By coinnews 
00:00 Speaker A
Well, US consumer sentiment tumbling further in May as the impacts of President Trump’s tariff policies remain top of mind for Americans. And joining us now to discuss the latest data, we got Jose Torres, Interactive Brokers senior economist. Jose, always great to see you on set.
00:18 Speaker A
Should we start there with the consumer sentiment this morning? I know it was weak, but I’m curious as an economist, you saw that print, you saw that headline, what do you make of it?
00:27 Jose Torres
You know, sentiment numbers and confidence numbers prior to COVID were a huge leading indicator as to what consumer spending was going to be like in the future. But since the pandemic, the inflationary surge, the most substantial since the 1980s, really affected consumer psyche. So we had this disconnect. Look at March, Adam, Josh, March, retail sales through the roof. Sentiment, confidence numbers in the basement. So we’re seeing that significant bifurcation. As far as the outlook from here, you know, we have this trade agreement with the UK, a break on China, investors and economists, my colleagues, very bullish in our prediction market. We’re seeing a lot of yes buying on retail sales, GDP, Fed cuts roughly three this year, we’re expecting based on our prediction market. So really bullish landscape, especially because now we’re going to be tilting more to the more positive, traditionally GOP playbook kind of policy from the Trump administration, lighter taxation, milder regulations, low energy costs, and then slower moving onshoring progress in terms of manufacturing.
01:51 Speaker A
What’s interesting to me about this, Jose, is not only has consumer confidence gone to multi-decade lows, investor confidence, multi-decade lows. So sentiment really is completely washed out. And I, ever the optimist, sort of look at that and say, well, is this as bad as it gets? And maybe, right? With the retail sales numbers hanging in there and the market turning already. Is that a fair way to approach this?
02:20 Jose Torres
You know, Adam, I think sometimes with the consumer sentiment numbers, a lot of the folks, the survey respondents, they don’t necessarily have a lot of stock holdings. You know, so the concentration of equity holdings tends to be at the upper middle class, at the upper end. Those folks don’t care as much when they go shopping to see prices up 10%, 20% on some items. And that’s why we’re seeing such a disconnect, a bifurcation in inflation expectations from the surveys versus market-based inflation expectations in the treasury market. We’re seeing huge numbers. One year is roughly 7% in U-Mich, you know, and the treasury market is it’s in the twos. You know, so we’re seeing these crazy bifurcations. And another topic in terms of tariffs, we saw a big separation in yesterday’s PPI. You know, core goods accelerated to its fastest rate in 27 months, but because services, food and energy countered that increase in core goods costs, we saw the headline PPI actually drop to the steepest level since COVID, April of 2020, 16 months ago. So seeing a huge bifurcation. I don’t think that the tariffs are going to produce much inflation. I think that we’re going to be somewhere in between two and a half and three, and I don’t think the Fed is going to have to hike against that backdrop.
04:29 Speaker A
Yeah.
04:30 Jose Torres
Right.