WEBVTT - Apple Shares Rise to a Record, Fed Meeting 0:00:02.920 --> 0:00:10.840 Bloomberg Audio Studios, podcasts, radio news. You're listening to the 0:00:10.840 --> 0:00:15.000 Bloomberg Intelligence Podcast. Catch us live weekdays at ten am 0:00:15.040 --> 0:00:18.760 Eastern on Applecarplaying and Broud Auto with the Bloomberg Business App. 0:00:18.800 --> 0:00:22.000 Listen on demand wherever you get your podcasts, or watch 0:00:22.040 --> 0:00:24.000 us live on YouTube. 0:00:24.960 --> 0:00:27.000 You're live here on a Bloomberg Interactive Broker Studio. 0:00:27.040 --> 0:00:29.760 We're streaming live on YouTube as well, so you can 0:00:29.840 --> 0:00:32.120 head over to YouTube dot com and search Bloomberg Podcast. 0:00:32.520 --> 0:00:35.760 As Amy was just reporting Apple moving higher, it's now 0:00:35.920 --> 0:00:39.760 intra day all time record. Good for them. It's taken 0:00:39.800 --> 0:00:42.960 the lead over in Nvidia as the second most valuable 0:00:43.040 --> 0:00:46.519 company in the world while also reclaiming the three trillion 0:00:46.560 --> 0:00:47.839 dollar market cap valuation. 0:00:48.000 --> 0:00:49.519 So big day for. 0:00:49.880 --> 0:00:53.400 Apple stocks shareholders. Good news for them. Let's break it 0:00:53.440 --> 0:00:56.440 down a little bit here. Angelo Zeno joins US vice 0:00:56.480 --> 0:00:59.640 president and senior equity analyst at c FR A Research 0:00:59.680 --> 0:01:03.280 journey US from Nueva York via zoom Angel. 0:01:03.320 --> 0:01:04.560 Thanks so much for joining us here. 0:01:05.160 --> 0:01:08.200 How did you take How did you interpret yesterday's news 0:01:08.280 --> 0:01:11.520 from Apple? How big of a deal or not was 0:01:11.600 --> 0:01:12.360 their announcements? 0:01:13.880 --> 0:01:14.119 Yeah? 0:01:14.160 --> 0:01:15.840 I mean thanks for having me, guys, So you know, 0:01:15.880 --> 0:01:18.160 as far as you know how a good deal it is, 0:01:18.480 --> 0:01:20.399 we think it's a big deal to us. You know, 0:01:21.040 --> 0:01:24.959 Siri probably just got its biggest upgrade ever since it's 0:01:25.280 --> 0:01:28.880 you know, original kind of appearance back in twenty eleven. 0:01:29.280 --> 0:01:31.160 And you kind of look at what they've done across 0:01:31.200 --> 0:01:33.560 the ecosystem and the new you know, the new AI 0:01:33.640 --> 0:01:36.920 capabilities and tools that they're going to push out to developers. Now, 0:01:37.640 --> 0:01:39.480 there's going to be a lot that they can do 0:01:40.440 --> 0:01:43.360 with these tools, and you know, in terms of upgrading 0:01:43.360 --> 0:01:45.840 their apps and providing new capabilities out there to the 0:01:45.840 --> 0:01:49.440 consumer may not necessarily be something you see over the 0:01:49.480 --> 0:01:52.160 next kind of three to six months, may take you know, 0:01:52.240 --> 0:01:54.640 may take some time here. That's why we told investors 0:01:54.640 --> 0:01:57.240 out there this is going to be more evolutionary than 0:01:57.280 --> 0:01:59.559 it is some sort of super cycle that you're going 0:01:59.600 --> 0:02:02.200 to see later this year. But that said, I mean, 0:02:02.680 --> 0:02:05.080 I think what's really important here is you kind of 0:02:05.120 --> 0:02:08.919 look at most consumers out there today. Most consumers aren't 0:02:09.040 --> 0:02:12.959 using kind of AI in the sense of chat, GPT 0:02:13.400 --> 0:02:17.000 among other type of you know, large language models out 0:02:17.000 --> 0:02:19.880 there to the extent that they possibly can. And when 0:02:19.880 --> 0:02:22.320 you kind of think about what Apple is doing is 0:02:22.320 --> 0:02:27.320 they're probably they're throwing that kind of you know, ability 0:02:27.320 --> 0:02:29.560 out there for consumers to have it directly in their hands. 0:02:29.560 --> 0:02:31.680 So we think that's a big deal, and we think 0:02:31.720 --> 0:02:34.960 that's going to cause consumers out there to ultimately upgrade. 0:02:35.160 --> 0:02:37.239 May not be the sixteen, it might be the seventeen, 0:02:37.480 --> 0:02:41.280 but ultimately it's a very positive thing for the evolution 0:02:41.520 --> 0:02:42.000 of Apple. 0:02:42.520 --> 0:02:46.400 You maintained a by rating on this stock after yesterday's 0:02:46.600 --> 0:02:49.120 news following the conference, but then also if you look 0:02:49.120 --> 0:02:50.840 at the an R function, I know Paul likes to 0:02:50.840 --> 0:02:54.200 look at this. In the terminal, there's forty buys, fifteen holes, 0:02:54.480 --> 0:02:57.040 five cells. And Paul and I were just chatting about 0:02:57.040 --> 0:02:59.680 how this stock when you're looking at Apple up more 0:02:59.680 --> 0:03:02.560 than two twenty percent, is that April nineteenth low. How 0:03:02.639 --> 0:03:05.360 much more room do you think the shares have to 0:03:05.480 --> 0:03:06.000 run now? 0:03:06.960 --> 0:03:09.080 Yeah, suggest I think I think that's a great point. 0:03:09.080 --> 0:03:10.560 So you kind of look at the move that they 0:03:10.560 --> 0:03:13.280 had going into the announcement here, right, I mean, it's 0:03:13.400 --> 0:03:15.800 a fantastic move though the stock was actually down I 0:03:15.800 --> 0:03:18.160 think about fourteen percent on a year to date basis 0:03:18.160 --> 0:03:20.920 into late April, right, And I think that's kind of 0:03:20.919 --> 0:03:25.000 the story from January to April was, Hey, listen, we've 0:03:25.040 --> 0:03:28.680 got some China issues. Expectations in the second half of 0:03:28.680 --> 0:03:31.639 this year may not be able to be met. Now 0:03:31.720 --> 0:03:34.200 you kind of change the narrative around since kind of 0:03:34.240 --> 0:03:37.360 their earnings were released in early May, as well as 0:03:37.400 --> 0:03:40.400 kind of the developer's conference here to one, whereas, hey, 0:03:40.400 --> 0:03:43.320 those numbers may not be attainable to You know, we've 0:03:43.360 --> 0:03:48.320 gotten now six percent expected growth for the iPhone sixteenth cycle. 0:03:48.640 --> 0:03:52.240 There's probably upside to that number instead of downsides. So 0:03:52.560 --> 0:03:56.120 in argue, the narrative has changed. It's all about whether 0:03:56.240 --> 0:03:58.480 or not or how much upside can we see from 0:03:58.520 --> 0:04:01.280 that iPhone sixteenth cycle. At this point in time, we 0:04:01.360 --> 0:04:04.480 think there's upside to the six plus six percent number, 0:04:04.720 --> 0:04:06.880 probably at least eight to ten percent. It'll all be 0:04:06.960 --> 0:04:09.760 sighted also on whether or not Apples can kind of 0:04:09.960 --> 0:04:13.120 or Apple looks to increase prices in the next cycle. 0:04:13.240 --> 0:04:16.000 That remains to be seen. But in our view, there's 0:04:16.120 --> 0:04:19.279 upside potential that still remains despite the move that we've 0:04:19.320 --> 0:04:21.760 seen here over the last five to six weeks. 0:04:21.920 --> 0:04:24.600 So Angel, I'm out there in the marketplace sporting in 0:04:24.760 --> 0:04:26.200 Apple iPhone eleven. 0:04:27.000 --> 0:04:29.719 So I'm guessing I'm right for the upgrade eleven. Yeah, 0:04:29.720 --> 0:04:30.920 I guess I have a fourteen. 0:04:31.120 --> 0:04:33.400 I guess mine's a few years old. 0:04:33.800 --> 0:04:35.520 Here's this sex. It's ridiculous. 0:04:35.720 --> 0:04:37.560 So Angelo, do you think there can be people like 0:04:37.600 --> 0:04:41.760 me that are gonna take this AI features that will 0:04:41.800 --> 0:04:43.720 be coming out in the in the iPhone sixteen, I 0:04:43.720 --> 0:04:45.840 guess in mid September. Are there gonna be people like 0:04:45.920 --> 0:04:47.880 me that are going to go out and upgrade? Is 0:04:47.920 --> 0:04:50.320 this gonna be a real driver of unit sales? 0:04:50.360 --> 0:04:50.680 Do you think? 0:04:51.839 --> 0:04:52.080 Yeah? 0:04:52.120 --> 0:04:54.560 I mean, listen, I think, well, first off, you know, 0:04:54.760 --> 0:04:56.679 there's not much of a bar to be here because 0:04:56.720 --> 0:04:59.200 the iPhone's fifteen cycle is a down cycle. If you 0:04:59.240 --> 0:05:01.640 actually look at the four teen cycle, it was relative 0:05:01.720 --> 0:05:05.080 relatively flat cycle as well as well. So we've kind 0:05:05.080 --> 0:05:07.240 of had this kind of pause here over the last 0:05:07.320 --> 0:05:10.320 kind of two cycles in terms of on a unit basis, right, 0:05:10.360 --> 0:05:12.880 Whereas the twelve and thirteen really took a lot of 0:05:12.960 --> 0:05:15.760 kind of upside there because of some of the you know, 0:05:15.800 --> 0:05:18.520 the China market share gains because of the five G cycle, 0:05:18.680 --> 0:05:20.800 upgrade cycle and what have you. So as we kind 0:05:20.800 --> 0:05:24.400 of now here look here into the sixteen cycle, I 0:05:24.440 --> 0:05:27.000 think a number of things here, as far as kind 0:05:27.000 --> 0:05:30.320 of the fact that the iPhone twelve was that that 0:05:30.400 --> 0:05:33.599 last big upcycle. You're now looking at four years past that. 0:05:33.680 --> 0:05:36.680 So a lot of the twelve consumers out there are 0:05:36.680 --> 0:05:39.760 going to potentially look to upgrade. But for someone like 0:05:39.800 --> 0:05:42.719 you or even someone like myself that haven't upgraded in years, 0:05:43.200 --> 0:05:45.760 this is I mean, forget about the AI capability. 0:05:45.760 --> 0:05:46.760 It's just the camera. 0:05:46.520 --> 0:05:50.000 Capabilities that we've seen since the iPhone eleven. It should 0:05:50.120 --> 0:05:52.440 kind of you're going to see some notable enhancements, but 0:05:52.640 --> 0:05:55.040 I do think kind of that the new AI capabilities 0:05:55.080 --> 0:05:59.560 out there will drive some of those older consumers to upgrade. 0:05:59.560 --> 0:06:02.600 I think all so listen, this is these AI capabilities 0:06:02.600 --> 0:06:05.880 don't work on anything kind of outside of the fifteen 0:06:06.400 --> 0:06:09.440 uh pro devices kind of, so so you can even 0:06:09.480 --> 0:06:13.239 potentially see some you know, iPhone thirteen users or fourteen 0:06:13.360 --> 0:06:15.599 users out there look to upgrade as well. 0:06:15.920 --> 0:06:18.839 Talk to us more about when we're saying AI capabilities, 0:06:18.880 --> 0:06:21.440 what exactly are we going to be able to use 0:06:21.800 --> 0:06:24.480 on those devices that's going to be different from before. 0:06:25.800 --> 0:06:28.240 Yeah, I mean listen, I think most of it is 0:06:28.279 --> 0:06:31.119 pretty basic in nature versus kind of what we've seen 0:06:31.200 --> 0:06:34.200 thus far, and some of the announcements we've seen right 0:06:34.279 --> 0:06:38.159 in terms of what Samsung has announced at the S 0:06:38.240 --> 0:06:42.520 twenty four, what we've seen Alphabet with the Google Pixel. 0:06:42.160 --> 0:06:42.719 And what have you. 0:06:42.800 --> 0:06:46.800 But you know, clearly Theories getting its upgrade is the 0:06:46.800 --> 0:06:50.280 big thing out there. You know, embedding chat GP functionality 0:06:50.960 --> 0:06:52.960 in there as well as a big deal. But you know, 0:06:53.000 --> 0:06:58.520 they showcase capabilities, rewrite, summarization, gen Moji might be a 0:06:58.560 --> 0:07:00.880 cool thing with you know, some of the the younger 0:07:01.000 --> 0:07:04.479 users out there. They showed some you know, cool stuff 0:07:04.520 --> 0:07:07.240 on the photo side of things. So they're going to 0:07:07.320 --> 0:07:10.880 be incremental additions in terms of AI across their ecosystem 0:07:10.880 --> 0:07:12.240 that you're going to be able to kind of use 0:07:12.280 --> 0:07:16.640 and just ultimately kind of make yourself just more efficient 0:07:16.720 --> 0:07:18.400 in nature. I mean, if there was something in an 0:07:18.400 --> 0:07:21.280 email that you had forgotten to put in your calendar, 0:07:21.400 --> 0:07:23.200 that's something that kind of theory is going to be 0:07:23.240 --> 0:07:25.200 able to help you with, whereas you do no longer 0:07:25.240 --> 0:07:26.840 have to kind of go back and search that in 0:07:26.920 --> 0:07:29.800 your email box. So a lot of kind of small 0:07:30.720 --> 0:07:33.440 useful information. We'll see how how well this works once 0:07:33.480 --> 0:07:35.800 it actually comes out and it's exactly in the hands 0:07:35.840 --> 0:07:38.920 of consumers out there. But that said, you know, I 0:07:38.920 --> 0:07:40.640 think a lot of it is incremental. But I think 0:07:40.680 --> 0:07:43.680 the way Apple kind of markets their iPhone devices and 0:07:43.760 --> 0:07:46.400 older devices in general, when you kind of throw the 0:07:46.480 --> 0:07:49.600 Aire storyline on top of it, on top of that, 0:07:49.880 --> 0:07:52.200 I think that's really what kind of is going to 0:07:52.240 --> 0:07:54.480 capture the appeal of a lot of those consumers out there. 0:07:54.760 --> 0:07:56.920 All right, Angela, thank you so much for joining us. 0:07:56.920 --> 0:07:59.960 Angelo Zeno us a vice president and senior equity annals 0:08:00.040 --> 0:08:01.960 at cfr A Research. 0:08:02.120 --> 0:08:03.920 I actually think I will go and get a new iPhone. 0:08:03.920 --> 0:08:06.680 With the new one in September, look at you, and 0:08:06.720 --> 0:08:08.520 I'm not for Ai'm not for the camera, and I 0:08:08.680 --> 0:08:09.320 just I don't know. 0:08:10.160 --> 0:08:11.480 I kind of need a new care. I don't know 0:08:11.480 --> 0:08:13.840 if my mine's a little too fuzzy and granny. However, 0:08:13.880 --> 0:08:16.200 I have dropped my phone many times, so that's not 0:08:16.240 --> 0:08:17.520 Apple's pot that's actually my own. 0:08:17.560 --> 0:08:19.600 Well, my thing is it's all about the battery. 0:08:19.600 --> 0:08:22.680 When the battery starts to die, that's my clue upgrade 0:08:22.680 --> 0:08:24.680 and it has been kind of losing its right. 0:08:24.840 --> 0:08:27.160 I keep having to charge mine multiple times. 0:08:27.920 --> 0:08:30.080 So I think that's kind of the way that's historically 0:08:30.080 --> 0:08:30.640 been so you know. 0:08:30.640 --> 0:08:32.800 What, maybe you and I both will have new phones 0:08:32.960 --> 0:08:33.240 walk over. 0:08:33.360 --> 0:08:34.680 I mean, the good news is we have a huge 0:08:34.760 --> 0:08:37.120 Apple store just you know, right down the block here. 0:08:37.400 --> 0:08:38.720 It's right Fifth Avenue. 0:08:38.480 --> 0:08:40.360 Across from the plaza, across from the plaza, and I 0:08:40.360 --> 0:08:43.280 walk past the pen station every day. Sometimes is going 0:08:43.360 --> 0:08:46.000 there with the other throngs of billions tourists go to 0:08:46.040 --> 0:08:46.320 that show. 0:08:46.360 --> 0:08:47.839 Oh it's it's always packed. 0:08:47.840 --> 0:08:50.880 It's always packed. Crazy. So maybe I'll go there. 0:08:50.920 --> 0:08:52.679 And that's where Tim Cook comes when he comes into 0:08:52.720 --> 0:08:54.440 the city. Does some of his product launches there? 0:08:54.480 --> 0:08:57.360 That's right, that's stock trading above two hundred and two 0:08:57.440 --> 0:08:59.880 dollars right now, still trading at an intra day wreck, 0:09:00.200 --> 0:09:01.920 so clipsing those December all time highs. 0:09:01.920 --> 0:09:04.280 Paul, good good news for our friends in Cooper Tina. 0:09:06.800 --> 0:09:10.679 You're listening to the Bloomberg Intelligence Podcast. Catch us live 0:09:10.760 --> 0:09:13.800 weekdays at ten am Eastern on Apple car Play and 0:09:13.800 --> 0:09:16.720 Android Auto with the Bloomberg Business Act. You can also 0:09:16.800 --> 0:09:20.280 listen live on Amazon Alexa from our flagship New York station, 0:09:20.640 --> 0:09:25.600 Just Say Alexa, playing Bloomberg eleven thirty. 0:09:25.240 --> 0:09:28.440 Tomorrow Again, all eyes turned to the Federal Reserve as 0:09:28.480 --> 0:09:30.800 it tends to do from time to time. We have 0:09:30.880 --> 0:09:33.200 the statement coming out of two PM press conference at 0:09:33.200 --> 0:09:36.600 two thirty Michael McKee, Bloomberg's own Michael McKee probably hopping 0:09:36.640 --> 0:09:39.319 on the asella later second and hitting down to DC 0:09:39.840 --> 0:09:44.640 so he can badger FED Chairman Jay Palill in our studio. 0:09:44.800 --> 0:09:48.360 Oh so exciting to suspend the soccer. 0:09:48.559 --> 0:09:51.400 He must have found the Jersey transit train station which 0:09:51.400 --> 0:09:54.160 he lost forgot about for a long time. I hered 0:09:54.240 --> 0:09:57.200 Jersey Chief US interest rate strategies for Bloomberg and College 0:09:57.240 --> 0:10:01.679 studio in studio with the soccer carball suspenders, which just loves. 0:10:03.120 --> 0:10:08.200 I guess tomorrow our expectations should be low for market 0:10:08.240 --> 0:10:10.520 moving news coming from the FED is how we should 0:10:10.520 --> 0:10:10.920 approach it. 0:10:11.000 --> 0:10:11.920 Well, not necessarily. 0:10:11.960 --> 0:10:15.000 You know that there's the possibility that the FED will 0:10:15.160 --> 0:10:18.040 shift its dots not only for this year, but more importantly, 0:10:18.360 --> 0:10:20.480 at least from my perspective, will be the twenty twenty 0:10:20.480 --> 0:10:22.960 five and twenty twenty six dots. So if the FED 0:10:22.960 --> 0:10:25.040 were to move those up because they think that maybe 0:10:25.080 --> 0:10:26.839 the economy is going to be a little bit more robust, 0:10:26.880 --> 0:10:29.240 they won't have to cut interest rates quite as aggressively 0:10:29.679 --> 0:10:32.680 as the prior top plot from the March meeting, then 0:10:32.880 --> 0:10:35.400 the back end of the yield curve in treasuries could 0:10:35.400 --> 0:10:37.160 potentially move quite a bit. 0:10:37.600 --> 0:10:38.320 We don't see. 0:10:38.360 --> 0:10:41.440 Liquidity isn't great right now in the treasury market, so 0:10:42.000 --> 0:10:44.600 you can easily have a ten or fifteenity. 0:10:43.920 --> 0:10:45.560 Great, it's the biggest market of anything. 0:10:46.120 --> 0:10:48.240 Well, but that's the reason, right we've been issuing a 0:10:48.240 --> 0:10:52.200 whole lot of debt and there's only a limited number 0:10:52.200 --> 0:10:54.880 of buyers. So you know, just because you have a 0:10:54.880 --> 0:10:57.120 lot of debt doesn't necessarily mean that there's going to 0:10:57.160 --> 0:11:00.160 be an equal number of buyers out there. So it's 0:11:00.200 --> 0:11:02.600 more it's not that the market's not owned, right that 0:11:02.679 --> 0:11:06.000 So the Treasury Department issues bonds every single almost every 0:11:06.000 --> 0:11:09.560 week now but but basically all the time, and those 0:11:09.600 --> 0:11:12.720 get purchased. Now, the question is in the secondary market, 0:11:13.040 --> 0:11:15.480 how easy it is to sell those bonds into the 0:11:15.960 --> 0:11:18.680 into the market and is there a natural buyer on 0:11:18.720 --> 0:11:22.600 the other side, And the answer is sometimes yes, but 0:11:22.600 --> 0:11:24.800 but occasionally in order to find those buyers, the price 0:11:24.840 --> 0:11:28.360 has to move quite significantly to you know, to entice 0:11:28.400 --> 0:11:29.360 people into the market. 0:11:29.600 --> 0:11:32.680 What do you think bond investors want to hear from 0:11:32.720 --> 0:11:35.720 FED chair pal versus what you think we actually will 0:11:35.760 --> 0:11:37.440 hear in his commentary. 0:11:37.640 --> 0:11:40.400 Well, you know, bond investor, if you're long, you want 0:11:40.440 --> 0:11:41.959 to hear them say that, hey, we're going to cut 0:11:41.960 --> 0:11:44.960 interest rates, you know, starting in July, and and you 0:11:45.000 --> 0:11:47.880 know that that's certainly what what the longs would like 0:11:47.920 --> 0:11:50.600 to see, right, We're not going to hear hear anything 0:11:50.720 --> 0:11:53.440 like that. In fact, we might just hear the opposite. 0:11:53.480 --> 0:11:55.319 And I think that's one of the reasons why the 0:11:55.360 --> 0:11:58.240 people in the treasury market have been pretty cautious. There's 0:11:58.360 --> 0:12:01.080 positioning is now much. You had a lot of people 0:12:01.080 --> 0:12:05.520 who were short. They kind of exited those positions when 0:12:05.600 --> 0:12:08.959 we were actually near current levels or even with the 0:12:09.160 --> 0:12:11.199 yields maybe ten or fifteen base points higher. 0:12:11.520 --> 0:12:11.920 But the. 0:12:13.840 --> 0:12:16.120 Sell off that they think is constrained because it does 0:12:16.160 --> 0:12:19.280 seem like the Fed believes and is trying to convince 0:12:19.280 --> 0:12:21.440 everyone that at some point we're going to cut interest rates. 0:12:21.440 --> 0:12:23.360 So it's going to be hard for sell offs to 0:12:23.400 --> 0:12:26.320 be maintained for a very long period of time. Particularly 0:12:26.400 --> 0:12:30.079 now going back to that supply story, the Treasury Department 0:12:30.200 --> 0:12:32.960 is not issuing more debt than it had been before. 0:12:33.040 --> 0:12:36.360 The issuance pace is basically constant, where as you go 0:12:36.440 --> 0:12:40.080 back six nine months ago, they were continuing to increase 0:12:40.120 --> 0:12:42.200 the amount of debt that they were issuing, and that's 0:12:42.200 --> 0:12:43.439 actually slowed down quite a lot. 0:12:43.760 --> 0:12:46.800 What does a government bond trader do today before a 0:12:46.880 --> 0:12:50.920 FED meeting? Did they make sure they're flat, they're fully hedged? 0:12:51.000 --> 0:12:54.320 Do they know? Did they play their gut and go 0:12:54.440 --> 0:12:55.959 long or short? Here a little bit? What do you 0:12:56.040 --> 0:12:56.520 tip if you do? 0:12:56.880 --> 0:12:59.800 Yeah, I it's a good question. So I've talked to 0:12:59.840 --> 0:13:03.200 some some folks on the cell side, uh in the 0:13:03.240 --> 0:13:05.400 last couple of days, and and a lot of them 0:13:05.440 --> 0:13:10.040 are are dis confused, so they are relatively short or 0:13:10.080 --> 0:13:12.680 relatively flat, I should say. That being said, if you 0:13:12.720 --> 0:13:15.080 look at the positioning data, so the Federal Reserve every 0:13:15.120 --> 0:13:17.800 single week actually pulls the dealers and gets the primary 0:13:17.800 --> 0:13:19.800 dealer positioning data there. 0:13:19.840 --> 0:13:21.480 Are they honest when they're responding to them? 0:13:21.520 --> 0:13:25.040 Well, well they have to be, because if they're audited 0:13:25.080 --> 0:13:27.080 when they're audited annually by the FED, and if they're 0:13:27.200 --> 0:13:28.240 if they don't do their. 0:13:28.160 --> 0:13:30.040 Job there and okay, get in trouble. 0:13:31.000 --> 0:13:33.720 So the but but but dealers in aggregate or as 0:13:33.720 --> 0:13:36.720 long treasuries as they've ever been, it's almost record longs 0:13:36.760 --> 0:13:40.480 in terms of the notional amount outstanding, So so dealers 0:13:40.480 --> 0:13:42.560 are long. But on the other sides, they're also not 0:13:42.679 --> 0:13:45.400 quite record short, but they are. They're hedged a lot 0:13:45.440 --> 0:13:47.920 with futures, so it's like they're long the cash and 0:13:47.920 --> 0:13:49.600 they're short to future. So they're in what we call 0:13:49.640 --> 0:13:52.920 a basis trade where where they're playing some relative value, 0:13:52.960 --> 0:13:55.839 not taking a ton of risk. But but but they 0:13:55.840 --> 0:13:58.880 still have a lot of cash that that they cash, 0:13:58.880 --> 0:14:00.439 securities that they have on their books. 0:14:00.520 --> 0:14:03.040 I track a lot of the big banks and obviously 0:14:03.080 --> 0:14:05.520 their outlooks for when the potential of the first rate 0:14:05.800 --> 0:14:07.760 could happen. So gold min Sacks, for instance, over the 0:14:07.800 --> 0:14:09.920 weekend they still reiterated that they were thinking it was 0:14:09.960 --> 0:14:11.680 going to happen in September, but then they thought a 0:14:11.720 --> 0:14:15.040 second cut would happen in December rather than November. When 0:14:15.040 --> 0:14:17.520 you're looking at the bond market, what is that really 0:14:17.559 --> 0:14:19.760 telling us as far as what the consensus on the 0:14:19.760 --> 0:14:22.880 potential timing is. But because it is an interesting dynamic 0:14:22.920 --> 0:14:26.440 because you have September and then November, actually that interest 0:14:26.520 --> 0:14:28.640 rate decision is the same week as the election, so 0:14:28.680 --> 0:14:31.120 the meeting starts that Wednesday, not that Tuesday. 0:14:31.120 --> 0:14:34.760 They actually moved right to avoid the election. So the 0:14:34.800 --> 0:14:37.640 meeting now the release will be on Thursday, be the 0:14:37.680 --> 0:14:40.960 first time we've had a Thursday US that I can remember, not. 0:14:41.080 --> 0:14:42.880 Quite some time twenty years, so that a lot of 0:14:42.920 --> 0:14:44.720 people have been looking that far ahead to the calendar, 0:14:44.720 --> 0:14:46.600 but I have it circled on my desk, so I 0:14:46.680 --> 0:14:49.040 wanted to ask you your thought process about the timing there. 0:14:49.320 --> 0:14:51.920 So I actually suspect at this point that the Fed, 0:14:52.440 --> 0:14:55.560 you know, unless the CPI data really comes down massively 0:14:55.600 --> 0:14:57.440 and we start to have job losses in the next 0:14:57.520 --> 0:15:00.800 two months, which doesn't seem likely, I doubt that the 0:15:00.800 --> 0:15:03.640 Fed's going to do anything prior to the election. So 0:15:03.760 --> 0:15:06.840 I think September. While it's not a zero percent probability, 0:15:06.960 --> 0:15:12.440 I'll almost never say that, but although tomorrow's zero, well, 0:15:12.600 --> 0:15:14.920 I think that it's very possible that if the FED 0:15:15.040 --> 0:15:18.200 starts to cut rates, it'll be in November or December. 0:15:19.040 --> 0:15:21.280 And there's a growing possibility of my mind that the 0:15:21.280 --> 0:15:23.600 FED might not start cutting rates at all this year. Right, 0:15:23.680 --> 0:15:26.200 it might not cut rates until twenty twenty five, because 0:15:26.640 --> 0:15:30.000 the economy, even though it's slowing, is still reasonably robust, 0:15:30.160 --> 0:15:32.280 and when you look at a lot of the preponderance 0:15:32.280 --> 0:15:34.320 of the data that we look at, particularly the hard 0:15:34.400 --> 0:15:37.920 data like retail sales and even the job market, although 0:15:38.000 --> 0:15:41.320 you know, Anamog and our colleagues at Bloomberg Economics certainly 0:15:41.600 --> 0:15:43.160 see some cracks there as well. 0:15:43.360 --> 0:15:46.000 What is it about September in particular, while you're seeing 0:15:46.080 --> 0:15:49.080 kind of more firms expecting it that month in particular 0:15:49.160 --> 0:15:50.120 versus others. 0:15:49.840 --> 0:15:52.440 Because they're just moving it from July, right, you keep 0:15:52.440 --> 0:15:53.000 pushing it out. 0:15:53.200 --> 0:15:53.640 Yeah, they're just. 0:15:53.680 --> 0:15:54.200 Pushing it out. 0:15:55.240 --> 0:15:57.240 I think that the Fed will still avoid September, even 0:15:57.280 --> 0:15:59.360 though they'll always say that like, we'll do what we 0:15:59.440 --> 0:16:02.360 have to do regardless of the election. This would actually 0:16:02.360 --> 0:16:04.800 be the second closest to an election that they've made 0:16:04.800 --> 0:16:07.680 an initial move. If they were to move in September, 0:16:08.600 --> 0:16:12.120 they basically will say it would say to themselves, you 0:16:12.120 --> 0:16:14.960 know they they'll never say this publicly, but hey, you know, 0:16:15.000 --> 0:16:17.640 why don't we just wait six weeks? You know that realistically, 0:16:17.680 --> 0:16:19.840 we don't have a lot of data, and if the 0:16:19.920 --> 0:16:23.960 data is not absolutely crashing, there's not a there's not 0:16:23.960 --> 0:16:26.360 a fundamental need for us to cut this moment. We 0:16:26.360 --> 0:16:28.200 could just cut a little bit faster later. 0:16:28.600 --> 0:16:31.800 Once they do start cutting, what happens then? 0:16:31.840 --> 0:16:33.680 Did they cut every month there other than the month 0:16:33.880 --> 0:16:36.400 twenty five basis points? Fifty basis points? That does the 0:16:36.440 --> 0:16:39.360 five and a half percent discount rate go to where? 0:16:39.440 --> 0:16:39.720 I don't know. 0:16:39.840 --> 0:16:42.560 Yeah, well it would depend in the economic situation. But 0:16:42.640 --> 0:16:43.960 at the end of the day, I think they would 0:16:44.000 --> 0:16:47.520 like to cut in twenty fives. And certainly that's one 0:16:47.520 --> 0:16:49.800 big reason to look at the twenty twenty five and 0:16:49.800 --> 0:16:52.320 twenty twenty six dots because that'll give you a hint 0:16:52.360 --> 0:16:54.920 test of case. Right, So at this point it looks 0:16:54.960 --> 0:16:57.720 like every other Ish meeting is what they're thinking that 0:16:57.720 --> 0:16:58.240 they'll cut. 0:16:58.880 --> 0:17:01.040 What's a big soccer story in the world. 0:17:01.240 --> 0:17:04.040 Oh, we real Central New Jersey has a home match tomorrow, 0:17:04.160 --> 0:17:08.520 so we have our beer garden getting ready and where Yeah, 0:17:08.560 --> 0:17:12.720 we play at Ryder University. Yeah, in Marsville, New Jersey, 0:17:12.880 --> 0:17:15.000 which is but you know, right in between Princeton and 0:17:15.000 --> 0:17:17.000 Trent And so we get a pretty we've gotten pretty 0:17:17.000 --> 0:17:19.200 good crowds. We actually have record attendance this year, so. 0:17:19.160 --> 0:17:20.320 He pretty excited about it. 0:17:20.359 --> 0:17:23.879 And who do you play tomorrow? We played Lehigh Valley United. 0:17:23.600 --> 0:17:26.400 Rush, which is and where do you get players. 0:17:27.200 --> 0:17:30.240 Almost all of our players are Division one collegiate athletes. 0:17:30.280 --> 0:17:33.560 Okay, Paul, do you want to join in? Might I 0:17:33.640 --> 0:17:34.920 might join in on the beer bash. 0:17:35.760 --> 0:17:37.639 I've been joked around about that, and I'm like, I 0:17:37.640 --> 0:17:39.760 don't want to pull a hamstring like the first fifteen 0:17:39.840 --> 0:17:40.760 seconds I'm on the pitch. 0:17:41.320 --> 0:17:44.600 Anything on the professional level that reach paint. Well. 0:17:44.840 --> 0:17:46.720 You know, one of our local teams here in New 0:17:46.800 --> 0:17:49.160 York is doing really well in Major League Soccer, Soka 0:17:49.480 --> 0:17:51.760 New York Red Bulls is doing great. They got a 0:17:51.880 --> 0:17:56.239 player named Emil Forstburg from from RBI Leipzig and uh 0:17:56.359 --> 0:17:59.320 and and he's been tearing things up along with some homegrowns. 0:17:58.840 --> 0:18:01.959 And then a great stadium, the Red over there in Jersey. 0:18:02.000 --> 0:18:03.720 All right, Ira Jersey, thanks so much for joining us, 0:18:03.760 --> 0:18:06.679 Ira Jersey Chief US Interest Rate Strategic Just Bloomberg Intelligence 0:18:07.200 --> 0:18:10.040 joining us here on our Bloomberg Interactive Broker's studio. 0:18:10.960 --> 0:18:14.840 You're listening to the Bloomberg Intelligence podcast. Catch us live 0:18:14.920 --> 0:18:17.639 weekdays at ten am Eastern on Apple car Playing and 0:18:17.760 --> 0:18:20.639