WEBVTT - Trump's Fed Gamble and Nvidia Earnings 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.880 Business App. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.000 or watch us live on YouTube. 0:00:27.120 --> 0:00:31.440 Joining us now from the Peterson Institute, the Pride of Brookline, Massachusetts, 0:00:31.480 --> 0:00:33.919 Adam Posen. Adam, first of all, thank you for your 0:00:33.920 --> 0:00:38.600 important comments at Jackson Hall. Lisa and I really appreciate that. 0:00:38.920 --> 0:00:42.840 What's changed in four or five days Adam Posen from 0:00:42.920 --> 0:00:45.600 Jackson Hall in this FED debate. 0:00:46.440 --> 0:00:48.919 Thank you Tom for having me back both there with 0:00:48.960 --> 0:00:53.000 you and Lisa and today with you and Paul Jay 0:00:53.080 --> 0:01:00.040 A lot has changed. Three things. First, is that the 0:01:00.120 --> 0:01:04.480 tax on Governor Cook, as Paul Krugman and Larry Summers 0:01:04.520 --> 0:01:07.720 and many others have pointed out, have shifted into law 0:01:07.760 --> 0:01:13.000 fair meaning using the powers of the government to go 0:01:13.080 --> 0:01:20.160 after individual officials with quasi legal means. And as Krugman 0:01:20.240 --> 0:01:22.080 I think put it very well on his sub stack 0:01:22.160 --> 0:01:27.679 a few days ago, this is about personal intimidation, and 0:01:27.880 --> 0:01:33.560 to doctor Cook's credit, she's not giving into that. Second, 0:01:33.959 --> 0:01:38.280 something that was you were aware of and I was 0:01:38.319 --> 0:01:41.240 aware of, but we were sort of being discouraged from 0:01:41.240 --> 0:01:44.440 talking about too openly. Is now front and center, which 0:01:44.480 --> 0:01:48.160 is the renewal as you were just discussing with my 0:01:48.560 --> 0:01:52.440 renewal of the Reserve Bank presidents at the end of February, 0:01:53.280 --> 0:01:58.360 and so whatever happens with Governor Cook, the question is 0:01:58.520 --> 0:02:03.000 do you have a majority of Trump appointees who are 0:02:03.040 --> 0:02:09.080 willing to really mess with that process by the end 0:02:09.160 --> 0:02:12.800 of February. And the third, sorry, the third thing is 0:02:12.880 --> 0:02:17.360 there's just been such a limited market response right the event. 0:02:17.639 --> 0:02:20.639 You mentioned doctor Posen that the markets seem to ignore 0:02:20.680 --> 0:02:25.080 the moment, at least in the United States. Do you 0:02:25.160 --> 0:02:27.840 anticipate I don't want you to make a market call, 0:02:28.160 --> 0:02:34.000 but you anticipate that the president is unmindful that the 0:02:34.040 --> 0:02:37.800 markets end up telling authorities what to do. That's usually 0:02:38.040 --> 0:02:39.359 in history how it's worked. 0:02:40.440 --> 0:02:48.200 Yeah, Tom, I think the current president is either falsely 0:02:48.800 --> 0:02:53.160 overconfident or unmindful. I mean, we all heard the stories 0:02:53.200 --> 0:02:56.720 about Secretary of Descent and NEC director has it going 0:02:56.760 --> 0:03:00.040 through this whole elaborate thing in April to get the 0:03:00.080 --> 0:03:02.880 president to focus on the day that the treasury market 0:03:03.040 --> 0:03:06.560 started going down a lot because of the China trade war, 0:03:07.240 --> 0:03:10.160 and all that illustrates, even if you buy it entirely 0:03:10.240 --> 0:03:13.200 at face value, is that the President wasn't thinking about that, 0:03:13.240 --> 0:03:16.880 and he wasn't asking for percent or has its advice, 0:03:17.000 --> 0:03:19.240 or he wasn't listening to present and has its advice 0:03:19.320 --> 0:03:24.000 before that happened. So I think it's very clear that 0:03:24.160 --> 0:03:27.720 he is ignoring the markets. And I think he and 0:03:27.760 --> 0:03:30.480 his team have told themselves as well as others, a 0:03:30.560 --> 0:03:34.680 story that a variety of things they're doing, including the 0:03:34.760 --> 0:03:39.839 forthcoming issuance of stable coins creating demand for US treasuries, 0:03:40.440 --> 0:03:43.840 mean that they're not going to have to worry about this. 0:03:44.640 --> 0:03:46.440 And the other thing is, of course the market is 0:03:46.440 --> 0:03:49.920 playing along. Now. Fixed income market in the US generally 0:03:49.920 --> 0:03:52.520 tends to be both more important and more savvy than 0:03:52.560 --> 0:03:55.960 the equity market. The equity market, about these things is 0:03:56.040 --> 0:04:00.240 driven by other factors and so shouldn't be read as 0:04:00.320 --> 0:04:04.480 much of a verdict on these issues, these being inflation, 0:04:04.640 --> 0:04:08.720 central bank independence, fiscal policy. 0:04:08.840 --> 0:04:11.680 Sorry, no, go ahead, go ahead, ata, no, no. 0:04:11.720 --> 0:04:13.360 All I was just going to say is you know, 0:04:13.400 --> 0:04:16.200 we're having a very lively internal discussion at the Peterson 0:04:16.279 --> 0:04:19.640 Institute about why the markets aren't reacting and why, for example, 0:04:19.720 --> 0:04:23.520 they are reacting so negatively to France. It's not so 0:04:23.600 --> 0:04:26.800 much that we don't think the situation is very serious 0:04:26.839 --> 0:04:30.680 in France. It's just okay, why is the situation not 0:04:31.400 --> 0:04:34.880 at all serious in the US? And we're having trouble understanding. 0:04:34.279 --> 0:04:36.840 That, Adam, there are those that say that maybe the 0:04:36.839 --> 0:04:40.520 Federal Reserve does need some changes to be affected there, 0:04:40.520 --> 0:04:44.599 that maybe they have not performed effectively over the last years, 0:04:44.640 --> 0:04:46.000 if not even longer. 0:04:46.040 --> 0:04:47.520 How do you how do you think about that? 0:04:49.839 --> 0:04:53.560 My view is that as I've gone on the record 0:04:53.600 --> 0:04:55.960 on the program with you all saying I think they 0:04:56.000 --> 0:04:59.560 did screw up by not changing monetary policy in early 0:04:59.600 --> 0:05:03.000 twenty twenty one, when the labor market turned around quickly 0:05:03.120 --> 0:05:08.760 and when the Democratic Congress passed additional unnecessary fiscal stimulus, 0:05:08.839 --> 0:05:10.800 I mean they have screwed up. I think they've screwed 0:05:10.880 --> 0:05:17.080 up more on the financial supervisory side. What happened with 0:05:17.240 --> 0:05:19.640 Silicon Valley Bank and the other mid sized banks that 0:05:19.720 --> 0:05:23.000 got a carve out and light touch supervision a few 0:05:23.080 --> 0:05:26.880 years ago was really bad. What they did and failed 0:05:26.880 --> 0:05:31.640 to do in six seven eight was really bad. So 0:05:31.880 --> 0:05:36.559 but the question is does that get addressed. Do either 0:05:36.600 --> 0:05:40.680 of those get addressed by undermining FED independence politicizing the 0:05:40.720 --> 0:05:49.279 appointments creating frankly likely more lacks supervision rather than I 0:05:49.279 --> 0:05:49.920 don't think so. 0:05:50.080 --> 0:05:52.359 And I'm out a private conversation with Jackson all of 0:05:52.360 --> 0:05:54.240 the leading banker. I'm not going to say who does. Folks, 0:05:54.279 --> 0:05:57.760 it doesn't matter. You have the advantage of Olivia Blanchard's 0:05:57.800 --> 0:06:02.600 perspective at Peterson Institute. This banker was heated that America 0:06:02.680 --> 0:06:07.480 taught the other banks independence. It is central bank for 0:06:07.600 --> 0:06:13.559 mere mortals. Our listeners are viewers, restate why we're going 0:06:13.640 --> 0:06:18.680 through this, Why this independence of a central bank is 0:06:18.720 --> 0:06:22.640 so important? Unlike the Bank of England years ago, unlike 0:06:22.680 --> 0:06:27.520 the Bundesbank, and unlike otmar Issing's new fangled ecbank. 0:06:29.480 --> 0:06:32.279 Okay, I think it is a fair point that the 0:06:32.320 --> 0:06:35.000 FED was the example and the loadstar on a lot 0:06:35.040 --> 0:06:37.359 of this about the German buness Bank and the Swiss 0:06:37.440 --> 0:06:41.719 National Bank too. The rationales are They are four big 0:06:41.800 --> 0:06:45.680 rationales for why it's in the public interest for central 0:06:45.720 --> 0:06:50.480 bank to have operational independence, meaning getting to set interest 0:06:50.560 --> 0:06:54.320 rates and monetary policy on its own. The first is 0:06:54.360 --> 0:06:57.000 the argument made by the brilliant Ken Rogoff in nineteen 0:06:57.040 --> 0:07:01.680 eighty six that there's inherently an inflation bias to various 0:07:01.720 --> 0:07:05.200 degrees in monetary policy, because if you pump up the economy, 0:07:05.240 --> 0:07:10.120 at least temporarily, you get some growth, but in the 0:07:10.200 --> 0:07:13.720 end all you get is the inflation. Whence people expect that, 0:07:14.040 --> 0:07:17.960 and so the point of the independence is to anchor expectations, 0:07:18.000 --> 0:07:20.960 as the saying goes, so you basically get rid of 0:07:21.000 --> 0:07:24.280 this extra inflation that's totally avoidable, and all the data 0:07:24.400 --> 0:07:27.040 suggests this is right, that you get a lower average 0:07:27.040 --> 0:07:29.960 inflation rate with an independent central bank at no costs. 0:07:30.680 --> 0:07:34.360 The next two are very straightforward. When you have a 0:07:34.480 --> 0:07:38.840 politician who wants to have a rate cut time for 0:07:38.920 --> 0:07:42.120 a particular initiative or ahead of an election, out of 0:07:42.160 --> 0:07:45.240 whack with what the economic fundamentals are, that's bad. When 0:07:45.240 --> 0:07:49.000 you have a government that wants the central bank to 0:07:49.160 --> 0:07:53.600 directly finance its debts so that it doesn't the government 0:07:53.640 --> 0:07:57.280 doesn't have to behave in a responsible way, that's bad. 0:07:57.400 --> 0:07:59.960 We saw that in Italy, we saw that in Argentina, 0:08:00.160 --> 0:08:02.200 we saw it to a limited degree in Britain in 0:08:02.240 --> 0:08:07.840 the seventies. It's bad news. And so this election cycle installation, 0:08:08.080 --> 0:08:15.160 this prevention of of fiscal dominance is the other two 0:08:15.240 --> 0:08:18.600 main reasons why you do central bank independence. Again, I 0:08:18.640 --> 0:08:21.160 want to stress the late Stan Fisher, former or vice 0:08:21.240 --> 0:08:23.480 chair of the FED, former Government Bank of Israel, stress 0:08:23.560 --> 0:08:28.560 the distinction between operational independence and goal independence. It's still 0:08:28.600 --> 0:08:32.440 the Congress, the legislature that sets what ultimately is the 0:08:32.440 --> 0:08:35.040 Fed's goal, whether it's in the Humphrey Hawkins Act or 0:08:35.080 --> 0:08:39.200 two percent inflation or whatever, and evaluates that. But the 0:08:39.360 --> 0:08:42.319 day to day means the month independence is what we're 0:08:42.360 --> 0:08:45.920 talking about. And then finally the issue is just the 0:08:45.960 --> 0:08:49.880 same way that the Trump administration is gutting expertise and 0:08:50.559 --> 0:08:54.880 technocrafts and bureaucrats have experienced throughout the government, they're now 0:08:54.920 --> 0:08:57.080 doing the same thing to the FED, and that just 0:08:57.160 --> 0:08:58.400 makes policy making worse. 0:08:59.200 --> 0:09:04.520 So individual FED employees here, how does it, I mean, 0:09:04.800 --> 0:09:07.640 how does it impact the day to day? Do you think? 0:09:07.679 --> 0:09:09.719 I mean, does an impact the analysis do they do? 0:09:11.120 --> 0:09:13.640 The data is the data. I guess I can interpret 0:09:13.760 --> 0:09:15.959 data how they want, but the data is the data. 0:09:17.240 --> 0:09:20.080 Yeah, I think that's fair, and they certainly are going 0:09:20.160 --> 0:09:23.920 to try. I think what's happening which is happening again 0:09:24.160 --> 0:09:27.040 at the Bureau of Labor Statistics, at the National Institute 0:09:27.120 --> 0:09:31.200 for Health, at the EPA, at a whole range of 0:09:31.240 --> 0:09:35.599 government agencies in the US right now is a combination 0:09:35.760 --> 0:09:44.760 of demoralization and depression. Demoralization that the experts who try 0:09:44.800 --> 0:09:47.000 to do the right thing and do all the hard 0:09:47.040 --> 0:09:50.120 work of trying to interpret the data and verify the 0:09:50.240 --> 0:09:52.440 data and come up with good sources of the data 0:09:52.520 --> 0:09:57.520 and improve the data get ignored more and more and 0:09:57.960 --> 0:10:01.640 they amount of funding they get. I mean, nonsense about 0:10:01.640 --> 0:10:04.839 a marble building and all that you lose people because 0:10:04.880 --> 0:10:09.360 your salaries aren't competitive, the building is crappy place to work, 0:10:11.679 --> 0:10:16.199 and so that's demoralizing. And then you have the issue 0:10:16.240 --> 0:10:20.360 that you know think, I mean you would never experience this, 0:10:20.480 --> 0:10:22.840 but think about having a bad boss. I mean, if 0:10:22.840 --> 0:10:26.360 you have a boss who you can present pros and 0:10:26.400 --> 0:10:28.960 cons and sometimes she listens to you, and sometimes she 0:10:29.000 --> 0:10:33.720 doesn't find but generally actually values a debate. And suddenly 0:10:33.800 --> 0:10:37.679 you have a boss that listens to you know, one 0:10:37.720 --> 0:10:40.520 particular shareholder that's pretty bad. 0:10:40.600 --> 0:10:42.520 And we got to run. I got one final question 0:10:42.600 --> 0:10:44.240 for you, folks. I want to really lay this out 0:10:44.240 --> 0:10:47.679 because I think it's really eclectic. The Peterson Institute like 0:10:47.760 --> 0:10:51.160 they have Jed Coco's and non resident senior Fellow is 0:10:51.320 --> 0:10:55.760 really strange. Wonderful economists. A guy named Nick Lardie who's 0:10:55.760 --> 0:10:59.520 pretty good on China, Mary Lovely, a guy named Firm 0:10:59.559 --> 0:11:02.120 and up school up in Boston. It's called Harvard. I 0:11:02.120 --> 0:11:06.480 think he's Furman's up there. It's the list of quality. 0:11:06.880 --> 0:11:11.400 One of my heroes, William Klein, Shedbone Blenchard. As I mentioned, 0:11:11.559 --> 0:11:14.560 when you all sit around, doctor Posen, are you just 0:11:14.720 --> 0:11:19.440 consuming a new embedded inflation, not like vocar eighties? 0:11:19.520 --> 0:11:22.559 But are we to a new regime of inflation? 0:11:24.280 --> 0:11:28.080 Well, Tom has always I'm grateful to your appreciation and 0:11:28.320 --> 0:11:31.199 amplification of what our team does. I'm very proud of them. 0:11:31.360 --> 0:11:34.600 We literally sit around once a week with a lot 0:11:34.640 --> 0:11:37.839 of the non resident people join twenty twenty five people 0:11:37.920 --> 0:11:40.280 joining us online and our twenty people in the room 0:11:40.320 --> 0:11:44.880 and have a working lunch meeting. Sometimes it's about research. 0:11:44.960 --> 0:11:48.839 Is literally yesterday it's on Tuesdays was about this, and 0:11:49.000 --> 0:11:52.119 like I said, we're wrestling with why the markets aren't reacting, 0:11:53.280 --> 0:11:56.440 what the inflation outlooks going to be, how soon? How bad? 0:11:57.200 --> 0:12:02.480 I think we're all pretty convinced that the tariffs and 0:12:02.640 --> 0:12:06.280 especially anti migration is going to pass through to higher 0:12:06.320 --> 0:12:10.080 inflation over the next six to nine months, meaningfully higher 0:12:10.160 --> 0:12:14.640 like four or five percent. Wow. And we are worried 0:12:15.520 --> 0:12:21.080 that the FED will change, and we're very worried about 0:12:21.120 --> 0:12:24.360 the Reserve Bank presence because as Jason Furman, who you mentioned, 0:12:24.400 --> 0:12:28.679 and other FED alums like Karen Dinan and David Wilcox 0:12:28.720 --> 0:12:33.800 and so I have argued, if the Committee is still 0:12:33.840 --> 0:12:36.959 the committee, there's a limit on how much they can 0:12:37.000 --> 0:12:40.920 screw up on inflation, no matter who Trumpet points. But 0:12:41.440 --> 0:12:45.040 if suddenly we swing to a number of the Reserve 0:12:45.080 --> 0:12:49.240 Bank presidents are not reappointed and they either don't get 0:12:49.280 --> 0:12:54.440 the vote or they're replaced by cronies, then that goes 0:12:54.480 --> 0:12:55.920 out the window that guard rails. 0:12:56.400 --> 0:12:58.520 We got to run. Adam Posen, thank you so much, 0:12:58.559 --> 0:13:00.440 to take away their folks. As if we get four 0:13:00.440 --> 0:13:04.040 to five percent Adam Posen and inflation, guess what the 0:13:04.160 --> 0:13:07.560 dialogue changes. It's just as simple as that doctor Posen 0:13:07.600 --> 0:13:10.880 from Jackson Hole and from the Peterson Institute in Washington, 0:13:10.920 --> 0:13:14.720 Thank you so much. Stay with us. More from Bloomberg 0:13:14.880 --> 0:13:17.120 Surveillance coming up after this. 0:13:24.160 --> 0:13:27.720 You're listening to the Bloomberg Surveillance Podcast. Catch US Live 0:13:27.800 --> 0:13:31.000 weekday afternoons from seven to ten am Eastern. Listen on 0:13:31.040 --> 0:13:34.720 Applecarplay and Android Auto with the Bloomberg Business app, or 0:13:34.840 --> 0:13:36.959 watch US live on YouTube with us right now. 0:13:37.080 --> 0:13:39.840 Mandeep Singh is global head of Tech Research as well. 0:13:40.040 --> 0:13:44.240 So in the mystery of pre conference call for you 0:13:44.440 --> 0:13:47.880 is in a study of unit dynamics within the different 0:13:47.920 --> 0:13:51.920 divisions of Nvidia, including data center. Is it a line 0:13:51.960 --> 0:13:54.800 on the income statement? What's the man deep sing mystery 0:13:55.120 --> 0:13:56.319 that you're going to be looking at? 0:13:56.559 --> 0:13:59.560 I mean, right now, it's about the data center revenue 0:13:59.600 --> 0:14:05.199 because at revenue, earnings will come simply because this company 0:14:05.200 --> 0:14:08.480 has a monopoly when it comes to the GPUs that 0:14:08.520 --> 0:14:13.560 they're making, they can charge whatever margins they want and that. 0:14:13.440 --> 0:14:15.720 Has been the case. So it's a question of top line. 0:14:15.840 --> 0:14:20.280 So in technology they can hold price or even increase price. 0:14:21.080 --> 0:14:25.240 Well, they keep releasing new architectures. So with Blackwell, they 0:14:25.280 --> 0:14:28.920 will increase price. With the new architecture that's upcoming in 0:14:28.960 --> 0:14:32.600 twenty twenty six, they will increase price, and the lower 0:14:33.160 --> 0:14:36.840 skws that are outdated will be sold at a lower 0:14:36.880 --> 0:14:38.400 prices compared to that. 0:14:38.560 --> 0:14:41.360 Mandy Tom just forwarded me some research from Rob Shiftman 0:14:41.360 --> 0:14:44.440 Bloomberg Intelligence credit analysts, who covers the technology space from 0:14:44.480 --> 0:14:46.920 a credit perspective. Is that man, he's got a lot 0:14:46.920 --> 0:14:48.920 of pretty pictures, which I like. But what it shows 0:14:49.000 --> 0:14:52.040 is just these huge capex for all these companies and 0:14:52.040 --> 0:14:54.600 the bomb market I guess is fine with it. But 0:14:55.600 --> 0:14:58.280 I mean, is somebody asking a question like, are you 0:14:58.280 --> 0:14:59.960 guys getting any return on this capex? 0:15:00.360 --> 0:15:02.920 Well, the cloud companies have shown return. 0:15:03.040 --> 0:15:07.840 We saw Microsoft's Azure segment growth increase to thirty nine percent. Okay, 0:15:08.080 --> 0:15:12.280 seventeen percent of that growth was AI workload driven. So 0:15:12.400 --> 0:15:15.960 from that perspective, the cloud companies have shown the ROI 0:15:16.000 --> 0:15:19.520 for sure. It's the other smaller software companies. 0:15:19.880 --> 0:15:20.440 They are the. 0:15:20.440 --> 0:15:23.560 Ones who are still struggling to figure out what's the 0:15:23.640 --> 0:15:26.880 right product based on LLM, how much do we charge 0:15:26.880 --> 0:15:27.480 the customer? 0:15:27.800 --> 0:15:29.960 And can we increase our margins. 0:15:30.200 --> 0:15:33.760 Shiffment's core theme, I know you two never talk. Shiffman's 0:15:33.760 --> 0:15:38.320 core theme is that investor payouts display strength, not strain. 0:15:38.840 --> 0:15:41.520 Why is the Amazon He's got this fancy man deep 0:15:41.560 --> 0:15:46.280 singh bar chart here. Amazon's not participating in dividends and 0:15:46.400 --> 0:15:47.560 share buybacks are. 0:15:47.440 --> 0:15:48.400 They they're not. 0:15:48.600 --> 0:15:51.920 But look, when you are at the scale that Amazon, 0:15:52.040 --> 0:15:57.000 Microsoft and Google are, it doesn't matter you know they 0:15:57.160 --> 0:16:00.000 are doing dividends or not because they are growing top 0:16:00.480 --> 0:16:03.080 At the scale at Amazon is you know, five hundred 0:16:03.080 --> 0:16:05.760 billion plus in revenue. If you are growing top line 0:16:05.800 --> 0:16:09.520 double digits, that's huge and that's what investors care about. 0:16:09.560 --> 0:16:11.560 The free cash flows will come. It's just a matter 0:16:11.640 --> 0:16:12.520 of turning on the show. 0:16:12.720 --> 0:16:13.640 It's all going to end. 0:16:13.680 --> 0:16:15.240 It's all going to end. 0:16:15.480 --> 0:16:17.240 Is there lighten up on the meg seven? 0:16:17.400 --> 0:16:18.000 Exactly? 0:16:18.160 --> 0:16:20.440 Is there a bare case for Nvidia out there? Like 0:16:20.440 --> 0:16:22.520 when you go out there and talk to institutional investors, 0:16:22.600 --> 0:16:24.120 what do they push back on anything? 0:16:24.280 --> 0:16:24.480 Oh? 0:16:24.560 --> 0:16:25.239 Absolutely? 0:16:25.280 --> 0:16:28.280 I mean, uh, and Vidia is not the same company 0:16:28.280 --> 0:16:31.600 as it was eight quarters ago when everyone underestimated the 0:16:31.640 --> 0:16:34.840 size of this market. Now the expectations have gone to 0:16:34.880 --> 0:16:37.520 a point where everyone expects them to beate and raised 0:16:37.520 --> 0:16:41.960 by three billion for next quarter. And look, if you 0:16:42.000 --> 0:16:45.360 are a software company right now, you're trying to optimize, 0:16:45.720 --> 0:16:48.040 what are the type of use cases where I need 0:16:48.080 --> 0:16:51.760 to use nvideo, GPUs and others where I don't. There 0:16:51.840 --> 0:16:54.120 is no one size fits all here. You want to 0:16:54.160 --> 0:16:57.640 optimize for token pricing, which is a key metric in AI, 0:16:58.080 --> 0:17:00.240 and that's where I think there is a bear case 0:17:00.280 --> 0:17:03.120 that you can build around invidious growth expectations being too high. 0:17:03.120 --> 0:17:03.960 Okay, here's our plan. 0:17:04.000 --> 0:17:06.560 We want you in every day this week bandeep, so 0:17:06.600 --> 0:17:09.639 you could rocket Thursday and Friday. I'll be your Saturday. 0:17:10.160 --> 0:17:12.000 If you want to commit, I can join us. Monday 0:17:12.080 --> 0:17:15.160 Labor Day. Already I have no life, is it? 0:17:15.440 --> 0:17:18.720 Yeah, it's early labor. I'll here Monday. 0:17:19.000 --> 0:17:21.840 You go to the open tom there's so much. 0:17:21.960 --> 0:17:23.080 Did you go yesterday? 0:17:23.200 --> 0:17:25.959 No, I'm going this weekend, so you'll have to excuse 0:17:26.000 --> 0:17:27.000 me on one of these days. 0:17:27.000 --> 0:17:30.000 Paul, I had your twenty three dollars beverage so you don't. 0:17:29.760 --> 0:17:33.359 Have to buy itey he made honey do Yeah, commitment. 0:17:33.040 --> 0:17:34.960 To it, Mandy City, Thank you so much. 0:17:35.320 --> 0:17:46.560 Stay with us. More from Bloomberg Surveillance coming up after this. 0:17:46.560 --> 0:17:50.480 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:17:50.520 --> 0:17:53.919 starting at seven am Eastern on Applecarplay and Android Auto 0:17:53.960 --> 0:17:56.920 with the Bloomberg Business app. You can also listen live 0:17:57.000 --> 0:18:00.560 on Amazon Alexa from our flagship New York station, Just 0:18:00.640 --> 0:18:03.080 say Alexa play Bloomberg eleven thirty. 0:18:03.160 --> 0:18:06.800 You're thrilled to bring you, Amanda Agatti. She is with 0:18:06.920 --> 0:18:09.480 P and C Bank. Amanda, let's just start with the 0:18:09.560 --> 0:18:13.840 why why are stacks ignoring the Trump Cook battle? 0:18:14.840 --> 0:18:17.400 Well, good morning, guys, it's always great to be with you. 0:18:17.720 --> 0:18:21.119 I think the equity market is really largely ignoring it. 0:18:21.240 --> 0:18:24.639 One because it's starting to get conditioned to a lot 0:18:24.720 --> 0:18:28.400 of this purple haze, a policy uncertainty, but two because 0:18:28.480 --> 0:18:31.400 I think the bottom line is rate cuts are more 0:18:31.520 --> 0:18:35.560 likely than not regardless of what ultimately happens with Cook, 0:18:35.600 --> 0:18:37.879 and I think that is the most important thing for 0:18:38.200 --> 0:18:39.719 the equity markets path forward. 0:18:39.920 --> 0:18:42.639 So the equity markets, so they hinge around meg seven 0:18:42.720 --> 0:18:46.040 and in Nvidia performance or do you see a legitimate 0:18:46.200 --> 0:18:48.000 rotation at P and C Bank. 0:18:48.880 --> 0:18:51.639 Well, it's hard to bet against the mag seven, and 0:18:51.720 --> 0:18:55.000 certainly it is in Nvidia earnings day. So everybody's focused 0:18:55.080 --> 0:18:58.720 on how strong results are likely to be. But we 0:18:58.880 --> 0:19:02.520 actually have seen in expanding market breadth over the course 0:19:02.560 --> 0:19:04.880 of the summer, and a lot of it's been fueled 0:19:04.880 --> 0:19:07.959 by how strong Q two earning season actually was. It 0:19:08.000 --> 0:19:10.960 wasn't just about the top seven or the top ten 0:19:11.080 --> 0:19:13.400 names and when we look at revisions for Q three 0:19:13.520 --> 0:19:16.040 and even in the balance of the year, we're seeing 0:19:16.040 --> 0:19:18.760 that breath story take hold. So I think that's a 0:19:18.800 --> 0:19:23.320 really important fundamental and healthy aspect of the market rally, 0:19:23.600 --> 0:19:26.359 even as it's stalled out here into the end of 0:19:26.400 --> 0:19:29.120 the summer a little bit. But given where valuations are, 0:19:29.240 --> 0:19:33.040 it's healthy. We're not hanging our hat on just one name, 0:19:33.119 --> 0:19:35.639 even though today is a big day for sure. 0:19:36.000 --> 0:19:38.359 So today's a big day, Amanda, as you mentioned in Nvidia, 0:19:38.440 --> 0:19:40.560 but took to us about just earnings in general. The 0:19:40.560 --> 0:19:43.440 second quote, earnings came in much better than expected, I think, 0:19:43.480 --> 0:19:45.280 And the question is for a lot of folks, is 0:19:45.280 --> 0:19:48.320 that enough to continue to push this market higher? 0:19:48.359 --> 0:19:49.359 How do you think about earnings? 0:19:50.119 --> 0:19:53.200 Well, Q two, there's no question Q two results were 0:19:53.320 --> 0:19:56.560 a monster relative to where we started. 0:19:56.560 --> 0:19:56.720 Now. 0:19:56.760 --> 0:19:59.520 The bar had been set pretty low because everybody was 0:19:59.560 --> 0:20:03.239 freaked out technical term for you, as it relates to 0:20:03.320 --> 0:20:06.960 the impact from tariffs and trade potentially hitting in Q two. 0:20:06.960 --> 0:20:10.479 Of course, it didn't hit squarely in Q two. We 0:20:10.560 --> 0:20:13.679 punted it a little bit into Q three. So the 0:20:13.760 --> 0:20:16.800 results came in I think even much better than a 0:20:16.880 --> 0:20:18.959 very low bar that was set and I think the 0:20:19.000 --> 0:20:22.359 results continue to suggest that there's still a lot of 0:20:22.359 --> 0:20:24.920 fundamental strength here. We're not seeing a lot of weakening. 0:20:25.080 --> 0:20:28.440 Q three is really what's important in terms of the rally, 0:20:28.680 --> 0:20:30.840 and revisions have been creeping quite a bit higher. 0:20:30.960 --> 0:20:35.320 Bloombergerging twenty four to seven on the Fed Trump uproar. 0:20:35.840 --> 0:20:40.120 Just three headlines here, Claudia sam publishing Federal reserves shouldn't 0:20:40.119 --> 0:20:44.160 take the political bait. John Authurs, who's been absolutely brilliant 0:20:44.520 --> 0:20:47.879 firing Lisa Cook won't be enough for what Trump wants. 0:20:48.119 --> 0:20:52.560 And Jonathan Levin Powell won't save the FED with silence. 0:20:52.600 --> 0:20:57.760 Amanda Gotti. Here's Bill Dudley, economist saying markets are too complacent. 0:20:58.200 --> 0:21:01.399 Even if Trump stands only a small chance of taking 0:21:01.440 --> 0:21:05.400 control of the FED, the effort itself is disruptive. So 0:21:05.480 --> 0:21:08.800 how do you change an equity strategy for our listeners 0:21:08.840 --> 0:21:12.280 and viewers. You know, whatever the outcome, there's going to 0:21:12.320 --> 0:21:13.920 be disruption at the FED. Right. 0:21:15.080 --> 0:21:16.879 It does seem as if there's going to be a 0:21:16.880 --> 0:21:19.720 lot of noise at the FED. There's no question about that. 0:21:19.880 --> 0:21:22.120 I think at the end of the day, though, the 0:21:22.160 --> 0:21:25.560 forward guidance and the dot plot and the path is 0:21:25.600 --> 0:21:28.000 really what's going to matter the most. So is it 0:21:28.040 --> 0:21:30.960 twenty five basis points? Is it fifty? Is it ultimately 0:21:30.960 --> 0:21:32.919 one hundred? You know, a series of cuts. 0:21:32.640 --> 0:21:39.200 INSTRC modeling avestent like for rate cuts, we are looking 0:21:39.400 --> 0:21:42.399 at potentially one hundred basis points worth of cuts, but 0:21:42.520 --> 0:21:44.200 not all into the end of this year. 0:21:44.280 --> 0:21:47.960 It spills over into early twenty six. But so if 0:21:47.960 --> 0:21:51.159 that's the path, then we're not pulling the ripcord and 0:21:51.240 --> 0:21:53.520 raising a ton of cash and moving to the sidelines. 0:21:53.600 --> 0:21:57.479 That will create a decent amount of support for the 0:21:57.520 --> 0:22:01.480 market here and certainly for the earnings and backdrop. So 0:22:02.080 --> 0:22:06.000 we're tweaking positioning. So we've been talking about quality as 0:22:06.040 --> 0:22:08.960 being a really important place to be for investors all year. 0:22:09.240 --> 0:22:12.560 Quality is getting pretty fairly valued or fully valued here, 0:22:12.880 --> 0:22:15.600 So we are tweaking at the margin, but we're not 0:22:15.600 --> 0:22:19.720 feeling particularly negative or bearish kind of going into the 0:22:19.800 --> 0:22:21.240 end of the year if the FED is going to 0:22:21.280 --> 0:22:22.560 continue to be accommodative. 0:22:22.720 --> 0:22:23.679 Amanda, thank you so much. 0:22:23.720 --> 0:22:27.200 Amanda Gottia brief here from P ANDC Bank this morning, 0:22:27.200 --> 0:22:29.720 where she's Coiossey Management. 0:22:30.040 --> 0:22:30.760 Stay with us. 0:22:31.000 --> 0:22:41.639 More from Bloomberg Surveillance coming up after this. 0:22:41.640 --> 0:22:45.560 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:22:45.600 --> 0:22:48.640 starting at seven am Eastern on Apple, Cocklay and Android 0:22:48.640 --> 0:22:51.640 Auto with the Bloomberg Business app. You can also watch 0:22:51.720 --> 0:22:54.679 us live every weekday on YouTube and always on the 0:22:54.680 --> 0:22:55.800 Bloomberg terminal. 0:22:56.080 --> 0:22:59.719 Joining us now from Staten Island. Anthony Crescenzi, executive right, 0:23:00.119 --> 0:23:02.720 was in Pimco. The way he rolls a Staten Island 0:23:02.720 --> 0:23:05.760 the famp and then he goes down to Latin America. 0:23:05.320 --> 0:23:08.399 That actually looks on Argentina paper market. 0:23:08.680 --> 0:23:11.360 They say a lot of Italian speakers too, Okay. 0:23:11.840 --> 0:23:14.040 And I've had the honor of being in the acclaimed 0:23:14.080 --> 0:23:17.239 Pimpco meeting a newport, and all these smart guys are 0:23:17.280 --> 0:23:20.399 in the room, and all I know is Staten Island 0:23:20.400 --> 0:23:24.160 electricity is up fifty four percent since twenty nineteen. 0:23:24.720 --> 0:23:26.760 You are the king of short term paper. 0:23:27.040 --> 0:23:29.400