timestamps for Reference

• US-Russia Negotiations and Putin’s Aims: [03:35–07:30]
• Giuliano on Ukraine’s Sovereignty and War Motives: [04:58, 06:13, 06:52]
• Fed Beige Book/Policy Outlook: [13:26–20:14, 21:52]
• Brooke Sutherland on Industrial Outlook: [23:19–26:25]
• Max Wasserman on Market Risk and Fed’s Mandate: [31:26–37:39]

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Summary Table

| Topic | Speaker(s) | Highlight | Timestamp | |----------------------------------|-----------------|-------------------------------------------------------------|---------------| | U.S. Russia-Ukraine Negotiations | Elise Giuliano | U.S. approach seen as favoring Russia, at odds with norms | 04:14 | | Russia’s War Motives | Elise Giuliano | War not about land, but sovereignty destruction | 04:58 | | Peace Prospects | Elise Giuliano | Low chance in near term; suffering continues | 08:53 | | U.S. Economic Outlook | Stuart Paul, Claudia Sahm | Weak consumer demand, divided Fed, risk of last cut | 14:08, 19:18 | | Tariffs & Industry | Brooke Sutherland| Tariff impacts, weak non-tech outlook, corporate uncertainty| 24:02, 25:31 | | Valuations & Liquidity | Max Wasserman | Tech risk, Fed backstopping, inflation hazard | 36:14, 37:39 |

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Tone and Language

The conversation is analytical and pragmatic, frequently punctuated by concern about global stability, economic uncertainty, and the unpredictability of both war and markets. The tone is urgent yet grounded, reflective of the gravity of ongoing war and economic cross-currents.

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This summary captures all substantial content, themes, quotes, and expert views discussed in the episode, providing clarity and context for listeners.

Transcript

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[Carol Massar]

Bloomberg Audio Studios Podcasts Radio News this is Bloomberg businessweek Daily, reporting from the magazine.

[Elise Giuliano]

That helps global leaders stay ahead with.

[Carol Massar]

Insight on the people, companies and trends shaping today's complex economy, plus global business, finance and tech news as it happens. The Bloomberg businessweek Daily podcast with Carol Massar and Tim Stanweck on Bloomberg Radio well, President Trump dispatched top negotiators, including special envoy Steve Witkoff, for additional high level meetings with both Russia and Ukraine, but said he would only be willing to meet the leaders of those countries if talks yielded a so far elusive pact to end the war. The president telling reporters Tim he had no deadline for an agreement.

[Interviewer/Host]

Ushakov, an aide to Russian President Putin, said he speaks often with Witkoff, but declined to comment on a Bloomberg News report that US envoy Witkoff advised the Kremlin aide in an October 14 phone call on how Putin should broach the issue of a peace plan with President Trump. His guidance included suggestions on setting up a Trump Putin call before Zelensky's White House visit later that week. And using a recent Gaza agreement as a way in, the president was asked about the reported conversation between Yuri Ushakov and US Special Envoy Steve Witkoff last night on Air Force One.

[Max Wasserman]

That's a standard thing, you know, because he's got to sell this to Ukraine. He's going to sell Ukraine to Russia. That's what he's, that's what a dealmaker does. You got to say, look, they want this. You've got to convince them with this. You know, that's a very standard form of negotiation. I haven't heard it, but I heard it was standard negotiation. And I would imagine he's saying the same thing to Ukraine because each party has to give and take.

[Interviewer/Host]

That was President Trump last night on Air Force One.

[Carol Massar]

Well, delighted to have back to talk about all of this. Elise Giuliano, she is senior lecturer in Political Science at Columbia University, Director of Graduate Studies at Columbia's Herriman Institute for Russian Eurasian and East European Studies, and director of the program on U.S. russian relations. She is here in studio. So great to have you back with us, Elise. So I want to ask you this Bloomberg exclusive reporting on the conversation between Steve Witkoff, special envoy here in the US for the president, and Yuri Usikov, an aide to Russian President Putin. Is this standard form of negotiation? Is this normal diplomacy, especially among non ally countries?

[Elise Giuliano]

Well, yes, President Trump used the word standard, but usually what standard is that? You talk to your ally when you are trying to negotiate a cease fire or an end to a war involving your ally. And Ukraine is the US Ally. But here what it looks like is that Witkoff actually in a way took Russia's side by telling Russia that they should call Trump prior to the meeting with Zelensky in the White House back in October. So that looks like they're, you know, the US Is choosing sides and choosing the wrong side since it's Russia that attacked Ukraine and Russia that has been an adversary state of the US for many years now.

[Interviewer/Host]

So in your view, how does it affect peace negotiations?

[Elise Giuliano]

So it can be very dangerous when you have a negotiator who doesn't understand the war or Russia or Ukraine. And Witkoff worked in real estate in New York. And so he seems to me conceptualizes this conflict as a war over land or territory. And that's not necessarily a crazy assumption. There are a lot of wars over land or territory. But in this case it's wrong. This is notrussia, doesn't need the land or want the land. What they want to do is destroy Ukrainian sovereignty. And this is Putin's goal. It's been his goal since 2022. And he continues, I believe, to seek that goal. So giving a little bit of land, that. This is what Witkoff suggested, that we can find, get to a peace agreement by giving up some territory, some land. It's not really what Russia's interested in.

[Carol Massar]

That is an important distinction, because I think even we say it's about Putin expanding a land grab. Right. So the difference is going back to the way ussr. Like what? Like what is it about really, for President Putin? Well, why is it that Ukraine makes him so frustrating that it has its own independent nation?

[Elise Giuliano]

Right. So this takes a little bit more time to explain than we have.

[Carol Massar]

Sorry.

[Elise Giuliano]

But I guess I would say this.

[Carol Massar]

Is a whole semester. Right.

[Elise Giuliano]

But I would say two things we can sort of summarize is that, number one, Putin wants Ukraine to still be in the neighborhood of Russia and a close ally of Russia. And that means an authoritarian kind of oligarchic state. It doesn't mean a member of the EU or NATO or democracy or. Or an ally of the us. So keeping the west out of Ukraine is the fundamental goal of Russia.

[Carol Massar]

What is Putin so afraid of? Why is that?

[Elise Giuliano]

So having a large, powerful democracy on the border. And then there's this personal element as well, personal oligarchic friends of Putin who were expelled from positions of power in Ukraine over the past few years, as well as this concept that Ukrainians are not a nation, they're not a separate people, and they don't deserve statehood. They are little brother Slavic little brothers of Russians. So this is why they're kidnapping children and taking Ukrainian children and saying, you're actually Russian.

[Interviewer/Host]

Does it make you think differently about the US relationship with Russia?

[Elise Giuliano]

It has worsened the US relationship with Russia. It was already an adversarial relationship, as I mentioned, but now it's much, much worse. We see Americans arrested and used as just pawns in trades that Russia as political prisoners. We see lack of any kind of diplomacy with regard to other countries in the world or other formerly common interests that the US and Russia shared. So we seem to be entering a kind of deep freeze in relations with Russia, and it doesn't look like a kind of ceasefire or peace agreement is going to change some of those underlying issues.

[Carol Massar]

So, God, here we are in our fourth year on this war. Remember when it broke out? So does it mean that this is a fight to the bitter end? It feels kind of bitter. If I look at the devastation in Ukraine, people, places, if you will. So is a peace plan even possible?

[Elise Giuliano]

So I would say, you know, it's good that the Trump administration is talking. Yeah. But the goal of Ukraine and the goal of the US Initially was to kind of find a ceasefire agreement and then take the time and the real hard work of diplomacy to reach a peace agreement, a peace treaty. These aren't usually documents or agreements that are reached quickly.

[Carol Massar]

Right.

[Elise Giuliano]

So a ceasefire agreement would be wonderful. Ukrainians continue to suffer. They continue to die. I was just talking to my Ukrainian friend, and she said that beyond not being able to sleep at night because of the huge number of drone and missile attacks that have increased this summer, she sometimes can't go to the hospital for her medical care because there's no hospitals closed, and you never know when it's open or closed. So there's this tragic human, ongoing human element. And there are reasons why both sides might want to want a ceasefire at the present time. But there's also this kind of intransigent position of Putin, which is, again, the goal to undercut Ukrainian sovereignty and statehood. And I don't think he's moved off that goal because I think he still believes he can make progress on the battlefield.

[Interviewer/Host]

Well, if we think back to when this war started, there were many observers who thought it would be over within a week and Ukraine would have to cede to Russia. That did not happen, and we have no idea when it will end. But just to. In the last 30, 40 seconds we have with you, can you make a prediction on how it could end and when it could actually end?

[Elise Giuliano]

Well, it's a war of attrition right now, and it's a drone war. And it does look like Russia's slowly making progress. But war is very unpredictable, and Russia is facing a lot of economic problems due to Ukrainian drone attacks on its energy and oil infrastructure. So both sides, like I said, do have an interest maybe in bringing it to a closer end, But I don't see that happening within the next six months or a year. I could be wrong. You know, things are unpredictable. And I think it's good that the Trump administration is talking to Ukraine and they're making progress on some issues. So they're hammering out what aspects of a peace agreement Ukraine might compromise on, and they likely will have to compromise on some territory, but they cannot compromise on what Russia is asking for right now, because Russia could.

[Carol Massar]

I know already we're going to be coming back to you because I feel like I still have a million questions. Elise Giuliano so Senior Lecturer at Columbia.

[Interviewer/Host]

Stay with us. More from Bloomberg businessweek Daily Coming up after this.

[Carol Massar]

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[Carol Massar]

Listening to the Bloomberg Business Week Daily Podcast. Catch us live weekday afternoons from 2 to 5 Eastern. Listen on Apple Car Play and Android Auto with the Bloomberg Business app or watch us live on YouTube. Hey, let's get to the Fed Beige Book. It is out. It's a qualitative summer, you know that. What's going on in the economy today? Based on info across the 12 Fed districts, it comes out approximately two weeks before a Fed meeting. And Tim yeah, Last meeting is December 10th.

[Interviewer/Host]

Well, we're getting some headlines right now. Economic activity was a little changed since the previous report According to most of the 12 Federal Reserve districts, though two districts noted a modest decline. In one reported modest growth, overall consumer spending declined further while higher end retail spending remained resilient. On the labor markets, employment declined slightly over the current period with around half of districts noting weaker labor demand. For more, let's bring in Stuart Paul. He's Bloomberg Economics, US and Canada economist. He joins us here in the studio. So Stuart, thanks to you. I was able to go through some of those Beige Book headlines, but what sticks out to you? The the resilient spending among the higher income consumers is notable and then weaker labor demand or weaker labor in the market is notable to me too.

[Stuart Paul]

Yeah. So when I saw the line about resilience at the upper end of the income distribution, of course I'm thinking about this K shaped economy narrative that's so pervasive. But when, when it comes to policy, we know that FOMC members need to think about the economic aggregates. So then when we scroll down to the labor market, seeing employment declining, I think matters way more than resilience at the upper end of the income distribution. So if we have both spending in the aggregate declining, we have employment in the aggregate declining and firms feeling as though they can only pass through about 20% of higher input costs, which we saw reported in the Kansas City district, my favorite district, in the Beige Book. I think that again, the balance of risk is skewed towards the Fed needing to undergird the economy, maybe needing to take that additional rate cut in December and in fact I think they're going to deliver it.

[Carol Massar]

Does that say to you that the Fed has to cut come December?

[Stuart Paul]

I don't think that the Beige Book is, is a deciding factor. But I think when we see the unemployment rate rising in the September report, when we see employment declining through early November. Yeah, which is what the Beige Books survey period includes. When we have those factors front of mind for policymakers, I think that it's enough to get that cut.

[Carol Massar]

Yeah, I'm seeing like things kind of hitting on both the dual mandate that maybe things need to be addressed.

[Stuart Paul]

Yeah, it's, it's tricky. The Fed we know is not, is not rushing to move into accommodative territory. And when we see the Beige Book citing prices rising moderately during the reporting period, including input cost pressures that are widespread among manufacturers, retailers, and when those are related to tariff induced increases in input costs, it's no surprise that the Fed is trying to maintain this balance as best as it can.

[Carol Massar]

Claudia Sam, also with us, chief economist for New Century Advisors. She's one of the best known economists in the world thanks to her research she's done on recessions. We talk about. Tom always talks about it. Tom Keene, the SAHM rule, but we all do here at Bloomberg and what it tells us about the U.S. economy. She's with us from Washington D.C. stuart's going to stay with us. Hey, Claudia. You two have had maybe a few minutes. We hope to go over the Beige Book. You've been listening also to Stuart, Paul, what jumps out for you and what it says about the U.S. economy, where you think we are in the U.S. economy.

[Claudia Sahm]

Right. Well, I think the Beige Book was going to be an important input to this discussion of like how resilient is demand because we've seen, you know, we don't have our complete picture numbers, like they're not going to get a GDP estimate even for the third quarter before they meet in December. So the Beige Book is comprehensive, it's qualitative, but it's structured and it does give us a flavor across lots of sectors across the country. So I think it is interesting that, you know, there's a highlight of the idea that the resiliency that we're seeing in some of the aggregates is being driven by higher income consumers. That does, you know, the Fed acts on like the country as a whole, like their mandate is, is a national kind of an aggregate mandate. But it really is important for them to understand like if there's broad based strength that that says a lot more than if it's just, you know, one part of the economy is kind of things up, that's a much riskier place even in when you're seeing good demand.

[Interviewer/Host]

So does Claudia, does anything in the Beige Book today change your view or change how the Fed should be looking at its meeting and on December 10th?

[Claudia Sahm]

So there, you know, of all the data that they're going to have in hand and the Beige Book was certainly something, you know, that goes into that, into that calculus. There's really not anything that's going to settle an argument. All right. The employment report was mixed. I mean you can, and I think in particular for even the people say Boston Fed President Susan Collins, who's one that sounds like she's probably not in favor of a cut in December. It's part of this issue. She just doesn't see the urgency. She doesn't see the deterioration. And we do know there is a whole, you know, burst of data that got delayed because of the shutdown that the Fed will get before their January meeting. So I think there is a really, there is a reasonable case of like, why not just wait until January? That's not my, that's not what I would do if I were them. But I can completely see her perspective and I would be very hard pressed, I think, to win someone like her over to cutting in December.

[Stuart Paul]

Now, Dr. Sam, I think that you're right. It might be difficult to win over Boston Fed President Susan Collins. I'm glad that you brought her up. One of the most valuable things, of course, about the Beige Book is that we can see economic activity by district. And in this Beige Book, we see economic activity in Boston expanding slightly. Of course, I mentioned earlier in the program, I like to scroll down in the beige book right to Kansas City, because that's of course, home of Kansas City Fed President Jeffrey Schmidt, the dissenter in October who is in favor of a rate hold during the October meeting. In this Beige Book, we're seeing Kansas City economic activity slowing. We're seeing growth slowing during the survey window with softer labor market conditions. So I'm wondering, you know, when you tally up the votes, where do you end up thinking everything is going to shake out when it comes to December?

[Claudia Sahm]

So I expect that we'll see a divided Fed come December. I, my, you know, I don't think things are a done deal at this point. I suspect there probably will be a cut in December. That may be the last cut that we see from the Powell Fed. Right. So just because you get in December doesn't mean we're like opening the, you know, the gates for a whole set of cuts. But, but I think we're going to, we are in all likelihood going to see more dissents, four dissents, maybe five dissents, which has not happened in quite some time with the Fed. I don't think that's a sign of a problem. I think it's a sign of like, there legitimately are reasons for the Fed to be conflicted. Inflation is still well above 2%, has been for years. There are still price pressures. The Beige Book talks about those costs that are still out there with businesses that could end up coming to consumers. And we have a labor market that while it's slow, there are some signs of faltering. It's not going over a cliff at the moment.

[Elise Giuliano]

Yeah.

[Claudia Sahm]

Right. So, like, I think there's a reason for them to disagree. It's a sign of like, they're really serious about their job and they're thinking hard about a tough problem.

[Carol Massar]

I want to go to Trade and Tariffs in a moment. But I just want to follow up with you, Claudia. You said this could be the last cut of Fed Chair Jay Powell's tenure. That tenure expires May 2026. I'm looking at 2026 Fed meetings. And we have got three meetings. January, March, April. Are you saying that we wouldn't get any more cuts because of the debate or because the economy won't need it?

[Claudia Sahm]

So inflation is, is elevated.

[Carol Massar]

Yeah.

[Claudia Sahm]

Right. And I think it's probably going to be until the middle of the year before we really see inflation kind of turn down. The tariffs work their way through before we can really point to data and be like, look, it's going back to 2%. Right. So it's going to take some time for that to work through. And the Fed, when inflation is elevated, they're going to want to be putting some restriction on the economy. Right. So every cut they do takes a little bit more restriction out. And we can argue till the cows come home about what the quote unquote neutral rate is. But you know, if you're cutting, you're getting closer to it. So every cut is going to be harder to negotiate with inflation still elevated. And so I think that's where you could, you know, get to a place where it just, if inflation is still high, unless you see clear deterioration in the labor market, which I very much hope we do not see because that would be very bad. But like, that could be a game changer in it. But if we continue this kind of muddle through, they really could do a pause for some time. And you know, I think, and that could be because again, inflation is, it has been sticky above 2%.

[Interviewer/Host]

Claudia, you mentioned price pressures and the word tariff in the beige book appears 47 times. Most of them or many of them in the prices section are, are how far into the economy or into these numbers have tariffs made their way? Like, have we seen the full effect of them yet? Are we seeing half of the effect of them right now? Can you measure that?

[Claudia Sahm]

I mean, there's absolutely a cottage industry out there of different estimates of the pass through of tariffs. I mean, we don't, you know, we don't see them on the price tags.

[Max Wasserman]

Right.

[Claudia Sahm]

We can't just measure them. These are all estimates. And you know, frankly, it has been surprising how slowly some of these tariff effects have shown up. I mean, it's pretty clear goods price inflation really picked up this year after having come down quite a bit. So I think we can look at the data and say tariffs are in there. They are moving prices up for consumers, maybe not as much as we'd expected. I think there is this concern that you hear from the hawks, which is a reasonable concern that, you know, say the economy were to pick up next year, particularly, you know, all the tax refunds come out and maybe, you know, some of the uncertainties waned. If we have more robust demand, that may be the opportunity businesses have to pass those costs through that they're still sitting on. Right. There is this interaction between the demand environment and kind of how the cost pressures show up in inflation. So the fact that they're still kind of sitting with businesses does, does kind of raise some concerns about, you know, eventually consumers pay these kind of things.

[Carol Massar]

Yeah, there's for so long they'll sit on it. Hey, both of you. Stuart, Claudia, sit down for a second because you mentioned we're talking tariffs and trade. And I want to bring in Brooke Sutherland, Bloomberg News Boston Bureau chief. She is also writer for the Bloomberg Industrial Strength newsletter. Because I want to talk about Deere, which is down almost 5% in today's session. It's the world's biggest farm machinery maker, weak forecast for the year. And part of that is because of the US Farm economy. There's a lot of uncertainty over the impact of tariffs and trade deals. And so we're seeing that play out in Deere. Brooke, what do we need to know specifically, you know, when it comes to Deere? Always company specific info, but also the commentary broader, more broadly about tariffs and trade on an impact on a company like Deere.

[Brooke Sutherland]

Sure. I mean, I think the good news is that Deere is calling for a bottom in the large agriculture equipment market next year. But the bad news is that, you know, you're still looking at declines in that business and for the industry overall. And I think that just reflects, you know, while there is some optimism that China resumes agricultural purchases from the US in greater volumes than it has been lately, it's not very clear exactly what that looks like. And there's a lot of ambiguity around that trade framework that the US And China struck and what that will ultimately mean for US Farmers. There's been a lot of talk about an aid package from the Trump administration for US Farmers, but it is, again, not exactly clear what that would amount to and whether or not it would be enough to really help farmers get through this period or if it ends up being more a temporary band aid. And so I think there's just a lot of uncertainty. There's a lot of, you know, Deere itself is still working through tariffs and you know, picking up on what Claudia was saying, I mean, it is difficult to pass on those price increases at a time when you're seeing a period of weak demand for Deere's equipment. And so I think, you know, going into next year, one thing that investors are really going to be watching is Deere's margins and its ability to protect that profitability, even if you don't see a really significant demand resurgence.

[Interviewer/Host]

Brooke, briefly, is the Deere story idiosyncratic or is it. Or can we extrapolate it as some sort of bellwether for industrials or the economy?

[Brooke Sutherland]

If you look at the broader industrial economy, it's really two stories. So you have the companies that are supplying the AI data center boom and that things like electrical equipment and certain types of H Vac equipment, and then you have pretty much everything else. And everything else has been in a downturn for really a very extended period. I mean, if you look at the ISM manufacturing index, I mean, I think this is the longest period of weak demand that we've seen ever. And its tariffs have really prolonged this where investors were looking for recovery there this year. And that has not played out largely just as companies work through these higher costs. But you're seeing a lot of reticence in terms of Capex spending outside of the AI data center boom just because companies aren't sure.

[Carol Massar]

Yeah.

[Brooke Sutherland]

What the ground are. They don't know what things cost. They don't know where. Where to spend money. And so you're really seeing that hesitancy elsewhere in the industrial sector.

[Carol Massar]

All right, always appreciate it. Our Boston bureau chief, Brooke Sutherland follows the industrial space so well. Brooke, have a good Thanksgiving. I want to wrap up with Stuart and Claudia. Claudia, to you. You know, just listening what Brooke had to say. I mean, do you feel like there's more clarity about the US Economy at this point point or is there still a lot of things, whether it's from the White House or elsewhere that could come at us and just got about 45 seconds.

[Claudia Sahm]

I think broadly there is more clarity than say back in April. I think we've really weathered several storms in terms of rapidly changing policy landscape and yet things are still really uncertain. I mean, you have a Supreme Court that is going to rule on many of those tariffs that we were just talking about. We have a Supreme Court that's going to rule on the ability of the President. President to take remove a Fed governor. You know, so like there are some still some major question marks out there that could have big implications for what.

[Carol Massar]

Next year looks like and 45 seconds for you to Stu I think that.

[Stuart Paul]

There'S a lot of uncertainty right now out there in the broader economy. I think that the downside risks to the economy are mostly posed by things like tariffs remaining in place, a lot of the policy decisions that we're likely to see and a lot of the policy outcomes that we're likely to see are over the next year or so. Actually, I think skew risks to the upside. So where the uncertainty lies is in whether the current condition can remain. And I think that the actual uncertainty skews risk toward an even larger expansion.

[Carol Massar]

All right, so we'll just take a shot for every time we hear uncertainty this Thanksgiving holiday, because it sounds like that's the watchword. You guys are amazing. Bloomberg Economics US And Canada economist Stuart Paul Claudius Some thank you Chief Economist for New Century Advisors. So appreciate it.

[Interviewer/Host]

Stay with us. More from Bloomberg businessweek Daily Coming up after this.

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[Max Wasserman]

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[Carol Massar]

You're listening to the Bloomberg Business Week daily podcast. Catch us live weekday afternoons from 2 to 5 Eastern on Apple CarPlay and Android Auto with the Bloomberg Business app or watch us live on YouTube.

[Interviewer/Host]

Markets right now as we do gets about 10 minutes away from the close of equity trading here. The S and P still up 8. 10 of 1%. The NASDAQ Composite down, I mean up rather a full percentage point. We can round that up. The Dow up 7. 10 of 1%. It's a pretty broad based rally. 398 stocks in the S&P moving higher, 105 moving lower. But Carol, it's less broad based than it was earlier in the session.

[Carol Massar]

Yeah, absolutely. We've just seen kind of markets take a little bit of a leg down. It could be people squaring their positions ahead of the Thanksgiving holiday. You know, markets are open on Friday, short and holiday trading session on Friday for both the equity and the bond markets. But you know, there are some people who want to be a long weekend. So maybe they're just kind of making some moves ahead of that. Let's see what Max Wasserman has to say though, about the environment. He's founder and senior portfolio manager of Miramar Capital. The Firm has about $550 million in assets that's under management. He joins us from Northbrook, Illinois. Hey Max, good to have you back with us.

[Max Wasserman]

Thank you so much.

[Carol Massar]

Yeah, great to have you here. I want to just jump to it because you guys do have some major investments in Microsoft, Alphabet, Broadcom. You know, the question about the I spend this week Alphabet getting a real boost, if you will. That stock's been on a tear, up.

[Interviewer/Host]

15% just since the 13th of the month.

[Claudia Sahm]

Yeah.

[Carol Massar]

Up roughly 70% this year. You know, people wondering whether Nvidia needs to be worried because of Alphabets. All of a sudden it seems like they're making progress in a big way in AI and they have their own chips out there. How do you see it? How do you see these names? Is it a buy, sell or hold here?

[Max Wasserman]

Well, again, thanks for having me on. We have one of our largest investments now is, is Alphabet. We've been buying it for the past year and we just thought the stock was being left behind. High quality tech stocks of doing all the right things, but just nobody wanted it. Everybody wanted the Nvidias, they wanted the Microsoft's, the Broadcoms. They just left it alone and everybody jumped on the other bandwagon. Now it's rotated so now people see it and they ran this price up dramatically in the last few weeks as you mentioned. And right now I don't think you can chase these stocks. I think you have to give them room. Because if the Fed did not raise interest rates or the Fed, one of the chairmans didn't say they think cutting this would be looking at a different market. So much liquidity is being needed in the marketplace that if you get a hiccup in liquidity, these stocks are going to take a hit. I mean, you've seen how the attitude can change on an Oracle. You see in it a little bit in the video. So while these are great companies, the valuations do not give you a lot of room on the downside here.

[Interviewer/Host]

You know, you have some other, other companies that you've highlighted that are not in tech that I'm eager to hear from you on. Home Depot and McDonald's are companies that you like. Why?

[Max Wasserman]

Well, I mean, look, let's look at the fact that we believe that the Fed will end up cutting probably anywhere from 25 to 75 basis points more by next summer. I mean, you're looking by next summer.

[Interviewer/Host]

So Fed chair Jay Powell is out in May. Which of those happen? Which of those happen under his tenure?

[Max Wasserman]

I think you're going to get at least 25 to 50 under his tenure.

[Interviewer/Host]

Who was on her earlier care? Was it Claudia Sahm?

[Elise Giuliano]

Yeah.

[Interviewer/Host]

Who said yeah, maybe. Well, this will be the last cut under Jay Powell. Under Jay Powell, yeah.

[Carol Massar]

And okay, so just there's more meetings.

[Interviewer/Host]

We've had a good discussion today about this, Max. It's been like, you know, that's why I want to.

[Max Wasserman]

But that's okay. I mean, we look at it this way. I mean, the consumer right now is tapped. Credit card debt is very high and actually even margin debt, if you look at margin debt right now it's at 1.1 trillion, which is double it was five years ago and almost four times what it was 10 years ago. So you have margin debt high, consumer debt is high. You're starting to see layoffs take place. You know, corporations are calling it right sizing now. But you're seeing a lot of white collar jobs are being hit, the technology market. So we see the market slowing down and the pressure to keep job growth going and liquidity for this market, I think is going to force them. I'm not saying we think they should, we just believe they will. Because right now I think the Fed's going to have to end up backstopping this market with liquidity just because of the margin and the heavy debt that's being out there. So I think they will cut whether they should against another issue. And I think coming into a Trump new pointy, you know, he likes debt, he likes lower interest rates. So there's no reason to believe that this market's not going to get more fuel.

[Carol Massar]

Could that be problematic? Could that be problematic because the inflationary target is still above the Fed's 2% preferred rate? You increase liquidity in the system and, you know, just the velocity increases and potentially could put, you know, more inflationary pressures out there.

[Max Wasserman]

I think it could. I think you're right. But the Fed has told you right now it's less concerned about inflation, more concerned about economic growth and jobs. So I think that's going to. They switched their language a little bit. So yes, I think it could, but I think they're going to have to flood this market with more if it slows down because the Fed does not want a wealth effect to go in the negative way. So while I think inflationary, yes, I think it's a mistake, but I think they will. So the reason we like a Home depot and a McDonald's is we think lower interest rates will help these kind of stocks. And they're not trading at high multiples. Right. Everybody's been getting away from it because of the housing market. So if we're looking more than three months out, I think they stand to benefit from that. Consumer will be in a better shape with lower interest rates. So that's why I think it will be. But I think technology is playing itself out here. Great companies, but valuations are high. So as for the Fed, we've already known that every time the market has a problem, the Fed flinches and gives them low interest rates. The difference now is not only do you have the Fed doing that, but you have a president who really is touting that. So I think it's going to be inflationary. And I think the real concern could be what if the 10 year actually the yield curve gets steeper, not, you know, not inverted, but lower rates go low and then you have the higher rates go higher. So maybe you get a ten year at four and a half, five percent because of this. And I don't think the market's expecting that. And technology stocks need a lot of liquidity to sustain themselves at this level.

[Carol Massar]

All right, we're going to leave it on that note. Hey, Max, thank you so much. Happy Thanksgiving. Max Wasserman, he's founder and senior portfolio manager of Miramar Capital, joining us on this Wednesday. This is the Bloomberg businessweek daily podcast available on Apple, Spotify and anywhere else you get. Your podcasts listen live weekday afternoons from 2 to 5pm Eastern on Bloomberg.com, the iHeartRadio app, TuneIn, and the Bloomberg Business App. You can also watch us live Every weekday on YouTube and always on the Bloomberg terminal.

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[Carol Massar]

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