1
00:00:00,040 --> 00:00:06,720
Speaker 1: Bloomberg Audio Studios, Podcasts, radio news.

2
00:00:11,640 --> 00:00:15,440
Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

3
00:00:15,480 --> 00:00:18,680
Speaker 2: with Lisa Bromwitz and Amrie Hordernt. Join us each day

4
00:00:18,720 --> 00:00:22,280
Speaker 2: for insight from the best in markets, economics, and geopolitics

5
00:00:22,400 --> 00:00:24,880
Speaker 2: from our global headquarters in New York City. We are

6
00:00:24,920 --> 00:00:27,680
Speaker 2: live on Bloomberg Television weekday mornings from six to nine

7
00:00:27,720 --> 00:00:31,280
Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or

8
00:00:31,320 --> 00:00:33,919
Speaker 2: anywhere else you listen, and as always on the Bloomberg

9
00:00:34,000 --> 00:00:37,000
Speaker 2: Terminal and the Bloomberg Business app. So here's the laces.

10
00:00:37,080 --> 00:00:39,440
Speaker 2: This morning, the Federal Reserve hitting pause on rad cards

11
00:00:39,440 --> 00:00:41,800
Speaker 2: for the first time since July, pointing to a steadying

12
00:00:41,880 --> 00:00:45,840
Speaker 2: labor market and improving economy. Cludiasalm of New Century Advisors, writing,

13
00:00:45,880 --> 00:00:48,680
Speaker 2: there are reasons to be cautiously optimistic about the labor market,

14
00:00:48,920 --> 00:00:53,040
Speaker 2: reduce rates, fiscal support, and solid consumer spending. Claudia joins

15
00:00:53,080 --> 00:00:55,360
Speaker 2: us now for more, Claudia. It was the least anticipated

16
00:00:55,400 --> 00:00:57,600
Speaker 2: FED meeting in quite a while. In that regard, Chairmen

17
00:00:57,640 --> 00:01:00,760
Speaker 2: Powd did not disappoint. It was an absolute snooze, Claudia.

18
00:01:00,800 --> 00:01:03,120
Speaker 2: They seem to have this confidence in the outlook, a

19
00:01:03,160 --> 00:01:05,080
Speaker 2: better route. Look, how much way should they put on

20
00:01:05,120 --> 00:01:05,880
Speaker 2: recent day set?

21
00:01:07,480 --> 00:01:07,640
Speaker 3: Right?

22
00:01:07,640 --> 00:01:10,360
Speaker 4: Well, I think there was a cautious optimism.

23
00:01:10,840 --> 00:01:15,679
Speaker 5: Right there was a path forward where there's stabilization in

24
00:01:15,680 --> 00:01:18,200
Speaker 5: the labor market that had been when it motivated the

25
00:01:18,240 --> 00:01:20,160
Speaker 5: cuts before, concerns about the labor market.

26
00:01:20,200 --> 00:01:21,080
Speaker 4: So there are some signs.

27
00:01:21,080 --> 00:01:23,720
Speaker 5: Didn't want to overplay it, but some signs, and Powell

28
00:01:23,800 --> 00:01:27,320
Speaker 5: did sketch out a path for inflation to start turning

29
00:01:27,400 --> 00:01:33,080
Speaker 5: back down. But there wasn't full conviction, right, There wasn't

30
00:01:33,160 --> 00:01:36,759
Speaker 5: you know, enough conviction in that outlook to actually see cuts.

31
00:01:37,040 --> 00:01:38,479
Speaker 4: They're still going to want to wait and.

32
00:01:38,440 --> 00:01:41,480
Speaker 5: See the data, but poll is painting the picture of

33
00:01:42,319 --> 00:01:47,440
Speaker 5: further progress on inflation, further potential cuts in rates, just

34
00:01:47,560 --> 00:01:49,560
Speaker 5: not yet.

35
00:01:49,280 --> 00:01:52,640
Speaker 6: Claudia, there was an element of that meme where there

36
00:01:52,680 --> 00:01:55,360
Speaker 6: is someone sitting in a room saying everything is fine

37
00:01:55,400 --> 00:01:58,080
Speaker 6: and there's burning all around them. This question of all

38
00:01:58,120 --> 00:02:00,880
Speaker 6: the questions that he wouldn't answer going forward and kind

39
00:02:00,880 --> 00:02:03,800
Speaker 6: of FED give forward guidance if there isn't a sense

40
00:02:03,920 --> 00:02:05,920
Speaker 6: of who is going to be the next FED chair

41
00:02:06,320 --> 00:02:08,640
Speaker 6: and what some of the response are to some of

42
00:02:08,639 --> 00:02:12,120
Speaker 6: these pretty significant questions that were asked about Fed independence,

43
00:02:12,320 --> 00:02:14,880
Speaker 6: about the dollar, about a lot of other issues that

44
00:02:14,919 --> 00:02:16,560
Speaker 6: were I have no comment. I've got nothing for you

45
00:02:16,639 --> 00:02:16,840
Speaker 6: for that.

46
00:02:18,400 --> 00:02:18,600
Speaker 2: Right.

47
00:02:18,720 --> 00:02:23,840
Speaker 5: So, in terms of the questions about the investigation from

48
00:02:23,880 --> 00:02:27,320
Speaker 5: Department of Justice, the Supreme Court hearing on Lisa Cook, like,

49
00:02:27,480 --> 00:02:30,400
Speaker 5: those are questions the FED will be answering. So I

50
00:02:30,440 --> 00:02:32,680
Speaker 5: think we should remember the press conference is really a

51
00:02:32,720 --> 00:02:35,679
Speaker 5: window into the two days of deliberations about the monetary

52
00:02:35,680 --> 00:02:37,800
Speaker 5: policy decision. He really needed to keep it to the

53
00:02:37,800 --> 00:02:41,120
Speaker 5: economics because that's what they talked about for two days. Soon,

54
00:02:41,360 --> 00:02:44,120
Speaker 5: Pow will be going to Congress for his semi annual

55
00:02:44,200 --> 00:02:47,440
Speaker 5: Humphrey Hawkins hearings, and that is absolutely appropriate place to

56
00:02:47,440 --> 00:02:50,440
Speaker 5: be answering these questions about politics. Paw even gave a

57
00:02:50,520 --> 00:02:52,359
Speaker 5: hint to it in very Fed speak where he said,

58
00:02:52,360 --> 00:02:55,960
Speaker 5: you know, Congress is the window to democratic accountability for

59
00:02:56,000 --> 00:02:58,160
Speaker 5: the FED. That's where the FED goes and has to

60
00:02:58,200 --> 00:03:00,680
Speaker 5: answer those tough questions. So we're going to more on that.

61
00:03:01,120 --> 00:03:04,200
Speaker 5: Is just trying to get the timing right in the.

62
00:03:04,240 --> 00:03:04,720
Speaker 4: Forum, right.

63
00:03:04,840 --> 00:03:06,600
Speaker 5: Yes, it was really for him to speak for the

64
00:03:06,600 --> 00:03:08,880
Speaker 5: committee on these deliberations, and I think he did a

65
00:03:08,880 --> 00:03:11,920
Speaker 5: good job on that. But you know, the politics are

66
00:03:11,960 --> 00:03:14,480
Speaker 5: there and they're going to have to address this more fully.

67
00:03:14,880 --> 00:03:17,960
Speaker 6: There was another issue, another aspect of this press conference,

68
00:03:18,000 --> 00:03:20,639
Speaker 6: and frankly the decision more importantly, and that is one

69
00:03:20,680 --> 00:03:23,000
Speaker 6: of the descents. There were two descents. One of them

70
00:03:23,160 --> 00:03:26,200
Speaker 6: was Chris Waller, the FED governor who is in contention

71
00:03:26,480 --> 00:03:29,200
Speaker 6: to be the next FED chair. Did you see this

72
00:03:29,320 --> 00:03:32,560
Speaker 6: as a more political type of dissent or one that

73
00:03:32,680 --> 00:03:35,840
Speaker 6: actually did come with consistency in terms of some of

74
00:03:35,880 --> 00:03:37,680
Speaker 6: the rationale and previous decisions.

75
00:03:38,840 --> 00:03:41,240
Speaker 5: So I expect to hear from Governor Waller for his

76
00:03:41,840 --> 00:03:45,560
Speaker 5: thinking on his descent, But it does fit a pattern.

77
00:03:45,600 --> 00:03:49,000
Speaker 5: Waller was early to sound alarms about the labor market.

78
00:03:49,440 --> 00:03:52,400
Speaker 5: He may be late to saying all's clear or signs

79
00:03:52,400 --> 00:03:54,240
Speaker 5: are clear. I think it would be very consistent for him

80
00:03:54,280 --> 00:03:57,240
Speaker 5: to still have concerns about, you know, how much stabilization

81
00:03:57,360 --> 00:04:00,760
Speaker 5: really is there in the labor market and on that front,

82
00:04:00,800 --> 00:04:03,920
Speaker 5: and also this piece about the inflation outlook. I mean,

83
00:04:04,000 --> 00:04:06,720
Speaker 5: Waller is a forecaster to the core. He may have

84
00:04:06,800 --> 00:04:09,760
Speaker 5: more conviction that those tariffs. You know, we've seen the

85
00:04:09,760 --> 00:04:11,320
Speaker 5: tarif rights that are there, We're going to have a

86
00:04:11,360 --> 00:04:14,080
Speaker 5: textbook case of them rolling off. And he feels like

87
00:04:14,120 --> 00:04:16,520
Speaker 5: it's an it's worth going ahead and pulling some more

88
00:04:16,520 --> 00:04:18,839
Speaker 5: restriction out of the economy. So I think there's a

89
00:04:18,839 --> 00:04:22,040
Speaker 5: clear economic case that is consistent with not just Waller

90
00:04:22,120 --> 00:04:24,159
Speaker 5: of the past year when he has been in potential

91
00:04:24,200 --> 00:04:26,719
Speaker 5: running for fedchair, but really Waller over his whole career.

92
00:04:26,800 --> 00:04:28,800
Speaker 5: So I would really be hesitant to jump to the

93
00:04:28,839 --> 00:04:30,640
Speaker 5: politics in this moment.

94
00:04:30,880 --> 00:04:33,600
Speaker 1: This is consistent. But to the same time, he is

95
00:04:33,640 --> 00:04:35,039
Speaker 1: in the running to be a FED chair and we

96
00:04:35,040 --> 00:04:38,040
Speaker 1: immediately saw his chances spike up because of that. Do

97
00:04:38,080 --> 00:04:41,200
Speaker 1: you think because he did dissent that actually his chances

98
00:04:41,600 --> 00:04:44,120
Speaker 1: are in fact better today than they were twenty four

99
00:04:44,120 --> 00:04:44,640
Speaker 1: hours ago.

100
00:04:46,080 --> 00:04:48,800
Speaker 5: I have no insights on who will be the next

101
00:04:48,839 --> 00:04:50,320
Speaker 5: FED chair really.

102
00:04:51,600 --> 00:04:53,599
Speaker 4: Now I don't. I mean in the.

103
00:04:53,320 --> 00:04:55,880
Speaker 5: Market, the you know, prediction market response that makes a

104
00:04:55,920 --> 00:04:58,600
Speaker 5: lot of sense. And yes, you know he's pushing for cuts,

105
00:04:58,640 --> 00:05:01,080
Speaker 5: but you know it's the This has been a really

106
00:05:01,080 --> 00:05:04,800
Speaker 5: complicated process. The President clearly has you know, struggled to

107
00:05:04,880 --> 00:05:06,560
Speaker 5: kind of come up with the person that he wants

108
00:05:06,600 --> 00:05:09,200
Speaker 5: to see in that FED chair position. I think, you know,

109
00:05:09,279 --> 00:05:11,440
Speaker 5: big picture, we should step back. Yesterday it was a

110
00:05:11,480 --> 00:05:14,320
Speaker 5: ten to two vote in terms of pausing the FED

111
00:05:14,440 --> 00:05:17,640
Speaker 5: chair is not the swing vote on the committee, right

112
00:05:17,760 --> 00:05:20,359
Speaker 5: whoever goes into that position, there would have been a

113
00:05:20,400 --> 00:05:24,880
Speaker 5: pause yesterday. So I think, you know, I understand the speculation,

114
00:05:25,320 --> 00:05:28,919
Speaker 5: and maybe it did help Waller's odds yesterday, But I

115
00:05:29,120 --> 00:05:31,839
Speaker 5: just we want to fed that's focused on the economic

116
00:05:31,839 --> 00:05:35,279
Speaker 5: conditions and making its decisions and pulling the politics into

117
00:05:35,320 --> 00:05:37,440
Speaker 5: it any more than is absolutely necessary.

118
00:05:37,440 --> 00:05:39,440
Speaker 4: It's just it's a really risky path for us to

119
00:05:39,480 --> 00:05:39,880
Speaker 4: go down.

120
00:05:40,680 --> 00:05:53,800
Speaker 2: Stay with us. More Blomberg surveillance coming up after this, METSA,

121
00:05:53,960 --> 00:05:57,960
Speaker 2: Microsoft reaffirming commitments to record AI spending, most Street rewarding

122
00:05:58,000 --> 00:06:01,280
Speaker 2: one sech giant, punishing the APHA. Angela Zino of CFRA

123
00:06:01,400 --> 00:06:03,520
Speaker 2: has a by rating on Meta and a strong buy

124
00:06:03,839 --> 00:06:06,919
Speaker 2: on Microsoft. Angela joins us right now for more. Angela

125
00:06:06,960 --> 00:06:10,200
Speaker 2: a lot of spending, two very very different looking price

126
00:06:10,279 --> 00:06:12,920
Speaker 2: moves in the pre market. What explains the difference between

127
00:06:12,920 --> 00:06:14,320
Speaker 2: Meta and Microsoft?

128
00:06:15,760 --> 00:06:18,120
Speaker 7: Yeah, John, So I would say, you know, first off,

129
00:06:18,120 --> 00:06:21,160
Speaker 7: we're not surprised by the higher than expected spending from

130
00:06:21,160 --> 00:06:24,880
Speaker 7: these companies. I think most anticipated that going into the

131
00:06:24,880 --> 00:06:25,320
Speaker 7: print here.

132
00:06:25,360 --> 00:06:26,039
Speaker 8: I would say.

133
00:06:25,920 --> 00:06:30,320
Speaker 7: Meta's spending definitely more, even more than we anticipated. But

134
00:06:30,400 --> 00:06:32,960
Speaker 7: that being said, you know, at this point in time,

135
00:06:33,000 --> 00:06:36,640
Speaker 7: you're looking at a guidance of essentially thirty percent top

136
00:06:36,640 --> 00:06:38,800
Speaker 7: line growth here for Q one, and that really is

137
00:06:38,839 --> 00:06:41,960
Speaker 7: what explains it, right, This is a case where it

138
00:06:41,960 --> 00:06:44,320
Speaker 7: seems like Wall Street is willing to bid your SOT

139
00:06:44,400 --> 00:06:47,800
Speaker 7: higher if you're showing the top line growth. And it's

140
00:06:47,839 --> 00:06:50,880
Speaker 7: really phenomenal in terms of the type of growth you

141
00:06:50,920 --> 00:06:53,520
Speaker 7: are seeing at Meta at disappoint in time. It really

142
00:06:53,600 --> 00:06:56,440
Speaker 7: kind of demonstrates the fact that, hey, listen, maybe all

143
00:06:56,480 --> 00:07:00,200
Speaker 7: these investments that Zuckerberg has made here over the last year.

144
00:07:00,440 --> 00:07:02,320
Speaker 8: Is starting to pay off.

145
00:07:02,360 --> 00:07:05,800
Speaker 7: I think Zuckerberg in many respects is treating his company

146
00:07:06,680 --> 00:07:09,200
Speaker 7: like a startup, pumping a ton of money into it.

147
00:07:09,200 --> 00:07:12,960
Speaker 7: You're looking at capital intensity ratio now closer about forty

148
00:07:13,000 --> 00:07:16,880
Speaker 7: five to fifty percent in twenty twenty six, So we've.

149
00:07:16,720 --> 00:07:18,680
Speaker 8: Got some enormous fend going on here.

150
00:07:18,920 --> 00:07:21,600
Speaker 7: We'll see what the products look like as they trickle

151
00:07:21,640 --> 00:07:24,120
Speaker 7: through twenty twenty six. But as we kind of look

152
00:07:24,160 --> 00:07:27,240
Speaker 7: at the performance here at least for today, the street likes.

153
00:07:27,120 --> 00:07:29,640
Speaker 2: What they say at one point six twenty dollars startup,

154
00:07:29,680 --> 00:07:31,560
Speaker 2: It's not bad, is it? Angelo. I want to talk

155
00:07:31,600 --> 00:07:35,040
Speaker 2: about Microsoft. Sometimes sentiment is just shaken, and there's a

156
00:07:35,120 --> 00:07:38,320
Speaker 2: dark cloud that hangs over a stock and an ecosystem

157
00:07:38,440 --> 00:07:42,080
Speaker 2: software named at the moment, Angelo to your hires point struggling,

158
00:07:42,360 --> 00:07:43,080
Speaker 2: what's behind it?

159
00:07:43,200 --> 00:07:47,600
Speaker 7: Yeah, yeah, I mean, and when you look at Microsoft,

160
00:07:47,680 --> 00:07:49,400
Speaker 7: right they are the king of the you know, the

161
00:07:49,480 --> 00:07:52,280
Speaker 7: enterprise king of software in many respects. But whether it

162
00:07:52,320 --> 00:07:55,120
Speaker 7: be a service now that reported last night and SAP

163
00:07:56,120 --> 00:07:58,680
Speaker 7: and others that are probably going to report this earning season,

164
00:07:58,920 --> 00:08:00,960
Speaker 7: and just the numbers we've seeing over the last couple

165
00:08:00,960 --> 00:08:04,440
Speaker 7: of weeks, this is a dark cloud over the SaaS space.

166
00:08:04,640 --> 00:08:07,680
Speaker 7: And you know, as far as what we've seen from

167
00:08:07,680 --> 00:08:11,559
Speaker 7: Microsoft posting the December quarter results the March quarter guide,

168
00:08:11,600 --> 00:08:14,320
Speaker 7: it was very solid in nature. And if there's a

169
00:08:14,400 --> 00:08:17,120
Speaker 7: company that could navigate some of the uncertainties that are

170
00:08:17,160 --> 00:08:20,040
Speaker 7: out there and where you know, the enterprise space should

171
00:08:20,040 --> 00:08:23,720
Speaker 7: continue to buy their offerings, it should be on Microsoft

172
00:08:23,800 --> 00:08:26,800
Speaker 7: side of things, right, So we do think that Microsoft

173
00:08:26,880 --> 00:08:30,400
Speaker 7: is well positioned to navigate some of the uncertainties the

174
00:08:30,440 --> 00:08:33,319
Speaker 7: low visibility across the SaaS space.

175
00:08:33,040 --> 00:08:34,560
Speaker 8: Here over the next couple of years.

176
00:08:34,840 --> 00:08:37,880
Speaker 7: But nonetheless, that's just the narrative that's going on right now.

177
00:08:38,840 --> 00:08:42,040
Speaker 7: And you know, there are other negatives. I think from

178
00:08:42,120 --> 00:08:44,160
Speaker 7: the print here in the December quarter, whether it be

179
00:08:44,200 --> 00:08:48,040
Speaker 7: the higher open Ai concentration risk, whether it be the

180
00:08:48,080 --> 00:08:51,720
Speaker 7: lower expected you know, a cloud gross margin guide for

181
00:08:51,760 --> 00:08:54,480
Speaker 7: the March quarter. I think some of that also seeping

182
00:08:54,520 --> 00:08:56,920
Speaker 7: into the negative reaction you're seeing from Microsoft.

183
00:08:56,960 --> 00:08:57,280
Speaker 4: Angela.

184
00:08:57,360 --> 00:08:59,600
Speaker 6: Let's dig into both of those things. This question around

185
00:08:59,640 --> 00:09:03,160
Speaker 6: just to CLI computing growth and the pace seem to

186
00:09:03,480 --> 00:09:05,840
Speaker 6: miss some of the more lofty estimates and the dependence

187
00:09:05,840 --> 00:09:08,160
Speaker 6: on open Ai. There was one stat for the first

188
00:09:08,240 --> 00:09:11,840
Speaker 6: time Microsoft disclosed that forty five percent of a six

189
00:09:11,920 --> 00:09:14,600
Speaker 6: hundred and twenty five billion dollars book of future cloud

190
00:09:14,600 --> 00:09:17,880
Speaker 6: contracts was from open Ai. How much of a concern

191
00:09:18,000 --> 00:09:19,920
Speaker 6: is this to you, this concentration risk and the likes

192
00:09:19,960 --> 00:09:20,640
Speaker 6: of Microsoft.

193
00:09:21,600 --> 00:09:23,360
Speaker 7: Yeah, I mean, I think it's something you've got to

194
00:09:23,360 --> 00:09:25,640
Speaker 7: be mindful of. But you know, in the same respect,

195
00:09:25,640 --> 00:09:29,840
Speaker 7: their non open Ai RPO is still growing at a

196
00:09:29,840 --> 00:09:30,840
Speaker 7: fairly healthy clip.

197
00:09:30,840 --> 00:09:31,640
Speaker 8: I think, out of about.

198
00:09:31,480 --> 00:09:34,000
Speaker 7: Twenty eight percent or so in the quarter. It's going

199
00:09:34,080 --> 00:09:36,120
Speaker 7: to be lumpy here over the next couple of years.

200
00:09:36,160 --> 00:09:39,400
Speaker 7: I do think that forty five percent figure, you know,

201
00:09:39,480 --> 00:09:43,600
Speaker 7: while large in nature, likely comes down here over the

202
00:09:43,640 --> 00:09:46,720
Speaker 7: next couple of years. So yeah, I mean, on the surface,

203
00:09:46,960 --> 00:09:50,160
Speaker 7: it's concerning. I don't think it's as concerning as you know,

204
00:09:50,960 --> 00:09:54,440
Speaker 7: a oracle type of situation. You know, clearly the fact

205
00:09:54,440 --> 00:09:57,400
Speaker 7: that you know, the Microsoft, if they don't get it

206
00:09:57,400 --> 00:09:59,240
Speaker 7: from open ai here over the next couple of years,

207
00:09:59,280 --> 00:10:03,120
Speaker 7: should see it from other enterprise related vendors. But nonetheless, yes,

208
00:10:03,200 --> 00:10:05,520
Speaker 7: I mean on the surface here, the narrative again is

209
00:10:05,600 --> 00:10:09,200
Speaker 7: one where the street is very concerned about open Ai

210
00:10:09,280 --> 00:10:11,400
Speaker 7: at this point in time. I do think that funding

211
00:10:11,480 --> 00:10:15,640
Speaker 7: around will probably help the narrative in terms of the

212
00:10:15,720 --> 00:10:20,400
Speaker 7: cohort of names tied to open Ai like a Microsoft.

213
00:10:20,440 --> 00:10:22,720
Speaker 8: So again, we'll we have to wait and say.

214
00:10:22,559 --> 00:10:25,080
Speaker 6: With respect to the Azure side of things in the

215
00:10:25,120 --> 00:10:28,960
Speaker 6: cloud computing, how much is this an issue that Microsoft

216
00:10:29,000 --> 00:10:32,719
Speaker 6: just can't meet the incredible demand as quickly as some.

217
00:10:32,679 --> 00:10:33,600
Speaker 4: People would have hoped.

218
00:10:33,640 --> 00:10:37,679
Speaker 6: And how much is this truly competition from Alphabet from

219
00:10:37,760 --> 00:10:39,960
Speaker 6: the likes of Amazon that both report next week.

220
00:10:41,320 --> 00:10:43,640
Speaker 7: You know, I personally think it's more of the supply constraints.

221
00:10:43,640 --> 00:10:45,640
Speaker 7: I mean, they did highlight the fact that, hey, listen,

222
00:10:46,080 --> 00:10:47,800
Speaker 7: they could have grown their numbers in north of forty

223
00:10:47,840 --> 00:10:50,840
Speaker 7: percent if they had the supply, So you know, so

224
00:10:50,880 --> 00:10:53,360
Speaker 7: I do think it is more supply constraint in nature,

225
00:10:53,440 --> 00:10:56,400
Speaker 7: but in the same respects, this is a company that's

226
00:10:56,440 --> 00:10:59,080
Speaker 7: going to see also much more difficult comparisons on the

227
00:10:59,120 --> 00:11:01,960
Speaker 7: Azure side of things over the next couple of quarters.

228
00:11:02,440 --> 00:11:04,400
Speaker 8: You know, two quarters from now, you're.

229
00:11:04,280 --> 00:11:06,280
Speaker 7: Going to have to lat numbers like thirty nine percent

230
00:11:06,320 --> 00:11:08,800
Speaker 7: year of the year of growth. So I would expect

231
00:11:08,800 --> 00:11:12,200
Speaker 7: the numbers to potentially even decelerate further, let's pull it

232
00:11:12,200 --> 00:11:14,960
Speaker 7: into the mid thirties range as we kind.

233
00:11:14,800 --> 00:11:15,839
Speaker 8: Of progress through the year.

234
00:11:16,080 --> 00:11:20,120
Speaker 7: But nonetheless, I mean, these are still pretty phenomenal type

235
00:11:20,160 --> 00:11:23,520
Speaker 7: of growth numbers from Azure, and in fact that actually

236
00:11:23,559 --> 00:11:26,240
Speaker 7: ended up being beating our expectations.

237
00:11:26,559 --> 00:11:27,560
Speaker 4: Just taking a step back.

238
00:11:27,600 --> 00:11:30,120
Speaker 1: What caught my eye overnight was Jensen Wong talking about

239
00:11:30,120 --> 00:11:32,800
Speaker 1: how we don't have the energy potentially there's going to

240
00:11:32,840 --> 00:11:35,880
Speaker 1: be constraints in Taiwan when it comes to chip making

241
00:11:35,960 --> 00:11:39,240
Speaker 1: into United States and into Europe. Are these CAPAX now

242
00:11:39,480 --> 00:11:43,040
Speaker 1: numbers so big that actually the energy demand, the physicality

243
00:11:43,080 --> 00:11:45,319
Speaker 1: of building it out doesn't actually work yet?

244
00:11:46,160 --> 00:11:47,760
Speaker 8: I mean, well, we've got to see.

245
00:11:47,880 --> 00:11:50,280
Speaker 7: I mean, at this point in time, you know, energy

246
00:11:50,320 --> 00:11:52,600
Speaker 7: bottlenecks are clearly a risk out there. I mean, I'd

247
00:11:52,640 --> 00:11:55,160
Speaker 7: say personally, at this point in time, the street is

248
00:11:55,200 --> 00:11:58,440
Speaker 7: probably more concerned about some of the memory bottlenecks and

249
00:11:58,520 --> 00:12:00,400
Speaker 7: to you know, to be honest, I mean, when you

250
00:12:00,440 --> 00:12:03,480
Speaker 7: start thinking about the higher plants cap xpland it probably

251
00:12:03,480 --> 00:12:07,559
Speaker 7: takes into account some of the higher boosts in memories

252
00:12:08,320 --> 00:12:11,040
Speaker 7: in memory prices as well. But as far as you know,

253
00:12:11,080 --> 00:12:14,160
Speaker 7: the energy bottlenecks are concerned, it's going to get lumpy

254
00:12:14,200 --> 00:12:14,880
Speaker 7: in nature here.

255
00:12:15,200 --> 00:12:17,360
Speaker 8: They're going to be more challenges and certainties.

256
00:12:17,800 --> 00:12:19,319
Speaker 7: I think that's going to be more of a twenty

257
00:12:19,400 --> 00:12:22,360
Speaker 7: twenty second, second half of twenty twenty seven event and thereafter.

258
00:12:22,720 --> 00:12:24,800
Speaker 8: But nonetheless definitely something to be mindful.

259
00:12:25,000 --> 00:12:27,240
Speaker 2: Just as a market analyst and a market participant, Angela,

260
00:12:27,280 --> 00:12:29,040
Speaker 2: you've witnessed markets for a long time. If you can

261
00:12:29,080 --> 00:12:31,360
Speaker 2: get away from these names just for a moment, I

262
00:12:31,360 --> 00:12:33,080
Speaker 2: think Lisa's doing a great job this morning. You're talking

263
00:12:33,080 --> 00:12:34,839
Speaker 2: about the constraints in the physical world. Do you think

264
00:12:34,880 --> 00:12:37,480
Speaker 2: that's to trade so far of the year that people

265
00:12:37,480 --> 00:12:39,640
Speaker 2: are just chasing that story cross asset.

266
00:12:41,000 --> 00:12:44,920
Speaker 7: I mean, it seems to be you know, I definitely

267
00:12:44,960 --> 00:12:48,280
Speaker 7: think there's you know, there's definitely something to be said

268
00:12:48,400 --> 00:12:51,079
Speaker 7: about that. You know, you kind of look at really

269
00:12:51,440 --> 00:12:54,760
Speaker 7: where the narrative is across the tech ecosystem, right, it

270
00:12:54,800 --> 00:12:59,040
Speaker 7: continues to pile up in a number of these ship

271
00:12:59,240 --> 00:13:02,200
Speaker 7: related type of names that would benefit from that physical

272
00:13:02,240 --> 00:13:06,280
Speaker 7: AI world, as well as hardware related names as well.

273
00:13:06,440 --> 00:13:09,680
Speaker 7: So yeah, maybe not be as exposed to some of

274
00:13:09,720 --> 00:13:12,240
Speaker 7: the constraine tie time memory, but nonetheless, I mean you

275
00:13:12,320 --> 00:13:14,480
Speaker 7: kind of look at the play here at least across

276
00:13:14,559 --> 00:13:18,000
Speaker 7: the tech ecosystem and it would support that thesis here

277
00:13:18,040 --> 00:13:20,640
Speaker 7: and I don't know if it lets up here, you know,

278
00:13:20,679 --> 00:13:22,960
Speaker 7: in the near term you'll definitely get some choppiness. But

279
00:13:23,040 --> 00:13:25,920
Speaker 7: over the next three to five years, you know, when

280
00:13:25,960 --> 00:13:29,000
Speaker 7: you start thinking about the shift for an AI world,

281
00:13:29,720 --> 00:13:32,520
Speaker 7: it is going to be dictated more on the physical

282
00:13:32,640 --> 00:13:37,559
Speaker 7: AI opportunities, where there's also you know, greater uncertainties tied

283
00:13:37,640 --> 00:13:40,880
Speaker 7: to this, you know, SaaS oriented trade. And we've kind

284
00:13:40,880 --> 00:13:44,719
Speaker 7: of seen this accelerated shift away from chef sas to

285
00:13:45,000 --> 00:13:47,840
Speaker 7: kind of the the more you know, chip making related

286
00:13:47,920 --> 00:13:49,960
Speaker 7: names here, even over the last couple of weeks.

287
00:13:50,240 --> 00:13:53,680
Speaker 2: Stay with us Mulplinberg Savanas coming up off to this.

288
00:14:03,040 --> 00:14:05,320
Speaker 2: Jeanette loves to take us rights in this any shutdown

289
00:14:05,320 --> 00:14:07,480
Speaker 2: would likely be shortlived or shore lived.

290
00:14:07,640 --> 00:14:11,839
Speaker 1: Cham of Pale, I think please don't okay, right, that

291
00:14:12,000 --> 00:14:13,920
Speaker 1: was a short lived issue.

292
00:14:13,960 --> 00:14:17,520
Speaker 2: Thank you pronunciation short lift, particularly if they Senate does

293
00:14:17,559 --> 00:14:20,400
Speaker 2: not strip out the Humeland Security funding bill. Jeanette joined

294
00:14:20,440 --> 00:14:22,360
Speaker 2: us now for more Jenet apologies to get en off

295
00:14:22,400 --> 00:14:24,880
Speaker 2: track there, Let's get back on track going into the weekend.

296
00:14:24,960 --> 00:14:26,080
Speaker 2: Is this shutdown avoidable?

297
00:14:27,480 --> 00:14:29,120
Speaker 3: Yeah, I mean it looks right now like we're going

298
00:14:29,160 --> 00:14:32,600
Speaker 3: to again, as Tyler mentioned, have a short term shutdown

299
00:14:32,680 --> 00:14:35,760
Speaker 3: over the weekend, which would be less impactful than obviously

300
00:14:35,760 --> 00:14:38,400
Speaker 3: if it was lasting much longer than that. There is

301
00:14:38,440 --> 00:14:40,680
Speaker 3: this issue about the fact that they are not going

302
00:14:40,720 --> 00:14:43,120
Speaker 3: to do a separate legislative vehicle. As Tyler said, it

303
00:14:43,120 --> 00:14:45,400
Speaker 3: does seem like they want to the Democrats want to

304
00:14:45,480 --> 00:14:48,160
Speaker 3: use the funding bill as the vehicle for some of

305
00:14:48,200 --> 00:14:52,360
Speaker 3: these changes on immigration enforcement, and so that's why we're probably.

306
00:14:52,040 --> 00:14:54,160
Speaker 4: Going to have to have this shutdown now.

307
00:14:54,320 --> 00:14:56,760
Speaker 3: Obviously, this could you know, we could have at least

308
00:14:56,800 --> 00:15:01,440
Speaker 3: a continuing resolution to cover the Home Security bill once

309
00:15:01,480 --> 00:15:03,200
Speaker 3: the House comes back in on Monday.

310
00:15:03,440 --> 00:15:05,520
Speaker 4: So this could be very short lived. It could last

311
00:15:05,560 --> 00:15:06,520
Speaker 4: only three days.

312
00:15:06,800 --> 00:15:09,560
Speaker 3: But obviously depending on how this plays out, this could

313
00:15:09,600 --> 00:15:11,160
Speaker 3: have good, big implications.

314
00:15:11,480 --> 00:15:13,440
Speaker 4: A shutdown would only be a partial shutdown.

315
00:15:13,480 --> 00:15:16,800
Speaker 3: Six appropriations bills were passed, but this is still about

316
00:15:16,840 --> 00:15:19,600
Speaker 3: seventy five percent of the government funding and it includes

317
00:15:19,600 --> 00:15:22,640
Speaker 3: important things. Depending on how this plays out, do they

318
00:15:22,720 --> 00:15:26,120
Speaker 3: pass the defense spending bill, because we obviously are trying

319
00:15:26,160 --> 00:15:29,640
Speaker 3: to threaten and ran with action right now, so that

320
00:15:29,720 --> 00:15:31,720
Speaker 3: is not exactly good to have a shutdown when we're

321
00:15:31,720 --> 00:15:35,119
Speaker 3: trying to have a very strong US national security strategy.

322
00:15:35,520 --> 00:15:37,440
Speaker 4: What happened to IRS funding.

323
00:15:37,480 --> 00:15:39,600
Speaker 3: We're in the middle of tax refund season, so that

324
00:15:39,640 --> 00:15:43,280
Speaker 3: could have a really big impact. And then obviously labor

325
00:15:43,400 --> 00:15:45,440
Speaker 3: as well, so if that's not taken care of, we

326
00:15:45,480 --> 00:15:47,920
Speaker 3: could actually miss another jobs report at the end of

327
00:15:48,000 --> 00:15:50,120
Speaker 3: next week. So I do think that Congress has been

328
00:15:50,160 --> 00:15:51,920
Speaker 3: on a path to avoid a shutdown.

329
00:15:52,120 --> 00:15:53,360
Speaker 4: They will probably try.

330
00:15:53,160 --> 00:15:55,840
Speaker 3: To get these five bills passed immediately and get that

331
00:15:55,960 --> 00:15:57,920
Speaker 3: taken care of, and then we'll be dealing with this

332
00:15:57,960 --> 00:16:00,440
Speaker 3: Homeland security bill, and it would be a partial shutdown

333
00:16:00,480 --> 00:16:03,040
Speaker 3: that may last, hopefully just a short amount of time.

334
00:16:03,040 --> 00:16:04,520
Speaker 4: And that is our overall.

335
00:16:04,120 --> 00:16:06,640
Speaker 1: Thinking, Well, let's deal with the Homeland security bill, because

336
00:16:06,640 --> 00:16:08,800
Speaker 1: that's going to be where the huge debate is going

337
00:16:08,840 --> 00:16:12,320
Speaker 1: to a lie. What is Senator Schumer actually asking the

338
00:16:12,360 --> 00:16:15,200
Speaker 1: Republicans to amend in that bill?

339
00:16:15,440 --> 00:16:17,480
Speaker 3: Yes, I mean they want to obviously tack on some

340
00:16:17,680 --> 00:16:20,680
Speaker 3: policy provisions as Tyler mentioned, where they want to make

341
00:16:20,680 --> 00:16:23,120
Speaker 3: sure that there's no use of masks, there's the use

342
00:16:23,160 --> 00:16:26,920
Speaker 3: of body cameras, there's a code of conduct to things

343
00:16:26,920 --> 00:16:29,400
Speaker 3: of that nature. So obviously this would have to go

344
00:16:29,560 --> 00:16:33,200
Speaker 3: back to the House. There are there was some options.

345
00:16:33,240 --> 00:16:35,440
Speaker 3: You know, you heard some Republicans saying that they were

346
00:16:35,480 --> 00:16:37,960
Speaker 3: open to this, but then you've started to hear others

347
00:16:38,040 --> 00:16:40,840
Speaker 3: start to say that there have a disagreements particular about

348
00:16:41,000 --> 00:16:44,120
Speaker 3: the mask issue and things of that nature, and.

349
00:16:44,080 --> 00:16:48,880
Speaker 4: So this could be a little bit of a friction point.

350
00:16:49,120 --> 00:16:52,080
Speaker 3: But obviously the administration does know that something needs to

351
00:16:52,120 --> 00:16:54,520
Speaker 3: be done in the wake of what has happened over

352
00:16:54,560 --> 00:16:57,320
Speaker 3: the weekend with the shooting of a US citizen, they

353
00:16:57,360 --> 00:16:59,520
Speaker 3: do realize that they need to make some changes here.

354
00:17:00,000 --> 00:17:02,240
Speaker 3: I think they will ultimately push to get this bill

355
00:17:02,280 --> 00:17:03,240
Speaker 3: done one way or another.

356
00:17:03,320 --> 00:17:05,840
Speaker 1: Jeanett, though, if the Republicans do decide to go along

357
00:17:05,880 --> 00:17:09,479
Speaker 1: with these Democrats wants to pass that bill, are they

358
00:17:09,520 --> 00:17:12,399
Speaker 1: basically acknowledging then that their strategy when it comes to

359
00:17:12,480 --> 00:17:15,360
Speaker 1: DHS and ICE hasn't actually worked.

360
00:17:16,400 --> 00:17:17,159
Speaker 4: Not necessarily.

361
00:17:17,200 --> 00:17:19,080
Speaker 3: I mean, I think you've heard from a lot of

362
00:17:19,119 --> 00:17:22,560
Speaker 3: Republicans the way they've framed the issue, that they can

363
00:17:22,600 --> 00:17:26,560
Speaker 3: say that there's been less safety for everyone involved. There

364
00:17:26,560 --> 00:17:29,480
Speaker 3: are ways that they can show that just the tactics

365
00:17:29,480 --> 00:17:32,360
Speaker 3: have maybe become a little bit too strident and they

366
00:17:32,359 --> 00:17:33,359
Speaker 3: need to make some changes.

367
00:17:33,400 --> 00:17:34,920
Speaker 4: So I think that they can do this in a.

368
00:17:34,840 --> 00:17:39,440
Speaker 3: Way that creates not a losing message for the Republicans.

369
00:17:40,000 --> 00:17:42,480
Speaker 6: Jenett, Is it a good strategy to hold government funding

370
00:17:42,520 --> 00:17:45,040
Speaker 6: hostage to try to get some leverage? I mean, this

371
00:17:45,080 --> 00:17:47,280
Speaker 6: seems like voters are not particularly pleased with that. The

372
00:17:47,359 --> 00:17:50,480
Speaker 6: last time around, it didn't really work out for Democrats.

373
00:17:50,840 --> 00:17:52,680
Speaker 6: There were a lot of concerns around air traffic, and

374
00:17:52,720 --> 00:17:55,040
Speaker 6: we're chill still trying to work through the lack of

375
00:17:55,119 --> 00:17:57,560
Speaker 6: data releases. I mean, is this something that's sort of

376
00:17:57,600 --> 00:18:00,639
Speaker 6: running out of power in terms of the voter base.

377
00:18:02,000 --> 00:18:02,200
Speaker 8: Yeah.

378
00:18:02,240 --> 00:18:04,199
Speaker 3: I mean one of the things that obviously when we

379
00:18:04,280 --> 00:18:07,439
Speaker 3: came into let's say, last Friday, there was an effort

380
00:18:07,640 --> 00:18:11,200
Speaker 3: to have this bill done, have funding completely taken care

381
00:18:11,240 --> 00:18:15,439
Speaker 3: of before the deadline tomorrow evening but what happened with

382
00:18:15,440 --> 00:18:19,280
Speaker 3: the shooting was obviously a stark change. It created the

383
00:18:19,359 --> 00:18:22,840
Speaker 3: need to find some sort of leverage to change tactics Otherwise,

384
00:18:22,880 --> 00:18:26,200
Speaker 3: I think both parties were completely against having other shutdown.

385
00:18:26,400 --> 00:18:28,879
Speaker 3: They felt the pain on both sides of that forty

386
00:18:28,880 --> 00:18:31,560
Speaker 3: three day shutdown that we had last fall. But there

387
00:18:31,680 --> 00:18:34,000
Speaker 3: is the concern obviously that if they try to do

388
00:18:34,040 --> 00:18:37,199
Speaker 3: a separate legislative bill, there's a worry that maybe it

389
00:18:37,240 --> 00:18:39,800
Speaker 3: passes the Senate, but it never passes the House, and

390
00:18:39,840 --> 00:18:42,160
Speaker 3: so there's also this fear that that ruins their own

391
00:18:42,240 --> 00:18:45,360
Speaker 3: leverage on the Democratic side if they have to give

392
00:18:45,520 --> 00:18:50,000
Speaker 3: up the option to try to hold the government funding hostage. Obviously,

393
00:18:50,040 --> 00:18:53,040
Speaker 3: I don't think people would want a long term shutdown.

394
00:18:53,200 --> 00:18:55,240
Speaker 3: I don't think the White House, the Republicans, or the

395
00:18:55,280 --> 00:18:57,840
Speaker 3: Democrats want a long term shutdown. I think they do

396
00:18:57,960 --> 00:19:00,400
Speaker 3: want to find a solution here and hopefully this will

397
00:19:00,480 --> 00:19:02,240
Speaker 3: just last a few days to get this over the

398
00:19:02,240 --> 00:19:02,760
Speaker 3: finish line.

399
00:19:02,880 --> 00:19:04,000
Speaker 4: Jene you mentioned something else.

400
00:19:04,040 --> 00:19:06,640
Speaker 6: If the administration understands that something needs to be done,

401
00:19:06,680 --> 00:19:09,080
Speaker 6: I just wonder if you expect other personnel decisions to

402
00:19:09,080 --> 00:19:13,640
Speaker 6: be made from either the cabinet level or beyond to

403
00:19:13,680 --> 00:19:17,080
Speaker 6: try to address some of the unrest.

404
00:19:18,160 --> 00:19:18,359
Speaker 4: You know.

405
00:19:18,480 --> 00:19:22,120
Speaker 3: I mean, it's obviously always an option. Can't necessarily say

406
00:19:22,119 --> 00:19:24,720
Speaker 3: whether or not we see that happening at this time. Obviously,

407
00:19:24,760 --> 00:19:28,080
Speaker 3: the one big move is to move Tom Holman into Minnesota.

408
00:19:28,760 --> 00:19:32,000
Speaker 3: That was obviously a strategic decision to try to change

409
00:19:32,320 --> 00:19:34,359
Speaker 3: the tactics that are being used in to do some

410
00:19:34,440 --> 00:19:37,840
Speaker 3: de escalation. We'll see if other things come out of this.

411
00:19:37,960 --> 00:19:40,200
Speaker 3: Obviously it's been just a week. We'll have to see

412
00:19:40,200 --> 00:19:41,840
Speaker 3: how some of this plays out and see if there

413
00:19:41,880 --> 00:19:44,560
Speaker 3: are other ramifications that happen down the line.

414
00:19:44,920 --> 00:19:48,480
Speaker 2: This is the Bloomberg Survendans podcast, bringing you the best

415
00:19:48,480 --> 00:19:51,800
Speaker 2: in markets, economics, antient politics. You can watch the show

416
00:19:51,880 --> 00:19:54,800
Speaker 2: live on Bloomberg TV weekday mornings from six am to

417
00:19:54,920 --> 00:19:58,720
Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify,

418
00:19:58,840 --> 00:20:01,080
Speaker 2: or anywhere else you listen, and as always on the

419
00:20:01,080 --> 00:20:03,480
Speaker 2: Bloomberg Terminal and the Bloomberg Business opp

420
00:20:07,600 --> 00:20:08,000
Speaker 8: MHM