Moneybeat The tariff tango

MARY REICHARD, HOST: Coming up next on The World and Everything in It: The Monday Moneybeat.

NICK EICHER, HOST: Time now to talk business, markets, and the economy with financial analyst and adviser David Bahnsen. David heads up the wealth management firm The Bahnsen Group. He is here now—with a little market volatility in the respiratory system. David, good morning, and with a diminished supply of voice but no shortage of insight, special thanks for joining me today.

JOHN STONESTREET: Well, thanks for having me, Nick.

EICHER: All right. Let’s talk tariffs. When we talk about the president’s tariff threats, the big question is always whether these moves are actually delivering results or just adding to market volatility. So given how broad these negotiations can be, how should we assess the effectiveness? How do we separate real policy wins from just headlines?

STONESTREET: Well, I think Nick, the answer to that is going to be different case by case with different countries around different policy agendas.

That's part of the confusion of the whole topic is that sometimes we're told we're trying to get more support for border control.

So the way to see if it worked or not is if we get more support for border control, right? The promise of more support or some kind of headline around it is not quite the same thing.

But if in the end, you end up with certain resources that yield fruit around fentanyl coming across the border, around staving off illegal immigration, you know, those things are pretty measurable in the end.

Those are not the only policy objectives we're talking about. You know, that situation a few weeks ago with Colombia, we wanted to land a plane that had some Colombian migrants on it—and we ended up landing the plane.

That's pretty small-ball stuff in the grand scheme of things.

Once you bring China in the mix, it becomes very different because then you're talking about trade or currency or terms of trade. You're talking about intellectual property with the European Union, we're talking about things with automotive. So there's so many different report cards that we're going to be running here. It gets pretty confusing.

EICHER: The Consumer Financial Protection Bureau has been controversial since day one. Critics, including you, making the argument that it doesn’t really protect consumers, that it actually hurts them and hurts small businesses instead of the big ones that can cope with all of its regulatory costs. But now under White House Budget Director Russ Vought, it looks like the agency is on the chopping block. It’ll either get its wings clipped or be dismantled entirely. And with Elon Musk’s Department of Government Efficiency clearly on the move, I wonder whether you see the developments of last week as a major policy victory, or might this be something even bigger?

BAHNSEN: Well, look, I've been a very big critic of the CFPB since the day Obama and Elizabeth Warren enacted it.

I do not believe it was constitutional. I do not believe it was prudent. I do not believe it was ever done the right way. It set out to solve a problem we didn't have with solutions that didn't do any such thing.

So it can't go away soon enough as far as I'm concerned.

It's primarily because I think it invites more problems. I think by putting random regulations on certain aspects of financial products and services, those come at a cost to other users of financial products and services. I see regulation as a subsidy—meaning it hurts the little guy more than it hurts the big guy. And I have a big problem with that when it comes to public policy.

The CFPB is likely going to be one of the success stories of DOGE and OMB and Trump 2.0—because it was already constitutionally vulnerable. They have ways—the way that Obama fallaciously put it together—they have ways they can fallaciously take it down. That's what they're doing.

EICHER: Speaking of government agencies under the microscope, USAID has been one of the biggest early targets of DOGE. But there’s been a lot of noise around it—both from its defenders and from those eager to see it go. Honestly, the reporting on what’s actually happening has been at best inconsistent. With all that in mind, how do you assess what’s been done so far? Or is it still too soon to tell?

BAHNSEN: I don't think listeners are going to be totally satisfied with my answer—because it's a little bit of “on one hand, this” and “on the other hand, that.”

I don't believe that there's been a lot of honest reporting about what they've done. I don't believe there's been a lot of honest reporting about what USAID was doing. I think last week there was a chance for a lot of people on both sides of the aisle to pounce on things that weren't fully understood

But I think USAID’s a disaster. Even though I tend to be more conservative, methodical, and deliberative in the way I want to take things down, there is a very fair argument to be made that they have to go blow things up and put them back together later.

I'm not a revolutionary, so that spirit is uncomfortable for me. But I understand in this case it may be the only way they can get started is to start with a kind of blunt instrument and work backwards. So USAID deserves to have a scalpel taken to it, deserves to be thoroughly looked at.

It's hard to analyze how well they've done because the reporting on it has not been very accurate. So we're going to need a few months to do assess how not only effective the cuts were, but what accurately was cut. You know, what's the accurate assessment of what was cut? I think it's gonna take several months.

EICHER: All right, before we go, the January jobs report is in. How’d you read it?

BAHNSEN: It was a little bit softer than expected. There were 143,000 jobs created in January. I think the consensus was that it was going to be about 175,000—so it came a little bit light. But the unemployment rate ticked lower down to 4%.

It wasn't a meaningfully significant jobs report either way. But if it had come in really strong—say, 250,000, like the December report—then that might get people to worry about the Fed. Everyone plays that game of saying that good news is bad news. (Meaning, the assumption that strong employment is “inflationary,” and that will prompt the Fed to keep interest rates unnecessarily high as a way of fighting inflation.)

This came in somewhere in the middle, but really I think we need a few months into the new year to get a feel for how the business optimism that we've seen tick up since the new administration, as well as some of the deregulatory efforts, what kind of impact it has to the jobs market. Overall, Nick, it's been this way for a long time—4% give or take unemployment—and on a weekly basis, the initial jobless claims have stayed right around 220,000. That's a very low and manageable number.

EICHER: David Bahnsen, founder, managing partner, and chief investment officer of The Bahnsen Group. David writes at dividendcafe.com and regularly for WORLD Opinions. David, again, thanks for battling through that nasty cold. Keep getting better, and I hope you have a great week!

BAHNSEN: Thanks so much, Nick, appreciate it.

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