By coinnews 
00:00 Speaker A
Tariff volatility is back on Wall Street. President Trump lashing out against China this morning, saying China has violated its agreement with the US. Meantime, Treasury Secretary Scott Beston saying talks with China are quote, a bit stalled. His comments coming after a federal appeals court offered Trump a temporary reprieve from that ruling that did deem his tariffs illegal. Joining us now to break down where to ride out the trade-induced volatility is Cole Smead. He is CEO of Smead Capital Management, which oversees more than $7 billion in assets under management. Cole, it’s great to have you in the studio. Thank you for being here. We were just talking about this morning’s inflation data indicating that there is a little bit more progress when it comes to prices than we saw in the Consumer Price Index print, but the tariffs still remain a headwind, and that certainly played out in this morning’s economic data. How does that impact your investments going forward?
01:17 Cole Smead
Yeah. Um, well, add one more thing, you had consumer confidence hit a low. A low that we saw in 2020, a low that we saw in ’09, and also 2011, okay? And I say that because, um, when you put all these things together, I think it’s really incredible how the US economy has functioned despite high levels of uncertainty, particularly for business spending, okay? Um, if you go talk to business owners right now, they’re pretty scared about the whole tariff situation. I was in an event, someone was, uh, you know, makes guitars for a living, and they were just freaking out. Um, go talk to people on Main Street, and they’re not like at soccer practice being like, you know, what’s going on today with tariffs? Um, and I say that because it shows you the difference between business.
02:42 Speaker A
Are they not though? I mean, consumer sentiment numbers have been plummeting.
02:47 Cole Smead
In New York, yes. But in Main Street America, no. That’s the best evidence.
02:53 Speaker A
What is your what is your evidence of that? Are you talking to people across America?
03:00 Cole Smead
Uh, well, I I just mean if you just go talk to people day-to-day, like I I run into investors, I run into people in the media business, and I run into people in, you know, business owners. And again, that’s a big idea for them, especially if you import or export your goods, okay? Um, when it comes to day-to-day beyond that, um, that’s just not showing up. I’ll give you a picture of this. Um, what are we spending in deficit? It’s 7%. We normally only spend that. If you look back at the history, we did it, big deficit in World War I, big deficit in World War II. But we quickly tightened up our budget to get back to a much lower level of deficit or none at all. We have not tightened our belt at all. And what that’s doing is it’s providing this huge economic stabilizer and buffer in the economy. So this is a lot of uncertainty to pour onto the economy in, say, a 60-day stretch. And yet at the same time, economy’s not falling off. Consumers’ spending is not falling off. Why not? And the answer is because it’s really tough to stop an economy when you’re spending this much in deficit. And no one’s really saying that, by the way.
04:58 Speaker B
But well, to the very report that you just mentioned, the Consumer Confidence, they actually wrote in and said the tariffs are still top of mind for consumers’ minds. That was in the write-in responses. The first mentioned in that stanza as well. So to say that they’re not talking about it is incorrect based on that same report you’re citing.
05:22 Cole Smead
Correct.
05:38 Cole Smead
Correct. But if you look at it, the spending though isn’t going negative.
05:43 Speaker A
What you’re saying is the difference between the soft and the hard data, it sounds like.
05:46 Cole Smead
Correct. When also, that’s that soft data is bad data to invest based on. So at low points in the data, what should you expect? That the economy is going to pick up. Because I said 9, 11, 20 and today. And so I would expect the economy picks up because when those people survey, they’re telling you, like the weatherman, hey, it’s sunny today. It’s like, why already know that? Um, they’re telling you that there’s uncertainty. But the reality is you can’t invest based on that. Well, I think we’re going to wake up in 6 to 12 months. We’re going to find out is we did not slow the US economy because until we slow our deficit spending, you can’t slow it.