Traditional economic metrics aren't translating into how Americans are feeling, says Sarah Bianchi

Sarah Bianchi, Evercore's public policy chief strategist, discusses the likely Iran deal (60-day opening of straits for economic relief), low expectations for legislative action from a Republican Congress, and the challenge of midterms for Democrats. She notes the market has been patient but the economy is resilient despite tariffs and oil shocks. Crucially, she highlights a disconnect: traditional economic metrics are strong, but Americans feel worse due to inflation and high gas prices, making them impatient with Trump. She also sees strange-bedfellow populist politics emerging around AI and affordability.

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Sarah Bianchi 8.0

Traditional economic metrics aren't translating into how Americans are feeling, says Sarah Bianchi

dxy

The discussion of tariffs and a resilient economy suggests no strong immediate catalyst for a significant dollar move. The uncertainty around trade and geopolitics (Iran) could keep the dollar rangebound.

ndx

Bianchi notes the market has been 'patient' and the economy 'resilient', but also highlights significant political uncertainty (Iran, midterms) and poor consumer sentiment, suggesting a lack of strong directional catalyst for tech-heavy NDX in the short term.

rut

Bianchi emphasizes that Americans 'do not feel good' and are 'impatient' due to inflation and high gas prices. This negative consumer sentiment, which is more directly tied to the domestic-focused RUT, suggests a cautious downside risk for small caps.

wti

The discussion of a potential Iran deal (opening of straits, economic relief) implies potential for increased supply, capping upside. However, the economy is 'resilient through... oil shocks', suggesting demand is holding up, preventing a sharp down move. This points to a rangebound outlook.

yields

Bianchi states the market 'would like to see a rate cut' and that the president would too, implying a bias towards lower yields in the near term, though she acknowledges uncertainty from the war.

Asks about the most important policy topics, starting with Iran and the potential for a 60-day reopening of the straits.

Speaker1
Sarah Bianchi

The Iran deal on the table is likely final: some opening of the straits and economic relief for Iran in exchange for a 60-day moratorium on nuclear activity. It's not perfect for Trump, but he has no choice.

The Iranians have held tough, and the president keeps hesitating, but this is the deal we are looking at.
Asks if a Republican-controlled Congress can get anything else done, and how important that is.

Speaker1
Sarah Bianchi

Expectations for legislative action from a Republican Congress are very low; nothing significant will happen.

Maybe a few slight things, but the focus will quickly pivot to the 2028 race and new ideas.
Asks about the midterms and what it would mean if Democrats take the House and Senate.

Speaker1
Sarah Bianchi

Betting markets got ahead of themselves on the Senate for Democrats; many things have to go right. A Democratic win would mean marginally more healthcare spending, but Trump will continue using executive power regardless.

It would put pressure on the Democratic Party to have a proactive agenda, not just be anti-Trump.
Mentions Kevin Warsh and the market's patience during the first 100 days.

Speaker1
Sarah Bianchi

The market has been patient with Iran and is happy with Warsh getting through. The economy has been resilient through tariffs, immigration, and oil shocks.

There is a lot of uncertainty regarding the war, but the market would like to see a rate cut.
Asks if the poor economic sentiment (inflation) will play into the midterms, and if we are already close to UBI.

Speaker1
Sarah Bianchi

Americans do not feel good; they are impatient with Trump because they brought him back to fix the economy, but they don't feel much better. High gas prices ($4) are a key pain point.

People feel institutions are not working for them. Watching Trump struggle with messaging feels like watching Biden.
Argues that the stock market's strength (beyond AI) suggests solid economic underpinnings, questioning the disconnect with consumer sentiment.

Speaker1
Sarah Bianchi

Traditional economic metrics are not translating into how Americans feel. They feel things are going up and they are not getting ahead.

This is creating strange-bedfellow populist politics around affordability, with figures like Bernie Sanders, Chris Lehane, and Steve Bannon discussing similar issues.
Asks if calls for AI regulation are political theater, given the polarized environment makes action impossible.

Speaker3
Sarah Bianchi

Yes, it is easy for companies to say they want regulation or taxation, but the devil is in the details. They are trying to get things done at the state level in the interim.

Look how quickly the issues around data centers changed, with protests now in Virginia.

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