Evercore's Roger Altman: The economic outlook is good, but the K-shaped economy remains

[00:00:00] Speaker 1: We want to get a lot more this morning on last night's State of the Union address, the markets, the fight for Warner Brothers' discovery, and so much more. The man in the middle, Roger Altman, he joins us. He's a founder, of course, and senior chairman of Evercore. He's been advising Warner Brothers in its contentious media deal. But before we get to that deal, let's get your reaction to what you saw last night by the president of the United States. Well, first of all, thank you for having me. [00:00:25] Speaker 2: Well, brevity is not President Trump's strong suit, but I thought it was classic Trump. He's a showman, and the way he brought forth so many heroes, and I must say I love seeing the U.S. men's hockey team, and I would have liked to have seen the women's team, too. The way he taunted the Democrats, the way he's very creative about the facts, it was just classic Trump. [00:00:50] Speaker 1: Okay, but as a Democrat, did you think it was a winning strategy last night? [00:00:53] Speaker 3: Didn't he set the new record that your guy held? [00:00:56] Speaker 2: Didn't he? Well, I think Clinton was 88. Yeah, yeah, well, that was at the Democratic Convention, yes. Oh. But I don't think that speech, and I don't think State of the Union has generally changed very much. I mean, President Trump's poll numbers are pretty weak. 41 percent approval in the latest Washington Post poll on the economy, 39 percent overall. Those are really weak. Did he change that last night? No, I don't think so, because he described an economy which was roaring and couldn't be better, and I don't think a lot of Americans feel that way about the economy. If they did, you'd see different figures on consumer confidence. You'd see different figures on Trump's approval on the economy. So I thought there was a disconnect there. But, you know, as I say, I think it was vintage Trump. He's a showman, and he put on a show. [00:01:48] Speaker 1: Can I ask you just about the politics in the moment? Because here, you know, he's talking about affordability. You're suggesting that maybe things are not as affordable as they should be. On the other side of the aisle, though, when you look around the country, we keep talking about what's happening in Seattle. There's a millionaire's tax that may go into effect. We're talking about what's happening in California and New York. I mean, there's sort of these—the pendulum is swinging almost on both sides. And I wonder what you think that portends for the midterms. [00:02:14] Speaker 2: Well, at the moment, the Democrats are poised to win the midterms. When you say win the midterms, win the House? Well, win the House. And the Senate is possible. I think it's less than 50 percent, but the House is quite likely. But that's not a surprise, because I think only two times in the past 50 years has the party that just won the White House, in this case Trump and the Republicans, not lost the first congressional election following that. So that would be consistent with the cycle. And it's also consistent with his poll numbers. Now, I must say, the president's been very outspoken on various ways he might try to subvert the election. That worries me a great deal. I think that would be very destabilizing and just bad at every level. I hope he doesn't do that. Yeah, we don't need to do that again. But he's talking at great length about it, and I think it's very disturbing. [00:03:09] Speaker 3: Hey, Roger, remember the time you were on. You were annualizing Biden's stock market return. Remember when I told you you can't, that you can't, you're laughing. But that, we were talking about it as a positive. So since the election of Trump, 16 percent on the Dow, 19 percent on the S&P, 23 percent on the NASDAQ. There are good things happening. [00:03:30] Speaker 2: No, no. In fact, as a matter of fact, I'm glad you brought that up. OK. I think the economic outlook is actually good. I mean, at Evercore, we're expecting two and a half to 2.75 percent real growth for 26. Yeah. Inflation is ticking down. It's not as low as Trump said last night. Employment's pretty solid. It's coming down toward the Fed's 2 percent long-term target. We see 3 plus percent wage growth. And if you juxtapose that against the inflation ticking down, there are going to be real wage gains. Corporate profit outlook remains good. So I think just in terms of the economy. [00:04:04] Speaker 3: So it's a disconnect for people that they really don't understand that things are pretty good. [00:04:09] Speaker 2: Well, you have. But this whole debate, Joe, about the K-shaped economy and the lower half of the K, it's just a fact, I think, that lower-middle and lower-income Americans are having a harder time. [00:04:22] Speaker 3: Wage gain should help there. [00:04:23] Speaker 2: Yes, that's true. But they're having a hard time. You see that in the comments from recently. Walmart. You see that in the comments from people like McDonald's. And those folks, I would say, need help. And they're very concerned. And by the way, there's pretty, it's pretty obvious, there's deep concern and much of the labor force about the ultimate impact of AI on the demand for labor. [00:04:46] Speaker 1: Roger, what was your impression of the impact of the Supreme Court's decision on tariffs and how you think that changes things, either for the companies, some of which you may very well represent, and for, and the president, I think, tried to speak to it last night, for all of these investment commitments that so many other countries, foreign countries, made in the United States as part of these tariff deals, many of which are largely unfulfilled and in some cases continue to require legislative approval in those foreign countries. And where do you think those all go? The president said, all those deals are in place and are not going anywhere because they know that I'm still here. And he sort of nodded to, he said, Scott, as in Besson, are they here? What do you think? [00:05:29] Speaker 2: Well, I think there's two separate questions there. Okay. Just in terms of tariffs, the administration had a lot of time to prepare for the Supreme Court decision. I think they were ready. In some respects, they anticipated it. So they promptly put in place under section, under 122 authority, you know, 15% across the board tariffs, which they can keep in place for 150 days. And the weighted average tariff rate really didn't change very much between pre-Supreme Court and post-Supreme Court. It's about 13%. And then after the 150 days, I think they can have similar authority ready under section 301 and continue with equivalent tariffs. Right. In terms of the investment programs, I think those countries are in a tough spot because Trump is going to do everything possible to hold them to that. I'm sure some of those countries are slow walking that. In fact, I know they are. [00:06:25] Speaker 1: And, you know, you say they know they are because you've spoken to them. [00:06:28] Speaker 2: Well, I've heard enough that I consider reliable, such that they think Trump will be out of office before they actually have to make decisions on the whole thing. Right. But I don't think they're going to be able to just walk away from it because, you know, that's an agreement they have with the administration. And Trump will do everything he can to hold their feet to the fire on those.