00:00 Speaker A
Christina, I know I just broke down a lot of numbers across jolts and ISM manufacturing. What’s standing out to you this morning?
00:07 Christina
So I think what we’re getting certainly from the ISM data is that the risk of stagflation has increased, right? We’ve seen a deterioration in manufacturing activity. At the same time, we’ve seen prices paid increase. And while the jolts data is pretty stable, um, what we do see is an uptick, um, in, uh, well, or down tick, I should say, in jobs created. And that’s important because there’s been this delicate balance where, um, job creation has been relatively low, but so have layoffs, as Chair Powell noted. But if we think we’re going to see layoffs increase, which I very much anticipate going forward, and we continue to have pretty tepid job growth, that’s a problem. And again, underscores that message that the risk of stagflation or at least a deceleration the economy and potential recession is increasing.
00:55 Speaker A
What drives that layoff increase in your view?
00:58 Christina
So I think it’s a combination of things. What we saw in the previous bout of, shall I say tariff wars, is that there was a chilling effect on hiring on business event investment. Now, it went away rather quickly. But if tariffs were to remain longer term this time, that would certainly be problematic and create economic headwinds. But I actually think the bigger issue is dodge and government cuts. I think there’s, you know, I think the market is underestimating the impact on the economy because there are very, very significant ripple effects that occur when you start to cut government programs and government employees. Um, contractors are also getting cut. It has an impact on economies. And I think just like government spending has multiplier effects, cuts in government spending have very significant multiplier effects.
01:46 Speaker A
So, given all of those headwinds that you mentioned, we had an investor tell us earlier, this market isn’t even accurately priced for tariffs. Are they accurately priced for the risks of dodge then?
01:58 Christina
I don’t think so. Yeah. And what would that look like for for repositioning to start to look like, okay, this market is starting to believe this administration?
02:07 Speaker A
Yeah.
02:07 Christina
Well, I think the hard part is that we just don’t know how much further the administration will go. It could very well be that the administration looks at polling and says, gosh, Dodge is very unpopular, or tariffs are very unpopular. Let’s, let’s pivot. And that could be the end of it. And so markets could be fairly accurately priced. Um, but if we were to continue down this path and we were to see very significant government government spending cuts, or if we were to see tariffs in place for a long time, that would certainly mean that today markets are mispriced. We just don’t know, though.
02:45 Speaker A
We just don’t know. Yeah, that is something that hopefully we’ll get some clarity on this week or at some point in the future. Uh, we will be covering it all here at Yahoo Finance.