Chapter 1: What are the expectations for President Trump's return to Davos?
President Trump heads to Davos. From Marketplace, I'm Nancy Marshall-Genzer in for David Boncaccio. First, Larry Adam joins us to talk housing and tariffs. He's chief investment officer at Raymond James, which is a Marketplace underwriter. I started by asking what he expects when we get pending home sales tomorrow.
Well, I think you're going to continue to see some weakness in the housing market because we still have some affordability issues. One thing that we've been hoping for that we'd see mortgage rates come down, which has been the positive so far. But if you look at the markets just over the last couple of days, you're starting to see interest rates start to tick higher.
Chapter 2: How are housing market conditions affecting affordability?
So continue to think it's going to be a very slow recovery in the housing market going forward. Pivoting to tariffs, they have contributed to costs.
I know President Trump has said consistently that foreign firms pay for tariffs. But there's new research from a German think tank that found that only about 4% of the burden of tariffs is actually shouldered by exporters. Why do you think exporters don't foot much of the bill?
So I think if you just look broadly in the context of corporate America, they're very resilient. And I think that they've found different ways to try and mitigate those costs individually. If you look, for example, I do think they've switched some of their suppliers. As you know, energy prices around the world have been cut.
So that's reduced some of the spending, if you will, when it costs to transport. I think AI has had a big part of this in trying to reduce some costs as companies have gotten more efficient.
I think you have to look at all of that in the context of how we really haven't seen the big boost.
Yeah, and consumers have been expecting prices to rise, but that hasn't happened that much because of tariffs. So who's absorbing these costs? Suppliers, wholesalers, retailers?
For some reason, it hasn't really been as much as people think. As I mentioned, they become more efficient. If you look at each one of those components, the consumer really hasn't been paying. If you look at CPI, if you look at corporate America, margins are pretty much at historically elevated levels, which tells me that they're not necessarily taking in a lot of the costs.
And as you mentioned, corporations around the world haven't really eaten a lot of the costs. So I think it's just everybody becoming much more efficient and in the whole supply chain, trying to make sure that these costs did not get put onto the end consumer in the U.S.
Larry Adam is Chief Investment Officer at Raymond James. Thanks for joining us.
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Chapter 3: What impact do tariffs have on costs for consumers and businesses?
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The annual World Economic Forum meeting in Davos, Switzerland, is in its second day today. It's a meeting of some of the world's most powerful people, one that often attracts protests. Among the biggest names, the heads of Microsoft and Nvidia, the Chancellor of Germany, and after a six-year in-person absence,
President Trump is returning to the forum, where he plans to use a key address tomorrow to lay out his plans for making housing more affordable. For more on what we can expect, my colleague David Boncaccio turned to Henry Kerr, economics editor and deputy business affairs editor for The Economist magazine. He's in Davos.
Chapter 4: What insights does the German think tank provide about tariffs?
The folks gathering in Davos, I think, have something to talk about this year, right? I mean, since they gathered a year ago, somebody drove a bulldozer through their world trading system and I think globalization as they knew it.
Yeah, that's absolutely right. Of
it was still a bit unclear what the return of Donald Trump to the White House really meant for the world, and whether it would be something that looked more like the first Trump term, when a lot changed, but nothing like as radically as it has over the past year, with respect, as you say, to the trading order, to the geopolitical order, and to an extent to the domestic order in the US as well.
Henry, what do you think? You've been before. I mean, does work get done at that ski resort? And if you think so, how does that work get done? I mean, it's not just speeches from podiums.
The real value of the conference, of the World Economic Forum, is the amazing list of attendees. Really, what this is, is one giant networking event, the best in the world. And so, yes, I think real work gets done there, but it's not what you'll see on the stage if you're in the conference room
Among the dignitaries coming for the first time in six years will be President Trump, and he will speak. I would guess that the president sees his speech as the keynote of the whole gathering. I mean, is it the big ticket?
Yes, I think that's completely fair. I think an interesting question is whether the president will be able to resist breaking news somehow on Greenland, which is, of course, what everybody in Europe is most interested in hearing about. People want to hear what he has to say, given the extent of change that's going on.
Also, of course, don't forget, we're still waiting for the Supreme Court ruling on tariffs, which could at any moment upend again the global trading system and the Trump administration's economic policy.
You know, I was looking at the overall theme for this year. At first blush, it seemed bland in the extreme. I think it's a spirit of dialogue. But then when you think about it, when you step back a little bit in the polarized politics, we see, especially in the U.S., even just civil dialogue may be an edgy topic.
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