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Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg

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Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern

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Speaker 2: We are advantaged with us.

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Speaker 3: Claudia Som We're thrilled that she could join us here

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Speaker 3: on each and every jobs a chief economist at News

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Speaker 3: Century Advisors, Claudia, I guess a question to let you discuss.

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Speaker 3: Maybe it's not an Nber recession, but if I've got

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Speaker 3: a ginormous negative revision in an under one hundred thousand

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Speaker 3: this month jobs report.

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Speaker 2: What portion of America is now in recession? So we

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Speaker 2: need we need to.

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Speaker 4: Be really careful with these payroll numbers in that you know,

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Speaker 4: it's telling us something about labor demand is slowing, right,

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Speaker 4: and that that piece that contraction, that what it's a

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Speaker 4: recession that's about demand falling short. We also are in

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Speaker 4: a period it's very hard to measure, but we are

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Speaker 4: in a period where it is likely that the labor.

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Speaker 2: Supply is also slowing.

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Speaker 4: You know, we've had dramatic retroductions in immigration. We also

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Speaker 4: have an aging workforce, right, so we so those two

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Speaker 4: things can come together and get you lower numbers in

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Speaker 4: terms of payrolls. The bad piece, the thing that like

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Speaker 4: the FED might want to react to, would be the

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Speaker 4: weaker labor demand, that structural piece, that supply piece. That

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Speaker 4: is not something the FED reacts to. So while these

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Speaker 4: payroll numbers are pretty eye popping, you know, you know

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Speaker 4: some attention, these are weaker than we thought in the revisions.

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Speaker 4: Look at that unemployment rate, right, it ticked up, but

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Speaker 4: that is still a good that looks like balance still

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Speaker 4: to your.

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Speaker 3: Yield was a negative ten basis points, it's now a

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Speaker 3: negative fourteen basis point. To translate, folks, yields our lower

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Speaker 3: bond prices higher the thirty year bond even as higher.

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Speaker 3: Here modeling out that September meeting, Claudia sum, if I

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Speaker 3: look at the data, my amateur answer is I want

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Speaker 3: to smooth out to a three months unemployment rate. That

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Speaker 3: statistic is thirty five thousand. I mean the President's going

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Speaker 3: to go to Jerome Powell and say we're well under

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Speaker 3: one hundred thousand on a ninety day jobs report. Can

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Speaker 3: you say, okay, it's time to adjust.

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Speaker 2: Could we have.

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Speaker 3: An intermediate inter meeting rate cut.

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Speaker 4: I mean I think that is highly unlikely. Again, the

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Speaker 4: unemployment rate is four point two percent. Fair the Fed,

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Speaker 4: there's there's movements, Like the FED can't change the labor supply.

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Speaker 4: They can't think if they're structural changes, that's not their remit,

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Speaker 4: that's not their tools, right, and so they're going to

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Speaker 4: be watching very carefully the unemployment. It did move up,

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Speaker 4: if it continues to move up, if it picks up

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Speaker 4: pace as it moves up, Like these are real science,

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Speaker 4: you know, the payrolls they're telling us something. And there

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Speaker 4: certainly is a risk that there's more labor demand. But

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Speaker 4: this is not this is not I mean, no one

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Speaker 4: data release would tend to, you know, bring the FED

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Speaker 4: into intermeding action. But this is not you know, just

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Speaker 4: the broadbrush the top line numbers. This doesn't look like that.

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Speaker 3: Paul in August in Michigan and Ann Arbor. Yeah, there's

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Speaker 3: a junior, Claudia Sam's in graduate school who's going to

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Speaker 3: look at the immigration overlay on.

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Speaker 5: Yes, I know that's really what I like to see

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Speaker 5: that Claudia, Tom and I try to, you know, kind

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Speaker 5: of look at things on a rolling basis here, not

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Speaker 5: get too caught up in one month here, one month there.

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Speaker 5: The non farm payroll three month average change that's also

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Speaker 5: notable here. It was one hundred and fifty thousand, kind

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Speaker 5: of poking along, one hundred and fifty thousand last month,

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Speaker 5: that gets revised down to sixty four thousand, and then

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Speaker 5: this month comes in an even lower thirty five thousand.

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Speaker 6: I don't know that.

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Speaker 5: That seems like something's going on out there. How do

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Speaker 5: we think about that?

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Speaker 2: Right there?

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Speaker 4: Yes, like in smoothing through the numbers, but again that

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Speaker 4: these payrolls to put to piece apart, what is you know,

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Speaker 4: supply and demand, and it's very hard. Like the immigration

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Speaker 4: was we don't have good numbers in real time, but

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Speaker 4: we see border crossings have basically stopped for unauthorized immigration,

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Speaker 4: and the immigration you know whatever, you know, you think

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Speaker 4: about the policies like it wasn't an important driver of

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Speaker 4: labor force growth and these job gains that we needed

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Speaker 4: to be making, you know, in years past to get

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Speaker 4: that unemployment rate low. Well it's reversed, and it's it's

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Speaker 4: done so very suddenly. So I don't want to write

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Speaker 4: this all often. And the defense certainly wouldn't write this off.

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Speaker 4: There is a sign that we've got some weakening of demand.

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Speaker 4: We see that also in you know, in the GDP numbers,

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Speaker 4: the consumer spending, we've seen some softening. So like it's

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Speaker 4: this question of how do you pull the two pieces apart?

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Speaker 4: And I mean one rough way to kind of see

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Speaker 4: where you stand is to look at how unemployment rate

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Speaker 4: is balancing out the people looking for work or are

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Speaker 4: they still at about the same rate finding.

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Speaker 3: That work clute, So yeah, it's going to be I

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Speaker 3: can't wait to see what you're published there. Thank you

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Speaker 3: so much, Claudia. Some new century advisors here on this

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Speaker 3: job report. Really just the market's moving of the two

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Speaker 3: year yield hasn't found about him here we're in fifteen

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Speaker 3: basis points.

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Speaker 2: That's a huge, a huge move joining.

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Speaker 3: Us now, and I can't think of a better time

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Speaker 3: to speak to Michael Darta, thrilled that he could join

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Speaker 3: us here after doctor some Michael Darte is with Roth

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Speaker 3: Capital as well. Michael Darta, I want you to synthesize

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Speaker 3: this back to classic data, which is the animal spirit

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Speaker 3: of the country. Can we have enough inflation to keep

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Speaker 3: nominal GDP okay or all of a sudden is our

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Speaker 3: stagflation going to become stag staggy?

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Speaker 7: Thanks for having me on, Tom. Look, I think if

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Speaker 7: you look at the first half, because we're obviously getting

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Speaker 7: some distortions and volatility in the GDP statistics, but if

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Speaker 7: you average the first and second quarter nominal GDP ran

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Speaker 7: at about four percent, just to touch above four, you know,

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Speaker 7: that's perfect. That's basically a non inflation area setting. Once

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Speaker 7: these supply side shocks dissipate, we are seeing weakness and

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Speaker 7: real growth. You know, if you look at real final

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Speaker 7: sales to the private sector, just above one percent in

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Speaker 7: Q two, barely two percent in Q one, and then

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Speaker 7: we had a long streak of pretty close to three

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Speaker 7: percent growth, you know, in the two years before that,

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Speaker 7: and so we're definitely slowing here, but most of it

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Speaker 7: looks like it's on the real side, and that's exactly

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Speaker 7: what you'd expect from an adverse supply shock. So the

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Speaker 7: challenge for the FED is just to you know, keep

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Speaker 7: policy neutral, and that's the debate that's going on right

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Speaker 7: now on the FOMC. But Claudia made the point that

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Speaker 7: the unemployment rate is not lifting off. So those revisions

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Speaker 7: minus two point fifty eight K for the last two

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Speaker 7: months for payrolls or the prior two months. That looks

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Speaker 7: very scary and recessionary, But the reality is you will

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Speaker 7: not find one nb R recession in history without the

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Speaker 7: unemployment rate shooting up meaningfully, meaning at least several hundred

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Speaker 7: basis points from the cyclical trough. We're basically flat from

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Speaker 7: year ago level, same with U six And so this

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Speaker 7: is an economy where the supply side has taken a

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Speaker 7: hit from tariffs and the demand side has moderated. But

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Speaker 7: you know appropriately so.

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Speaker 5: So, Michael, is it again. There's a lot of numbers

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Speaker 5: to parts through here from today, a lot of negative revisions.

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Speaker 5: But as you mentioned, as Claudia mentioned, that unemployment rate

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Speaker 5: is staying right at four point two percent, and that's

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Speaker 5: is that where you think the FED will keep its

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Speaker 5: focus that number?

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Speaker 2: I think so.

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Speaker 7: I mean, that's essentially what poll FED chair Powell discussed

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Speaker 7: this week in terms of the economy being in balance,

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Speaker 7: supply and demand being in balance. I mean, look at

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Speaker 7: the margin. I think these numbers definitely lead the FED

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Speaker 7: to lower policy rates. The question is what is the

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Speaker 7: timing and the magnitude futures markets are priced for about

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Speaker 7: ninety basis points of cuts over the next twelve months.

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Speaker 7: You know, but markets have anticipated sooner in deeper cuts

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Speaker 7: than what the FED has been willing to deliver over

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Speaker 7: the course of the last few years, So that's not new.

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Speaker 7: I mean, the question here is do things really fall

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Speaker 7: off from here unless the Fed gets moving and you

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Speaker 7: risk markets, despite today's action, are pretty optimistic that we'll

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Speaker 7: hang in there.

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Speaker 2: Michael Darta.

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Speaker 3: When you look at those jobs and if we're under

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Speaker 3: one hundred thousand as a glide path, we get the

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Speaker 3: emotion of a negative statistic. We don't well, we don't

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Speaker 3: have that. What will the nominal tenuere you'll do?

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Speaker 7: Well, you know, we're right in a range show here,

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Speaker 7: tom right. I mean, you know, we came into the

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Speaker 7: year pushing four point eight percent, and we obviously slumped

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Speaker 7: below four for like a day when we had the

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Speaker 7: risk off event when Trump first announced the reciprocal tariffs,

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Speaker 7: and now we're kind of, you know, right in that range.

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Speaker 7: I mean, it's interesting because reflectively, people start talking about

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Speaker 7: fiscal deficits every time rates move up, but then when

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Speaker 7: they come down, no one attributes that to an improving

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Speaker 7: fiscal outlook. So perhaps something else is driving the rate

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Speaker 7: structure here, and I think what's driving it is simply

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Speaker 7: risk on and risk off. You know the contours of

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Speaker 7: the business cycle in FED policy, rate expectations moving around,

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Speaker 7: which is obviously hitched to both of those. And so

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Speaker 7: you know the tenure yield here to me, I mean,

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Speaker 7: you know, we're kind of neutral on box here for

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Speaker 7: four ther to five percent, bullish you know, sub four percent,

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Speaker 7: then I think you want to be more cautious.

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Speaker 5: So, Michael, I'm starting to see in my inbox in

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Speaker 5: social kind of a narrative that history may be repeating itself.

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Speaker 5: Last year, the FED aired by not cutting in July,

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Speaker 5: so they did catch up cut at their next meeting.

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Speaker 5: Is that something that might be brewing again this year?

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Speaker 7: I mean, Paul, it's possible, but I think you'd need

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Speaker 7: ongoing data deterioration and perhaps some kind of a risk

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Speaker 7: off event. You know, the FED did get going with

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Speaker 7: a fifty basis point cut, you know last year, second

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Speaker 7: half of the year they cut basis points, but then

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Speaker 7: what happened They stopped the labor market stabilized, So I

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Speaker 7: kind of think all in, you know, they're they're going

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Speaker 7: to start restart in a more gradual manner September. Very

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Speaker 7: well is still in play here. If you look at

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Speaker 7: the labor market diffusion index. I just brought it up

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Speaker 7: on my Bloomberg screen, Yes you go. We're at forty

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Speaker 7: six point eight as of this July. So that's actually

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Speaker 7: a little bit below where we were last summer, you know, which,

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Speaker 7: along with the rising unemployment rate which we don't have

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Speaker 7: this time, really kicked off alarm bells that the Fed

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Speaker 7: was falling behind the curve. You also had lower bond

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Speaker 7: market inflation expectations going into the early fall last year

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Speaker 7: and what we have today, and that could be a

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Speaker 7: consequence of this hectoring from the White House, which is

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Speaker 7: backfiring in my opinion.

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Speaker 2: So let's talk about that, Michael.

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Speaker 3: And this is the history of Michael Dart and all

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Speaker 3: that he has Wisconsin to me and and what a

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Speaker 3: privilege yesterday Michael Darta to talk to Richard Clare to

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Speaker 3: allow brainer.

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Speaker 2: Back to back about the modern trend that if we

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Speaker 2: cut rates or raise rates, we're establishing a new vector.

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Speaker 3: Why can't the chairman come out and say, you know,

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Speaker 3: back to Vulcar, back to Burns, we're going to do

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Speaker 3: a one off twenty five be cut and reassess.

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Speaker 2: To me, that's common sense.

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Speaker 3: But it pushes against all of a modern academic theory,

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Speaker 3: doesn't it.

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Speaker 7: Yeah, I mean, I think tomic comes down to, you know,

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Speaker 7: what are the markets priced in here? So the markets

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Speaker 7: have priced in ninety one basis points over the next

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Speaker 7: twelve months. So does the FMC guide markets for more

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Speaker 7: than that or less than that?

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Speaker 8: You know?

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Speaker 7: Right now? I mean, I think you've got quite a

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Speaker 7: bit of division on the committee. We did get two descents.

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Speaker 7: That's the first time too. Fed Governor's descent. It looks

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Speaker 7: like geniuses this morning since nineteen ninety three, right, But

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Speaker 7: I think the focus has to be on price stability.

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Speaker 7: I mean, obviously the FED wants to preserve the business site,

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Speaker 7: but inflation is still above target. And if the FED

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Speaker 7: is going to be harangued and cajoled into cutting rates

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Speaker 7: when it's perhaps inappropriately inappropriate to do so, if inflation

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Speaker 7: expectations go up, then long term interest rates go up,

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Speaker 7: not down. So if the president's concerned about debt financing costs,

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Speaker 7: let the FED do its job, you know, let's return

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Speaker 7: inflation two target and price stability is the number one

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Speaker 7: way that you're going to have moderate market interest rates.

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Speaker 7: The other way is get the fiscal House and Order

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Speaker 7: in Washington. D C has good luck for that face

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Speaker 7: planted in that regard.

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Speaker 3: Michael, Thank you so much, Michael darn Roth Capital, and

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Speaker 3: they're really looking forward to his research, you know, published

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Speaker 3: into the weekend.

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Speaker 2: Christina Catmeny waiting for her first gray hair. She may

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Speaker 2: get it.

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Speaker 3: By the way, the two year yields are moving today

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Speaker 3: with Invesco Christina cat Many here before.

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Speaker 2: I believe Steph Ross gonna join us.

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Speaker 3: What does it mean for adults in the bond business

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Speaker 3: when you see this is CFA level four, you see

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Speaker 3: a ginormous two year yield move.

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Speaker 9: Look, I mean we're getting a big steepening of the

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Speaker 9: curve today, and I think the market has vacillated this

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Speaker 9: year between is the Fed more concerned with growth?

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Speaker 10: Are they more concerned with inflation? Which is it? And

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Speaker 10: a lot of the.

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Speaker 9: Economic weakness we've seen all year has really been soft data,

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Speaker 9: and today is really the first signs that you're seeing

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Speaker 9: some real hard data that's weakening. And it's not the

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Speaker 9: seventy three number, it's that negative revision number, which is meaningful.

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Speaker 2: We nailed that. Yeah, we nailed fucker nailed.

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Speaker 5: So Christina, do you how do you think the Fed's

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Speaker 5: going to view this data? It's almost like, boy, if

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Speaker 5: they had known this data yesterday, would they have done

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Speaker 5: something different? How do you think they are going to

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Speaker 5: view this data? Here is a lip or is this

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Speaker 5: something different?

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Speaker 2: Was that right? Would they have done something different?

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Speaker 10: I don't know that they would have done something different.

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Speaker 9: And I think we've said really even coming into the

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Speaker 9: summer that they they have the calendar on their side

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Speaker 9: in terms of the gap to the September meeting, with

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Speaker 9: two payroll reports, two CPI reports, you're really supposed to

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Speaker 9: see a lot of these inflationary numbers come through from

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Speaker 9: the terrorist shocks, which has all been delayed, and a

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Speaker 9: lot of participants in the market have said, well, they

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Speaker 9: haven't come through yet, So we just don't have to

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Speaker 9: be worried about inflation.

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Speaker 10: That's not our camp. I think that there are still risks.

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Speaker 9: The Fed and Powell statements in the presser I think

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Speaker 9: very clearly tells you he's concerned about not even just

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Speaker 9: first order effects that haven't shown up, but second order.

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Speaker 9: So there's a lot of time it certainly gives nods

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Speaker 9: to the descents that we had this week that are

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Speaker 9: talking for preemptive cuts or Tom what you were talking

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Speaker 9: about earlier, of like, why don't we just ease because

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Speaker 9: we know we're restrictive and give ourselves some wiggle room.

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Speaker 9: But that hasn't been where the Fed's been anchored, even

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Speaker 9: though a lot of us think maybe that's what they

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Speaker 9: should be doing.

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Speaker 3: Paul, continue the conversation. We've got a beautiful three months

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Speaker 3: moving average chart. In October of twenty.

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Speaker 2: Twenty three, when the market lifted, it was a two

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Speaker 2: hundred thousand every month three months moving average. We're down

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Speaker 2: to thirty five thousand.

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Speaker 3: In defense of the President and Secretary Besson, that's a.

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Speaker 2: Vector, Yeah, it is.

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Speaker 5: It's certainly something to pay attention to. And again we're

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Speaker 5: seeing in the short end of the curve the two

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Speaker 5: year yield is now off seventeen basis points. We have

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Speaker 5: a fifty fifty basis point steepening in the yield curve.

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Speaker 5: What does that tell you?

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Speaker 10: Look, in a lot of ways, the curve we think

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Speaker 10: should be steeper. Still, even with this.

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Speaker 9: Move today and coming into this week, really in the

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Speaker 9: last month, you've seen kind of this retest of what

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Speaker 9: has been the thesis this year, you've seen a big

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Speaker 9: flattening in the last week. You've seen a big correction

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Speaker 9: in foreign exchange with the dollars stronger, and now we're

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Speaker 9: kind of turning these back on our heels. But with

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Speaker 9: where we are in a cycle, the curve shouldn't be flat,

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Speaker 9: and we've gotten in cash space almost down to back

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Speaker 9: two tents close to a flat level, so we need

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Speaker 9: to re steepen that out. And it tells you that

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Speaker 9: even if the FED is not easy to yesterday or

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Speaker 9: tomorrow in the pipeline that's in the trajectory and the

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Speaker 9: long end should still be at where it is anchored

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Speaker 9: or at higher levels because the inflationary risks remain out there.

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Speaker 2: Have you ever been called a bond vigilante?

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Speaker 8: No?

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Speaker 3: No, are the bond vigilantes out today tell said what

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Speaker 3: to do.

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Speaker 10: I don't know if they are.

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Speaker 9: I don't know if the bond vigilantes of old kind

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Speaker 9: of remain in the same sense we're not.

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Speaker 10: We don't have these.

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Speaker 9: I think there's a lot of fear of like the

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Speaker 9: Liz Trust moments, in these like dramatic selloups.

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Speaker 10: Really today's move is a front end correction.

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Speaker 9: And I think on that, But is that a narrative

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Speaker 9: in the market about what are fiscal pressures? What are

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Speaker 9: we doing big picture of like controlling inflation and supply

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Speaker 9: and all be shot, We're bringing.

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Speaker 3: Three hundred billion tariff revenue to pay for a big

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Speaker 3: bill for a tax cut. I'll be political and say

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Speaker 3: it's spread out across the death siles, and some people

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Speaker 3: would say it's skewed for the fancy people like Paul Sweeney. Okay, fine,

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Speaker 3: I'm looking at the screen and I got a ninety

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Speaker 3: day moving average of non farm payrolls that Paul not

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Speaker 3: that long ago, would have been.

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Speaker 2: Is the economist Bart Simpson would say, a total cow.

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Speaker 2: That's the bottom line.

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Speaker 9: This is what people have been waiting for for really

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Speaker 9: at least the last we're nine months, if not two years,

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Speaker 9: right since twenty two when we were looking for this

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Speaker 9: rolling recession is imminem.

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Speaker 5: So credit, what do you do with credit here? I

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Speaker 5: mean it sounds like maybe I'm not I don't want

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Speaker 5: to take too much credit risk here.

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Speaker 9: Yeah, So we have been a little bit more cautious

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Speaker 9: on credit, and that's been a kind of a harder

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Speaker 9: call because credit remains exceptionally tight, keeps grinding. You're in

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Speaker 9: a slow supply period over the summer, so we kind

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Speaker 9: of have bits and pieces of credit, but where we're

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Speaker 9: probably most comfortable owning credit is higher quality front end paper.

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Speaker 9: And then there are some things kind of globally that

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Speaker 9: look interesting too, in Europe some credit.

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Speaker 2: It's Friday, we're at the beach. Does a five year

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Speaker 2: CD look good right now?

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Speaker 10: I still think it looks looks pretty decent.

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Speaker 5: Yeah, yeah, to your to your treasuries now that I mean,

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Speaker 5: that's a big song in the two year?

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Speaker 2: Okay, what are you going to do? What are you

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Speaker 2: going to do when you get back to the office.

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Speaker 2: I mean, are you gonna buy or you're selling? You know,

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Speaker 2: but you get price up, yeled down in the two year?

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Speaker 10: Yeah?

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Speaker 2: Do you lighten up on that? Is it like a stock?

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Speaker 2: Were you?

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Speaker 9: So we've kind of shifted into more steepeners with this

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Speaker 9: and kind of say like what are the tactical So

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Speaker 9: it's it's again, what what's your big picture of thesis?

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Speaker 9: I don't think that those have changed, right, Like we

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Speaker 9: believe in a week or dollar, we believe that the

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Speaker 9: curves should be steeper, but we keep vacillating of what

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Speaker 9: the FEDS pricing, and I think coming into this the

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Speaker 9: front end looks like it was stretched.

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Speaker 2: Christina.

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Speaker 3: Thank if someone's Christina Catmanni are in a huge day

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Speaker 3: for Invesco in her bonds as well.

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Speaker 1: You're listening to the Bloomberg Surveillance po podcast. Catch us

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Speaker 1: live weekday afternoons from seven to ten am Eastern. Listen

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Speaker 1: on Apple Karplay and Android Otto with the Bloomberg Business app,

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Speaker 1: or watch us live on YouTube.

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Speaker 2: Curious what you need to focus on?

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Speaker 3: Clarida and BRAINERD they don't listen to us. They listened

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Speaker 3: to Ernie Tedesky.

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Speaker 2: Joining us now from the the Budget Lab at Yale.

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Speaker 3: I should say Ernie Tedesky, who drives a lot of

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Speaker 3: their mathematics. Ernie, I don't want to give away the

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Speaker 3: publication of your report, but you're kind enough to say

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Speaker 3: you've done an all night or trying to get out

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Speaker 3: in front of a new tariff calculation from the President.

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Speaker 3: Can you state that you're eighteen percent maybe adjusted for

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Speaker 3: consumption substitution, seventeen percent tariff is going to go up.

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Speaker 6: So actually, when you look at the list that came

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Speaker 6: out last night, some of the tariffs went up, some

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Speaker 6: of them went down from what was threatened before, So

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Speaker 6: like Bangladesh, for example, went from thirty five percent to

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Speaker 6: twenty percent, Thailand went from thirty six percent to nineteen percent.

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Speaker 6: So it was kind of a mix when you add

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Speaker 6: everything together. We had been at eighteen point two percent.

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Speaker 6: Now we're at eighteen point three percent for the average

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Speaker 6: effective terrafory. And the other big one is that Mexico

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Speaker 6: got a ninety day stay. Yeah, they were supposed to

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Speaker 6: go up to thirty percent there now at twenty That's

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Speaker 6: another big factor in this too. So really, like versus

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Speaker 6: forty eight hours ago, this list didn't make a giant difference.

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Speaker 3: It's folks, I can't say enough about the importance of

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Speaker 3: what they're doing in terms of the graphical representation.

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Speaker 2: Ernie. I'll get to Mexico in a moment. Paul's got

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Speaker 2: a bunch of questions too.

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Speaker 3: You have an I take great offense to our analysis

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Speaker 3: that we're back to Smoot Hawley thirty three and thirty four.

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Speaker 3: If you look at the Tadesky horizontal line, we're back

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Speaker 3: to nineteen eighteen, we're back to eighteen six two. Indeed,

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Speaker 3: we are back to seventeen ninety eighty nine. What does

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Speaker 3: that history mean for twenty twenty six in America.

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Speaker 6: I mean, look like those were very different times back then.

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Speaker 6: I think Number one, it means, you know, I agree

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Speaker 6: with the administration, we're going to raise a substantial amount

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Speaker 6: of revenue from these terracts and.

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Speaker 2: Brainers said that yesterday. Lyle was all over that yesterday.

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Speaker 6: Look, and one should not understate how important that is.

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Speaker 6: We have an unsustainable fiscal trajectory. Well, you know, we

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Speaker 6: project three trillion dollars over the next ten years. But look,

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Speaker 6: we're also seeing evidence of this already in consumer pass

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Speaker 6: through durble PCE that was part of the PCE report

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Speaker 6: that came out yesterday accelerated the most over six months

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Speaker 6: that it has since nineteen eighty seven, other than the

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Speaker 6: depths of the pandemic. So, you know, the idea that

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Speaker 6: we're going to somehow dodge a bullet and get through

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Speaker 6: the Scott free I think is already empirically real.

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Speaker 5: So, Ernie, that's a key point that the three trillion

439
00:23:05,000 --> 00:23:08,240
Speaker 5: dollars over ten years that the US government's going to raise,

440
00:23:08,720 --> 00:23:12,879
Speaker 5: that's not being paid by China, by Mexico, by the EU,

441
00:23:13,320 --> 00:23:16,520
Speaker 5: that's being paid by the American economy, and I don't

442
00:23:16,560 --> 00:23:19,520
Speaker 5: know where it comes from, the consumer, the importer of

443
00:23:19,600 --> 00:23:23,240
Speaker 5: the retailer. Talk to us about it on a household basis,

444
00:23:23,640 --> 00:23:25,920
Speaker 5: How much do you think consumers are going to pay

445
00:23:25,960 --> 00:23:26,800
Speaker 5: on per household base?

446
00:23:26,920 --> 00:23:30,119
Speaker 6: Yeah, no, this is a very very important question. So

447
00:23:30,800 --> 00:23:33,560
Speaker 6: first of all, on your first point, you know, if

448
00:23:33,600 --> 00:23:37,320
Speaker 6: foreigners were paying this tariff, we would expect import prices

449
00:23:37,320 --> 00:23:40,480
Speaker 6: to decline. Import prices have not declined. If anything, they've

450
00:23:40,520 --> 00:23:43,760
Speaker 6: picked up a little, so they're probably so on average,

451
00:23:43,760 --> 00:23:47,159
Speaker 6: they're probably not shouldering much of all of this. You know,

452
00:23:47,200 --> 00:23:52,200
Speaker 6: we think that right now consumers are paying about seventy

453
00:23:52,320 --> 00:23:54,840
Speaker 6: percent of the tariff, you know, so that's the pass

454
00:23:54,880 --> 00:23:56,800
Speaker 6: through right now, and we think that that's sticking up

455
00:23:56,800 --> 00:24:00,040
Speaker 6: over time. It's still early ultimately these you know, so

456
00:24:00,200 --> 00:24:03,560
Speaker 6: if these tariffs today stayed in effect and perpetuity, that

457
00:24:03,600 --> 00:24:06,800
Speaker 6: would be twenty four hundred dollars per household per year

458
00:24:06,960 --> 00:24:10,320
Speaker 6: after you know, say two years of days and pitching

459
00:24:10,560 --> 00:24:14,040
Speaker 6: families at the bottom much more than that, And that's after.

460
00:24:13,920 --> 00:24:18,320
Speaker 2: Text, right, that's after that, right, So you're talking yet.

461
00:24:18,000 --> 00:24:21,840
Speaker 3: You know, somebody popping sixty seventy thousand a year, figure

462
00:24:21,840 --> 00:24:24,320
Speaker 3: out the rent. Forget about the idiocy of New York City.

463
00:24:24,560 --> 00:24:27,879
Speaker 3: I mean Ernie's living large up in New Haven. But

464
00:24:28,000 --> 00:24:32,000
Speaker 3: the answer is twenty four hundred dollars after text that

465
00:24:32,400 --> 00:24:35,439
Speaker 3: hammers the bottom of three deaths house, Folks, I can

466
00:24:35,520 --> 00:24:37,679
Speaker 3: say this again, Ernie Tedesky with us before we go

467
00:24:37,760 --> 00:24:41,480
Speaker 3: to trade minister a career here with John Farrell.

468
00:24:41,720 --> 00:24:44,120
Speaker 2: The Budget labbit Yell. It's free, you go out, It's

469
00:24:44,119 --> 00:24:45,000
Speaker 2: a website.

470
00:24:45,440 --> 00:24:49,760
Speaker 3: It's spectacular, whatever your politics, and with all sorts of charts.

471
00:24:50,119 --> 00:24:50,920
Speaker 2: Ernie Tedesky.

472
00:24:51,359 --> 00:24:58,960
Speaker 3: Mexico Avocados, tomatoes, broccoli, The Budget labb at Yell. Food

473
00:24:59,040 --> 00:25:03,119
Speaker 3: prices rice three point four percent in stay two point

474
00:25:03,200 --> 00:25:04,320
Speaker 3: nine percent higher.

475
00:25:04,359 --> 00:25:08,200
Speaker 2: Forever. Fresh produce from.

476
00:25:08,000 --> 00:25:12,679
Speaker 3: Mexico I'm at living is initially seven percent up and

477
00:25:12,720 --> 00:25:16,560
Speaker 3: then stabilizes it three point six percent higher. Is that

478
00:25:16,600 --> 00:25:19,960
Speaker 3: why we delayed from Mexico? Is they explain to President

479
00:25:20,000 --> 00:25:21,960
Speaker 3: Trump the price of tomatoes.

480
00:25:22,800 --> 00:25:25,880
Speaker 6: So here's the good news about these tariffs is that

481
00:25:25,920 --> 00:25:30,840
Speaker 6: they exempt products that are US MCA complying from Canada

482
00:25:30,880 --> 00:25:34,640
Speaker 6: and Mexico. It's complicated, but like basically you can think

483
00:25:34,680 --> 00:25:37,800
Speaker 6: of it that if your product is actually made substantially

484
00:25:37,840 --> 00:25:41,159
Speaker 6: in Mexico and Canada, then it is exempt from the tariffs.

485
00:25:41,920 --> 00:25:45,359
Speaker 6: Fresh produce is you know, eighty percent of the fresh

486
00:25:45,400 --> 00:25:47,840
Speaker 6: produce that we get ninety percent of the fresh produce

487
00:25:47,840 --> 00:25:52,120
Speaker 6: from Mexico right now, is US MCA complying. So it's

488
00:25:52,240 --> 00:25:55,760
Speaker 6: not Mexican imports that are driving the food price increases

489
00:25:55,760 --> 00:25:59,440
Speaker 6: from these tariffs. It's the non Canada and Mexico countries,

490
00:25:59,640 --> 00:26:04,960
Speaker 6: so from Brazil, you know, bananas from Central America, that's

491
00:26:05,000 --> 00:26:07,000
Speaker 6: what's getting hit by these interests right now.

492
00:26:07,400 --> 00:26:10,399
Speaker 5: Are you surprised, Ernie that how it's played out, with

493
00:26:10,640 --> 00:26:14,000
Speaker 5: Canada being such a big trading partner of the US

494
00:26:14,000 --> 00:26:17,119
Speaker 5: that the boy the discussions with Canada Mexico seem to

495
00:26:17,160 --> 00:26:17,800
Speaker 5: be quite different.

496
00:26:20,480 --> 00:26:23,320
Speaker 6: It does surprise me. On the other hand, the their

497
00:26:23,400 --> 00:26:27,359
Speaker 6: reactions have been quite different. You see no retaliation from

498
00:26:27,400 --> 00:26:31,479
Speaker 6: Mexico to our tariffs so far, whereas Canada is the

499
00:26:31,520 --> 00:26:36,240
Speaker 6: only country other than China that has levy counter tariffs

500
00:26:36,280 --> 00:26:39,879
Speaker 6: and to their detriment, I might, I mean, the politics

501
00:26:39,880 --> 00:26:43,360
Speaker 6: of doing that are completely understandable, but that just heightens

502
00:26:43,400 --> 00:26:46,600
Speaker 6: the economic damage to Canada and to the United States

503
00:26:46,760 --> 00:26:49,800
Speaker 6: from these tariffs. So it doesn't surprise me that our

504
00:26:49,960 --> 00:26:52,080
Speaker 6: you know, counter counter reaction is different.

505
00:26:52,520 --> 00:26:54,199
Speaker 3: So mister Greer is going to be on are at

506
00:26:54,240 --> 00:26:56,920
Speaker 3: a moment If you were sitting in a room this

507
00:26:57,000 --> 00:27:00,639
Speaker 3: morning with mister Greer and the Secretary of Commerce the

508
00:27:00,680 --> 00:27:05,240
Speaker 3: Secretary Treasury, they pop in to see doctor Tedesky, what

509
00:27:05,240 --> 00:27:08,119
Speaker 3: what's a single thing you would say to the Secretary

510
00:27:08,119 --> 00:27:12,560
Speaker 3: of Treasury now is he tries to advise a president

511
00:27:13,000 --> 00:27:15,360
Speaker 3: who didn't take micro One on one.

512
00:27:16,880 --> 00:27:19,399
Speaker 6: I would say, I would say two things. One is

513
00:27:19,400 --> 00:27:21,760
Speaker 6: a question, one is a comment. The question would be

514
00:27:21,880 --> 00:27:24,639
Speaker 6: what is the strategic goal here? You know, why are

515
00:27:24,680 --> 00:27:27,719
Speaker 6: we tariffing things like nas and coffee?

516
00:27:27,720 --> 00:27:28,000
Speaker 3: Again?

517
00:27:28,280 --> 00:27:31,719
Speaker 2: Do you agree with Vice Chair Brainerd that the strategic

518
00:27:31,760 --> 00:27:34,400
Speaker 2: goal is to raise revenue to pay for the other

519
00:27:34,520 --> 00:27:37,680
Speaker 2: piece of budget lab analysis, that big big bill.

520
00:27:39,160 --> 00:27:41,040
Speaker 6: I think that's a secondary goal. I think that this

521
00:27:41,160 --> 00:27:44,919
Speaker 6: administration is true believers in tariffs. They think manufacturing and

522
00:27:45,040 --> 00:27:47,720
Speaker 6: jobs will come back. But I would say two things. One,

523
00:27:48,200 --> 00:27:50,400
Speaker 6: why then are we tariffing things that will never come

524
00:27:50,440 --> 00:27:55,000
Speaker 6: back like bananas and coffee? And then the second thing

525
00:27:55,040 --> 00:27:57,480
Speaker 6: I would say is is there a you know, can

526
00:27:57,480 --> 00:28:00,560
Speaker 6: we work together to find a better way to raise

527
00:28:00,640 --> 00:28:04,280
Speaker 6: the same amount of revenue that doesn't hit either lower

528
00:28:04,280 --> 00:28:06,879
Speaker 6: income households or investment as much as tariffs do.

529
00:28:07,760 --> 00:28:13,240
Speaker 5: So typically, Ernie, how should tariffs be used? How have

530
00:28:13,320 --> 00:28:16,560
Speaker 5: they been used in the past successfully? And is that

531
00:28:16,600 --> 00:28:18,879
Speaker 5: policy being you know, followed today.

532
00:28:19,680 --> 00:28:22,639
Speaker 6: Look, there are this is another area where I agree

533
00:28:22,680 --> 00:28:26,120
Speaker 6: with the administration. There are unfair trade practices out there

534
00:28:26,200 --> 00:28:30,600
Speaker 6: against the United States, and tariffs are ammunition in resolving

535
00:28:30,640 --> 00:28:33,720
Speaker 6: those disputes. That has absolutely been the case in the past.

536
00:28:34,280 --> 00:28:37,640
Speaker 6: They have not since at least the nineteen thirties, been

537
00:28:37,760 --> 00:28:42,440
Speaker 6: used for substantial revenue. And similar to that, we haven't

538
00:28:42,760 --> 00:28:45,280
Speaker 6: you know, levied them broadly. If we've used them, it's

539
00:28:45,280 --> 00:28:49,520
Speaker 6: been on very specific items, not because we you know,

540
00:28:49,920 --> 00:28:52,000
Speaker 6: not because we don't like those items or those countries,

541
00:28:52,040 --> 00:28:54,080
Speaker 6: but literally to try to get those countries to the

542
00:28:54,120 --> 00:28:57,080
Speaker 6: table to resolve trade disputes. So this is very different

543
00:28:57,080 --> 00:28:58,880
Speaker 6: than the way we've used tariffs in the past.

544
00:28:59,520 --> 00:29:02,240
Speaker 3: Number fifth, nineteen oh one. I know you read this

545
00:29:02,280 --> 00:29:05,600
Speaker 3: in Doug Erwin's Against the Tides September.

546
00:29:05,040 --> 00:29:06,200
Speaker 2: Five, nineteen oh one.

547
00:29:06,320 --> 00:29:11,960
Speaker 3: McKinley does a recant of his trade certitude. He does

548
00:29:11,960 --> 00:29:16,320
Speaker 3: this the day before his assassination. Do you frame out

549
00:29:16,360 --> 00:29:20,160
Speaker 3: here that if the president is whatever your politics was,

550
00:29:20,240 --> 00:29:23,800
Speaker 3: I don't care if you frame out he's overcome by

551
00:29:23,840 --> 00:29:29,640
Speaker 3: events like inflation. Could we have a Trump recant where

552
00:29:29,640 --> 00:29:32,120
Speaker 3: he gets us back to Uruguay, where he gets us

553
00:29:32,160 --> 00:29:35,640
Speaker 3: back to get.

554
00:29:34,760 --> 00:29:37,040
Speaker 6: It's really hard for me to see that, you know,

555
00:29:37,160 --> 00:29:40,160
Speaker 6: Number one, they are true believers. Number Two, now we're

556
00:29:40,200 --> 00:29:43,000
Speaker 6: stuck with this three trillion dollars in revenue, which again

557
00:29:43,000 --> 00:29:45,120
Speaker 6: I would emphasize like that part of it is a

558
00:29:45,160 --> 00:29:47,960
Speaker 6: good thing and helpful. I think that that's going to

559
00:29:48,040 --> 00:29:52,720
Speaker 6: hinder any future administration, Republican or Democratic, whether you know,

560
00:29:53,080 --> 00:29:55,720
Speaker 6: if they don't like the tariffs, it's going to be

561
00:29:55,760 --> 00:29:58,480
Speaker 6: hard for them to replace them, right because you're going

562
00:29:58,560 --> 00:30:00,920
Speaker 6: to have status quo biased And you know, we can

563
00:30:01,520 --> 00:30:04,440
Speaker 6: I consider a spreadsheeting, come up with all sorts of

564
00:30:04,480 --> 00:30:07,440
Speaker 6: great theoretical alternatives all day long, but most of those

565
00:30:07,480 --> 00:30:11,960
Speaker 6: alternatives require Congress to take a vote, which is which

566
00:30:12,000 --> 00:30:14,719
Speaker 6: is going to make it hard to replace the revenue

567
00:30:14,720 --> 00:30:16,200
Speaker 6: that's already in place very quickly.

568
00:30:16,280 --> 00:30:18,640
Speaker 3: Or Ernie, we have judiciary action over the last two

569
00:30:18,720 --> 00:30:22,080
Speaker 3: days in an Appleit court listening to the legality of

570
00:30:22,120 --> 00:30:25,200
Speaker 3: the president's action. Could that be a bombshell where they

571
00:30:25,280 --> 00:30:27,800
Speaker 3: say to President Trump, you can't do this.

572
00:30:29,560 --> 00:30:31,920
Speaker 6: I would emercize I am not nearly as useful as

573
00:30:31,960 --> 00:30:35,200
Speaker 6: a lawyer. We know that if we did, yeah, but

574
00:30:35,240 --> 00:30:38,240
Speaker 6: if we did get a decision like that, yeah, I

575
00:30:38,240 --> 00:30:39,840
Speaker 6: think it would. I think it would be a bombshell.

576
00:30:39,880 --> 00:30:41,720
Speaker 6: It would not be the end, though. There are other

577
00:30:41,840 --> 00:30:44,560
Speaker 6: legal authorities that, at least temporarily they could use to

578
00:30:44,760 --> 00:30:45,680
Speaker 6: re raise tariffs.

579
00:30:45,880 --> 00:30:49,600
Speaker 3: The website of the year for Bloomberg Surveillance, without question,

580
00:30:49,680 --> 00:30:52,920
Speaker 3: the Budget Lab at Yale with the leadership of Earning Tedesk,

581
00:30:52,960 --> 00:30:54,840
Speaker 3: has just been absolutely spectacular.

582
00:30:55,200 --> 00:30:59,080
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

583
00:30:59,120 --> 00:31:02,400
Speaker 1: starting at seventy eight on Apple Coarclay, and Android Auto

584
00:31:02,560 --> 00:31:05,520
Speaker 1: with the Bloomberg Business app. You can also listen live

585
00:31:05,600 --> 00:31:09,160
Speaker 1: on Amazon Alexa from our flagship New York station. Just

586
00:31:09,200 --> 00:31:11,760
Speaker 1: say Alexa Play Bloomberg eleven thirty.

587
00:31:12,320 --> 00:31:17,760
Speaker 3: Anna rog Rana joins us senior technology analyst for Bloomberg Intelligence.

588
00:31:18,160 --> 00:31:20,240
Speaker 2: Let me go to where Mark German is this morning,

589
00:31:20,320 --> 00:31:21,640
Speaker 2: Anna rag There.

590
00:31:21,520 --> 00:31:24,920
Speaker 3: Seems to be a haste to just do something in

591
00:31:25,120 --> 00:31:29,480
Speaker 3: artificial intelligence after what we saw from Apple yesterday.

592
00:31:30,240 --> 00:31:32,880
Speaker 2: Is em and a part of mister Cook's future.

593
00:31:34,640 --> 00:31:36,560
Speaker 11: I mean, he talked about it last night on the call,

594
00:31:36,640 --> 00:31:38,640
Speaker 11: and frankly speaking, he said, you know, they will look

595
00:31:38,640 --> 00:31:42,160
Speaker 11: at deals, but I'm, to be honest, not so keen

596
00:31:42,200 --> 00:31:44,320
Speaker 11: on them buying a very large company for a very

597
00:31:44,400 --> 00:31:47,640
Speaker 11: large amount, because I would rather than partner with multiple

598
00:31:47,720 --> 00:31:50,680
Speaker 11: vendors to use different models, because we are still in

599
00:31:50,800 --> 00:31:53,840
Speaker 11: very early stages of figuring out which models will eventually

600
00:31:54,200 --> 00:31:56,280
Speaker 11: be used for what functions. So I'm more in the

601
00:31:56,640 --> 00:31:59,000
Speaker 11: partnership camp rather than buying camp.

602
00:31:59,120 --> 00:32:01,920
Speaker 3: So would you see them doing partnerships with Google and

603
00:32:02,040 --> 00:32:04,960
Speaker 3: Gemini and I perplexity.

604
00:32:06,120 --> 00:32:08,600
Speaker 11: Yeah, I Tom, I really hope so, because there's a

605
00:32:08,640 --> 00:32:11,600
Speaker 11: lot of money involved in that search deal. So if

606
00:32:11,600 --> 00:32:15,120
Speaker 11: they were to do a revised deal including Gemini models

607
00:32:15,160 --> 00:32:17,920
Speaker 11: and some kind of search agreement and then get paid

608
00:32:17,960 --> 00:32:20,320
Speaker 11: for it, I think that's in the best interest of Apple,

609
00:32:21,000 --> 00:32:22,760
Speaker 11: you know, both shareholders and employees.

610
00:32:23,200 --> 00:32:26,880
Speaker 5: Honurk I saw China. They called out China as a

611
00:32:27,000 --> 00:32:30,959
Speaker 5: source of growth there. That's been a big, big headwind

612
00:32:31,000 --> 00:32:33,040
Speaker 5: or big question mark. I think for a lot of

613
00:32:33,040 --> 00:32:36,680
Speaker 5: investors how Apple would perform in China given all the

614
00:32:36,720 --> 00:32:39,760
Speaker 5: crosswinds there. What did you learn last night? About Apple

615
00:32:39,840 --> 00:32:41,520
Speaker 5: in China.

616
00:32:41,640 --> 00:32:43,640
Speaker 11: So two things happened in China, and that's something we

617
00:32:43,760 --> 00:32:46,560
Speaker 11: discussed yesterday morning. One is the pull forward of demand

618
00:32:46,840 --> 00:32:49,480
Speaker 11: across the world because of tariff related you know, you

619
00:32:49,520 --> 00:32:52,040
Speaker 11: could see people are feared that the prices are going

620
00:32:52,080 --> 00:32:53,960
Speaker 11: to go up, so they bought it. The second thing

621
00:32:53,960 --> 00:32:57,520
Speaker 11: that happened specifically in China is some of Apple products,

622
00:32:57,560 --> 00:33:01,280
Speaker 11: some of their phones were eligible for discus through the carriers.

623
00:33:01,280 --> 00:33:04,600
Speaker 11: This is something that doesn't happen, you know, just hasn't

624
00:33:04,600 --> 00:33:07,240
Speaker 11: happened before. So those were the two factors that helped

625
00:33:07,280 --> 00:33:10,960
Speaker 11: them at least, you know, get over the positive territory

626
00:33:10,960 --> 00:33:11,600
Speaker 11: after some time.

627
00:33:12,120 --> 00:33:15,640
Speaker 5: Anrak probably the I would say on the average investor,

628
00:33:15,640 --> 00:33:18,040
Speaker 5: I guess my biggest question about Apple is to what

629
00:33:18,160 --> 00:33:20,320
Speaker 5: extent will they play and how will they play in

630
00:33:20,360 --> 00:33:23,760
Speaker 5: the world of AI. Did we learn anything more last night?

631
00:33:23,800 --> 00:33:26,120
Speaker 5: Did Tim Cook have anything else to really share?

632
00:33:27,520 --> 00:33:29,600
Speaker 11: I think he repeated a lot what he repeated back

633
00:33:29,600 --> 00:33:33,760
Speaker 11: in June in the Worldwide Developer Conference about Apple intelligence

634
00:33:33,800 --> 00:33:36,840
Speaker 11: and embedding more throughout the ecosystem and the operating system.

635
00:33:37,200 --> 00:33:38,800
Speaker 11: But you know, at the end of the day, series

636
00:33:39,000 --> 00:33:42,080
Speaker 11: most important because that's the that's the voice command where

637
00:33:42,120 --> 00:33:44,479
Speaker 11: you ask for things and they are a bit behind

638
00:33:44,520 --> 00:33:47,040
Speaker 11: on that. And you know that's where the partnerships may

639
00:33:47,080 --> 00:33:51,280
Speaker 11: come in and help them accelerate with that particular you know,

640
00:33:51,360 --> 00:33:53,520
Speaker 11: function and then get it improved quite a bit.

641
00:33:54,120 --> 00:33:56,840
Speaker 3: Andrak, you published an energy your ride this morning. He

642
00:33:56,840 --> 00:33:59,400
Speaker 3: thinks I doesn't read I don't read his research read it.

643
00:33:59,600 --> 00:33:59,760
Speaker 2: I do.

644
00:34:00,240 --> 00:34:02,520
Speaker 3: Rag. After I was done looking at the Chicago Cubs

645
00:34:02,840 --> 00:34:06,520
Speaker 3: non trading deadline, I looked at your piece on Jenai

646
00:34:06,720 --> 00:34:10,600
Speaker 3: to lift Microsoft over twenty twenty six consensus.

647
00:34:10,680 --> 00:34:12,440
Speaker 2: We talked about this yesterday.

648
00:34:12,480 --> 00:34:17,080
Speaker 3: But now that we've got Microsoft, Meta, Amazon, Apple in AWE.

649
00:34:17,120 --> 00:34:19,239
Speaker 2: Do you have a better clarity.

650
00:34:18,760 --> 00:34:22,200
Speaker 3: About late twenty six into twenty twenty seven.

651
00:34:23,640 --> 00:34:23,839
Speaker 2: Yeah.

652
00:34:23,880 --> 00:34:26,120
Speaker 11: I think from a growth rate point of view, Microsoft

653
00:34:26,160 --> 00:34:29,440
Speaker 11: will still do better than all the others, largely because

654
00:34:29,440 --> 00:34:32,080
Speaker 11: of their relationship with open Aiye. So remember one thing.

655
00:34:32,120 --> 00:34:34,919
Speaker 11: Every time you and I spend more time on CHACKGPT,

656
00:34:35,400 --> 00:34:38,239
Speaker 11: a lot of that processing is done by Microsoft. That's

657
00:34:38,239 --> 00:34:41,120
Speaker 11: really their biggest advantage right now. And that's where you know,

658
00:34:41,120 --> 00:34:44,360
Speaker 11: Amazon shareholders are unhappy about it because they didn't see

659
00:34:44,400 --> 00:34:47,960
Speaker 11: that lift in revenue growth as what Microsoft saw or

660
00:34:48,360 --> 00:34:49,200
Speaker 11: what Google saw.

661
00:34:49,520 --> 00:34:51,520
Speaker 2: So how do the upstart stay in the game.

662
00:34:51,600 --> 00:34:54,719
Speaker 3: I'm going to pick on Perplexity just because Joe Wisenhal

663
00:34:54,800 --> 00:34:59,839
Speaker 3: told me to. But how does someone like Perplexity con

664
00:35:00,120 --> 00:35:01,320
Speaker 3: heat with these giants?

665
00:35:02,719 --> 00:35:05,839
Speaker 11: See see Perplexity is fine in that case because it's

666
00:35:05,880 --> 00:35:10,560
Speaker 11: competing directly with Mode, with OpenAI and other applications that

667
00:35:10,600 --> 00:35:14,000
Speaker 11: are AI based applications. So it is trying to basically tell,

668
00:35:14,480 --> 00:35:17,680
Speaker 11: you know, users like myself that don't go to chat GPT,

669
00:35:18,200 --> 00:35:19,640
Speaker 11: start using my application.

670
00:35:19,760 --> 00:35:20,280
Speaker 2: It's better.

671
00:35:20,560 --> 00:35:23,120
Speaker 11: It's really in that realm they fight, you know, whether

672
00:35:23,160 --> 00:35:26,040
Speaker 11: it comes to somebody like an Amazon or Microsoft or Google,

673
00:35:26,560 --> 00:35:29,440
Speaker 11: the question is who is hosting that app on their

674
00:35:29,480 --> 00:35:32,239
Speaker 11: cloud platform, and you know whichever. If you let's say,

675
00:35:32,239 --> 00:35:34,920
Speaker 11: for the sake of discussion, if Perplexity is hosted on

676
00:35:34,920 --> 00:35:37,600
Speaker 11: one of these platforms and their user count goes up,

677
00:35:38,239 --> 00:35:40,400
Speaker 11: they make more money on the back end, not so

678
00:35:40,520 --> 00:35:41,399
Speaker 11: much on the front end.

679
00:35:42,160 --> 00:35:45,680
Speaker 5: Amazon also reported last night on a rag after the close.

680
00:35:47,320 --> 00:35:49,839
Speaker 5: It looks like they're the stocks trading down about seven

681
00:35:49,880 --> 00:35:53,080
Speaker 5: eight percent here, weaker than expected operating income and maybe

682
00:35:53,080 --> 00:35:55,759
Speaker 5: trailing the sales growth ahead of its cloud rivals. Here

683
00:35:56,760 --> 00:35:58,399
Speaker 5: help us think about Amazon right here?

684
00:35:59,640 --> 00:36:01,920
Speaker 11: Yeah again, this is there are two factors of it.

685
00:36:02,480 --> 00:36:05,799
Speaker 11: They do not have a chat gptal like app that

686
00:36:05,960 --> 00:36:08,520
Speaker 11: runs on their platform, which is why they don't get

687
00:36:08,520 --> 00:36:12,080
Speaker 11: that you know, consumer lift that Microsoft is getting. The

688
00:36:12,120 --> 00:36:15,080
Speaker 11: second thing is their round rate is very high. According

689
00:36:15,120 --> 00:36:17,440
Speaker 11: to last night's number, they're running at somewhere aroun one

690
00:36:17,480 --> 00:36:21,200
Speaker 11: hundred and twenty billion dollars in revenue compared to Microsoft's

691
00:36:21,200 --> 00:36:24,320
Speaker 11: seventy five and Google's fifty. So there is a difference

692
00:36:24,360 --> 00:36:27,000
Speaker 11: in growth rates. I mean, it's just pretty logical. But

693
00:36:27,160 --> 00:36:28,520
Speaker 11: you know that's what I said. If you were to

694
00:36:28,560 --> 00:36:32,320
Speaker 11: strip out Microsoft's AI contribution, you know, they would be

695
00:36:32,400 --> 00:36:34,959
Speaker 11: running in their twenties also, so I think the most

696
00:36:34,960 --> 00:36:38,440
Speaker 11: people do not, you know, I think the bigger disappointment

697
00:36:38,560 --> 00:36:40,879
Speaker 11: is both the other cloud vendors beat by a big

698
00:36:40,920 --> 00:36:44,160
Speaker 11: amount and these guys just met and that the reason

699
00:36:44,200 --> 00:36:46,279
Speaker 11: for that is the lack of a consumer app. Now,

700
00:36:46,880 --> 00:36:50,640
Speaker 11: I think over time Amazon will come back and showcase

701
00:36:50,960 --> 00:36:53,919
Speaker 11: that they will also get AI workloads, but they will

702
00:36:53,920 --> 00:36:56,319
Speaker 11: come more from the enterprise side, not so much from

703
00:36:56,360 --> 00:36:57,160
Speaker 11: the consumer.

704
00:36:57,040 --> 00:36:59,239
Speaker 3: So very quickly, and I think this could really help

705
00:36:59,280 --> 00:37:03,600
Speaker 3: the dummies, like a rag. How are each of their

706
00:37:03,760 --> 00:37:06,760
Speaker 3: audiences or potential audiences.

707
00:37:06,160 --> 00:37:07,280
Speaker 2: Of AI different.

708
00:37:07,840 --> 00:37:14,120
Speaker 3: Who's Amazon going after, Who's Microsoft going after, Who's Google

709
00:37:14,280 --> 00:37:15,560
Speaker 3: and others going after?

710
00:37:16,880 --> 00:37:18,840
Speaker 11: Yeah, all of them are pretty much going after the

711
00:37:18,920 --> 00:37:22,160
Speaker 11: same kind of customer. But Amazon is pretty much dedicated

712
00:37:22,200 --> 00:37:25,080
Speaker 11: to large enterprises. So let's say if JP Morgan is

713
00:37:25,120 --> 00:37:28,480
Speaker 11: experimenting right now to creating an app internally or a

714
00:37:28,560 --> 00:37:31,960
Speaker 11: chat about internally that has AI, over time, the usage

715
00:37:31,960 --> 00:37:34,879
Speaker 11: of that will grow and that would help AWS. As

716
00:37:34,920 --> 00:37:37,440
Speaker 11: I said, the case with Microsoft is because of their

717
00:37:37,480 --> 00:37:40,400
Speaker 11: relationship with open Ai. You know, chat GPD has gone

718
00:37:40,400 --> 00:37:43,560
Speaker 11: from you know, arguably somewhere around you know, seven hundred

719
00:37:43,600 --> 00:37:46,680
Speaker 11: million users daily and the number of time, the amount

720
00:37:46,719 --> 00:37:48,480
Speaker 11: of time you're using on the app is quite big

721
00:37:48,560 --> 00:37:51,400
Speaker 11: every day. So Microsoft is making more money off of it.

722
00:37:51,400 --> 00:37:53,919
Speaker 11: It's more a timing issue than so much that one

723
00:37:53,960 --> 00:37:54,799
Speaker 11: is better than the other.

724
00:37:55,120 --> 00:37:58,080
Speaker 3: ANDROK, thank you so much, Inerragrano, which is real expertise

725
00:37:58,160 --> 00:37:59,960
Speaker 3: there with Bloomber Intelligence.

726
00:38:06,600 --> 00:38:10,520
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

727
00:38:10,520 --> 00:38:13,840
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

728
00:38:13,960 --> 00:38:16,799
Speaker 1: with the Bloomberg Business app. You can also watch us

729
00:38:16,840 --> 00:38:21,160
Speaker 1: live every weekday on YouTube and always on the Bloomberg terminal.

730
00:38:21,239 --> 00:38:24,759
Speaker 3: Sebastian Page joins us some tiro Price his book on

731
00:38:24,880 --> 00:38:27,920
Speaker 3: leadership out. I'll get that out on Twitter and I'm

732
00:38:28,000 --> 00:38:30,960
Speaker 3: LinkedIn here and it's Sebastian, thanks for joining us today.

733
00:38:31,040 --> 00:38:34,440
Speaker 2: The heritage of tiro Price, back to my ute is

734
00:38:34,480 --> 00:38:37,960
Speaker 2: you guys were out front on technology and growth.

735
00:38:38,360 --> 00:38:43,480
Speaker 3: Tiro Price on the reaffirmation of this technology juggernaut in

736
00:38:43,600 --> 00:38:44,200
Speaker 3: MEG seven.

737
00:38:44,440 --> 00:38:50,320
Speaker 12: We absolutely love to research technology, understand technology, capture the trends.

738
00:38:51,680 --> 00:38:52,000
Speaker 2: Tom.

739
00:38:52,040 --> 00:38:55,600
Speaker 12: I hear the same words from different analysts and portfolio

740
00:38:55,600 --> 00:39:00,000
Speaker 12: managers on our platform these days about AI, same expression.

741
00:39:00,600 --> 00:39:04,120
Speaker 12: They're all saying, it's real. And if you look at

742
00:39:04,120 --> 00:39:07,480
Speaker 12: the projections for spending on AI for the next twelve months,

743
00:39:07,800 --> 00:39:12,080
Speaker 12: it's not decelerating, it's accelerating. It's expected to go up

744
00:39:12,080 --> 00:39:15,360
Speaker 12: by eighty percent globally. So here we are it's not

745
00:39:15,520 --> 00:39:18,400
Speaker 12: just about spending, it's also about productivity games.

746
00:39:18,840 --> 00:39:22,440
Speaker 5: So Sebastian, does that say we continue to just focus

747
00:39:22,520 --> 00:39:25,000
Speaker 5: on the MAG seven or just some of the big

748
00:39:25,040 --> 00:39:28,240
Speaker 5: tech names, or are you trying to find value outside

749
00:39:28,280 --> 00:39:30,040
Speaker 5: of that group that's worked so well.

750
00:39:30,560 --> 00:39:33,400
Speaker 12: That's such an important question because everything I just said

751
00:39:33,840 --> 00:39:37,120
Speaker 12: is basically the consensus. Stocks are up thirty percent in

752
00:39:37,160 --> 00:39:39,560
Speaker 12: three and a half months, the price earnings ratios at

753
00:39:39,560 --> 00:39:44,040
Speaker 12: twenty two, and the market is more concentrated than pretty

754
00:39:44,120 --> 00:39:48,440
Speaker 12: much any time and history, so you're going into earning season.

755
00:39:48,640 --> 00:39:53,120
Speaker 12: It's interesting listening to Bloomberg Surveillance. Everybody was saying, we're

756
00:39:53,120 --> 00:39:56,560
Speaker 12: going to get positive surprises, We're going to get positive surprises.

757
00:39:56,640 --> 00:39:59,040
Speaker 12: And I get a little bit philosophical here and I ask,

758
00:39:59,360 --> 00:40:03,120
Speaker 12: is it still surprise if everybody expects a surprise? Yep,

759
00:40:03,239 --> 00:40:07,479
Speaker 12: probably not, and you're seeing that now. So long way

760
00:40:07,480 --> 00:40:10,960
Speaker 12: of saying, we're long diversification in our portfolios, you should

761
00:40:11,000 --> 00:40:14,080
Speaker 12: own the growth stocks, but from an asset allocation top

762
00:40:14,160 --> 00:40:17,880
Speaker 12: down perspective, we're long diversification, and we're getting most of

763
00:40:17,920 --> 00:40:21,040
Speaker 12: it right now from international value, small and midcaps.

764
00:40:21,160 --> 00:40:21,520
Speaker 2: Really.

765
00:40:21,560 --> 00:40:23,680
Speaker 5: So we saw earlier in the year when there was

766
00:40:23,719 --> 00:40:27,040
Speaker 5: some of this volatility around Liberation Day and the shock

767
00:40:27,080 --> 00:40:30,400
Speaker 5: of tariffs, investors were taking money out of the US,

768
00:40:30,960 --> 00:40:33,360
Speaker 5: out of the dollar, out of US stocks, out of bonds,

769
00:40:33,440 --> 00:40:35,799
Speaker 5: and putting in elsewhere the rest of the world, including

770
00:40:36,120 --> 00:40:38,360
Speaker 5: European equities in a big way, who've been out performing.

771
00:40:38,440 --> 00:40:40,799
Speaker 5: Is that still the call there or is that just

772
00:40:40,840 --> 00:40:42,320
Speaker 5: a short term trade.

773
00:40:42,480 --> 00:40:45,440
Speaker 12: You know, from a macro perspective, it's counterintuitive. But some

774
00:40:45,480 --> 00:40:51,240
Speaker 12: of this is jolting Europe in particular into spending fiscal infrastructure.

775
00:40:51,760 --> 00:40:54,680
Speaker 12: We expect the debt to GDP in Germany to go

776
00:40:54,800 --> 00:40:58,040
Speaker 12: up by twenty percent over the next ten years.

777
00:40:57,800 --> 00:40:58,640
Speaker 5: So that could be.

778
00:40:59,000 --> 00:41:02,879
Speaker 12: I still believe long in the exceptionalism and the dynamicism

779
00:41:02,960 --> 00:41:05,840
Speaker 12: of the US economy, but right now you have macro

780
00:41:06,440 --> 00:41:08,280
Speaker 12: momentum semester Patrid.

781
00:41:08,280 --> 00:41:11,440
Speaker 3: There's suppose a VIX blows out to nineteen point one

782
00:41:11,560 --> 00:41:14,680
Speaker 3: zero over two big figures out with the tensions of

783
00:41:14,719 --> 00:41:18,800
Speaker 3: the morning. Okay, I get Windsor Ontario and the stereotype

784
00:41:19,040 --> 00:41:21,720
Speaker 3: of an auto industry in Canada flat on its back.

785
00:41:22,320 --> 00:41:24,640
Speaker 2: You've lived, I mean, did you see Jean Bellavoue at

786
00:41:24,640 --> 00:41:27,080
Speaker 2: the forum? I did not?

787
00:41:27,200 --> 00:41:30,560
Speaker 3: Yeah, I mean you know you lived Quebec. Fine, What

788
00:41:30,600 --> 00:41:34,560
Speaker 3: do does tariffs mean for the rest of Canada? Not Windsor,

789
00:41:34,880 --> 00:41:38,520
Speaker 3: but for resource Canada? What christiph Friedland used to talk

790
00:41:38,560 --> 00:41:41,080
Speaker 3: about plywood and sexy things like that.

791
00:41:41,239 --> 00:41:41,879
Speaker 2: What's it mean?

792
00:41:42,320 --> 00:41:46,760
Speaker 12: It matters a lot. It probably matters more than counterrentatively,

793
00:41:46,840 --> 00:41:50,520
Speaker 12: Again for the US. In the US, goods subject to

794
00:41:50,600 --> 00:41:56,320
Speaker 12: tariffs represent only nine percent of GDP. So I gotta say, Tom,

795
00:41:56,640 --> 00:42:00,279
Speaker 12: I'm both a Canadian citizen and a US citizen, so

796
00:42:00,760 --> 00:42:05,520
Speaker 12: I have a view that's I would say neutral here,

797
00:42:05,840 --> 00:42:08,640
Speaker 12: But generally speaking, it looks like Canada just wants to

798
00:42:08,680 --> 00:42:10,799
Speaker 12: get a better deal and that's why they're holding out.

799
00:42:11,120 --> 00:42:14,080
Speaker 3: Should others hold out? I mean, is that what TiAl

800
00:42:14,160 --> 00:42:16,840
Speaker 3: Price would say is it is a new terriff for

801
00:42:17,000 --> 00:42:19,920
Speaker 3: as your budget lab says, we're back.

802
00:42:19,800 --> 00:42:22,840
Speaker 2: To nineteen thirty three. Should that all the country's push?

803
00:42:23,120 --> 00:42:26,080
Speaker 12: Look, you know, on days like today, it sounds like

804
00:42:26,280 --> 00:42:30,880
Speaker 12: it feels like tariffs are driving the entire US economy. Again,

805
00:42:30,960 --> 00:42:34,520
Speaker 12: goods subject to tariffs represent nine percent of GDP. There

806
00:42:34,600 --> 00:42:37,799
Speaker 12: are knock on and implied to facts, but you have

807
00:42:38,040 --> 00:42:43,160
Speaker 12: many other factors that in my mind matter more fiscal spending,

808
00:42:43,239 --> 00:42:47,080
Speaker 12: the strength of the consumer, the corporate earnings. These all

809
00:42:47,120 --> 00:42:48,000
Speaker 12: look pretty good.

810
00:42:48,719 --> 00:42:53,200
Speaker 2: Well, one more question your book. Beyond diversification, it's absolutely phenomenal.

811
00:42:53,320 --> 00:42:54,480
Speaker 2: Let's go there right now.

812
00:42:54,800 --> 00:42:59,880
Speaker 3: How should our listeners and viewers diversify given the global

813
00:42:59,880 --> 00:43:01,279
Speaker 3: trauma that we're in right now?

814
00:43:01,800 --> 00:43:03,760
Speaker 12: Yeah, you know, Tom, I don't know if you'd noticed.

815
00:43:04,040 --> 00:43:06,320
Speaker 12: When I go to the dentist, my dentist always wants

816
00:43:06,360 --> 00:43:09,120
Speaker 12: investment advice. I think I guess they have a little

817
00:43:09,120 --> 00:43:11,759
Speaker 12: bit of money on the dentists are well paid, and oh,

818
00:43:11,800 --> 00:43:13,799
Speaker 12: you're in the investment business. What should you do? But

819
00:43:13,880 --> 00:43:16,160
Speaker 12: you have two seconds to say something. I always say

820
00:43:16,160 --> 00:43:19,320
Speaker 12: the most trite thing to say, which is stay invested,

821
00:43:19,440 --> 00:43:23,200
Speaker 12: stay diversified. And I have in my notes for you

822
00:43:23,280 --> 00:43:26,200
Speaker 12: all today the headline is be boring. We actually have

823
00:43:26,239 --> 00:43:29,320
Speaker 12: a lot of our tactical positions, not all that are neutral.

824
00:43:29,600 --> 00:43:33,359
Speaker 12: We are long diversification. Sometimes it's painful when markets become

825
00:43:33,400 --> 00:43:35,839
Speaker 12: more and more concentrated, but I think that's the right

826
00:43:35,880 --> 00:43:36,480
Speaker 12: thing to do, right.

827
00:43:37,000 --> 00:43:40,000
Speaker 3: Sebastian Page, thank you so much for getting its started

828
00:43:40,000 --> 00:43:40,400
Speaker 3: this morning.

829
00:43:40,400 --> 00:43:42,080
Speaker 2: He's a t ro price.

830
00:43:42,640 --> 00:43:46,560
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday

831
00:43:46,560 --> 00:43:49,880
Speaker 1: starting at seven am Eastern on Applecarplay and Android Auto

832
00:43:50,000 --> 00:43:52,959
Speaker 1: with the Bloomberg Business app. You can also listen live

833
00:43:53,040 --> 00:43:56,600
Speaker 1: on Amazon Alexa from our flagship New York station, Just

834
00:43:56,680 --> 00:43:59,200
Speaker 1: say Alexa Play Bloomberg eleven thirty.

835
00:43:59,360 --> 00:44:03,719
Speaker 3: We finished strong, Strong, Strong with Anna Wong who saw

836
00:44:03,719 --> 00:44:06,280
Speaker 3: this coming, Doctor Wong. Before we get the market open,

837
00:44:06,760 --> 00:44:10,920
Speaker 3: Kayleie Cox over at Ridtholtz identifies that the labor force

838
00:44:10,960 --> 00:44:14,640
Speaker 3: has declined for the third straight month. It's the first

839
00:44:14,640 --> 00:44:19,239
Speaker 3: time that's happened since twenty eleven. You nailed this with

840
00:44:19,360 --> 00:44:22,960
Speaker 3: your historic discussion on birth death models in that is

841
00:44:23,000 --> 00:44:26,279
Speaker 3: the vector in place to get to a negative non

842
00:44:26,360 --> 00:44:27,279
Speaker 3: farm payrolls.

843
00:44:27,560 --> 00:44:30,839
Speaker 8: I think I think today's very weak payrolls report and

844
00:44:30,880 --> 00:44:34,880
Speaker 8: the massive Doward revision suggests that the negative payroll is

845
00:44:34,920 --> 00:44:39,359
Speaker 8: probably with us right now. So with today's reading and

846
00:44:39,440 --> 00:44:42,840
Speaker 8: our read that the overstatement per month is roughly between

847
00:44:43,160 --> 00:44:47,480
Speaker 8: eighty thousand to one hundred thousand, that means today's print

848
00:44:47,800 --> 00:44:51,799
Speaker 8: means slightly negative payrolls. So I think today's print will

849
00:44:51,800 --> 00:44:56,520
Speaker 8: bring back the recession narrative because it is very very weak.

850
00:44:56,640 --> 00:44:59,160
Speaker 2: Claudia Sum didn't want to go there, you know. No,

851
00:44:59,360 --> 00:45:00,880
Speaker 2: that's so that's where she wus.

852
00:45:01,000 --> 00:45:02,400
Speaker 5: And how do you think that the FED is going

853
00:45:02,480 --> 00:45:05,080
Speaker 5: to view this data point? Again, it's just one data point.

854
00:45:05,120 --> 00:45:08,640
Speaker 5: We heard that from President Hammock of the Cleveland FED.

855
00:45:09,000 --> 00:45:10,560
Speaker 5: How do you guys think the FED will view this?

856
00:45:11,239 --> 00:45:15,480
Speaker 13: Yeah, so President's Beth Hammock is basically the most hawkish

857
00:45:15,680 --> 00:45:17,800
Speaker 13: individual in THEMC committee.

858
00:45:17,800 --> 00:45:24,360
Speaker 8: According to our spectrometer yes, and in terms of this peril, however,

859
00:45:24,640 --> 00:45:28,960
Speaker 8: it really vindicated Chris Waller's position, and in fact, Chris

860
00:45:29,000 --> 00:45:33,880
Speaker 8: Waller issued at dissent note today and it basically confirmed

861
00:45:33,880 --> 00:45:36,840
Speaker 8: his read of the labor market. As you have to

862
00:45:36,920 --> 00:45:39,839
Speaker 8: read beneath the headlines and go into details and think

863
00:45:39,880 --> 00:45:44,520
Speaker 8: about the revisions, because even today's revisions are larger than

864
00:45:44,640 --> 00:45:47,800
Speaker 8: what I would have expected, and I'm more ready on

865
00:45:47,840 --> 00:45:51,160
Speaker 8: the high side in the market. So it so I

866
00:45:51,200 --> 00:45:53,799
Speaker 8: think Chris Waller will gain a lot of plout within

867
00:45:53,880 --> 00:45:57,000
Speaker 8: the FOLC and will be we will likely.

868
00:45:56,840 --> 00:45:59,000
Speaker 13: Be seeing an earlier rate cut this year.

869
00:45:59,080 --> 00:46:01,759
Speaker 2: Doctor one. I understand people like you.

870
00:46:01,760 --> 00:46:05,240
Speaker 3: You were at Chicago and you're trained to be measured,

871
00:46:05,719 --> 00:46:08,360
Speaker 3: get on a trend. We don't want to cut rates

872
00:46:08,440 --> 00:46:11,719
Speaker 3: until we really have a trend in place. Isn't it

873
00:46:11,760 --> 00:46:14,960
Speaker 3: a perfect time to just do a twenty five beep

874
00:46:15,080 --> 00:46:16,839
Speaker 3: cut and reassess.

875
00:46:19,239 --> 00:46:22,880
Speaker 8: I think the policy role would say say, yes, they

876
00:46:22,920 --> 00:46:23,879
Speaker 8: should be cutting now.

877
00:46:24,480 --> 00:46:27,240
Speaker 13: But at the same time, I think I think.

878
00:46:27,080 --> 00:46:31,560
Speaker 8: Today's very weak payrolls report and the massive downward revision

879
00:46:31,600 --> 00:46:35,120
Speaker 8: suggests that the negative payroll is probably with us right now.

880
00:46:35,520 --> 00:46:39,600
Speaker 8: So with today's reading and our read that the overstatement

881
00:46:39,680 --> 00:46:43,720
Speaker 8: per month is roughly between eighty thousand to one hundred thousand.

882
00:46:43,880 --> 00:46:49,120
Speaker 8: That means today's print means slightly negative payrolls. So I

883
00:46:49,160 --> 00:46:53,440
Speaker 8: think today's print will bring back the recession narrative because

884
00:46:53,760 --> 00:46:55,120
Speaker 8: it is very, very weak.

885
00:46:55,239 --> 00:46:57,919
Speaker 3: Claudia sum didn't want to go there, you know, No,

886
00:46:57,960 --> 00:47:00,520
Speaker 3: that's so, it's whatso rules do you think that the

887
00:47:00,560 --> 00:47:02,319
Speaker 3: FED is going to view this data point?

888
00:47:02,320 --> 00:47:04,560
Speaker 5: Again, it's just one data point. We heard that from

889
00:47:05,040 --> 00:47:08,200
Speaker 5: President Hammock of the Cleveland Fed. How do you guys

890
00:47:08,200 --> 00:47:09,160
Speaker 5: think the FED will view this?

891
00:47:09,560 --> 00:47:13,720
Speaker 8: Yeah, so President's Beth Hammick is basically the most hawkish

892
00:47:13,960 --> 00:47:19,879
Speaker 8: individual in THEMC committee according to our spectrometer. Yes, and

893
00:47:20,160 --> 00:47:24,880
Speaker 8: in terms of this peril however, it really vindicated Chris

894
00:47:24,920 --> 00:47:28,800
Speaker 8: Waller's position, and in fact, Chris Waller issued at dissent

895
00:47:29,000 --> 00:47:33,640
Speaker 8: note today and it basically confirmed his read of the

896
00:47:33,719 --> 00:47:36,759
Speaker 8: labor market as you have to read beneath the headlines

897
00:47:36,800 --> 00:47:40,240
Speaker 8: and go into details and think about the revisions, because

898
00:47:40,480 --> 00:47:45,120
Speaker 8: even today's revisions are larger than what I would have expected,

899
00:47:45,200 --> 00:47:47,480
Speaker 8: and I'm already on the high side in the market.

900
00:47:47,600 --> 00:47:51,120
Speaker 8: So it so I think Chris Waller will gain a

901
00:47:51,160 --> 00:47:54,359
Speaker 8: lot of plout within the FOOC and will be we

902
00:47:54,400 --> 00:47:57,360
Speaker 8: will likely be seeing an earlier rate cut this year and.

903
00:47:57,440 --> 00:47:59,520
Speaker 3: A stay with this, please please please stay with us,

904
00:48:00,160 --> 00:48:01,400
Speaker 3: with us Bloomberg Economics.

905
00:48:01,400 --> 00:48:03,759
Speaker 2: We're going to get the markets opening. Come back to

906
00:48:03,840 --> 00:48:05,360
Speaker 2: doctor Wong what you need.

907
00:48:05,200 --> 00:48:09,400
Speaker 3: To know futures deteriity that came back actually off the report.

908
00:48:09,440 --> 00:48:13,359
Speaker 3: They're now negative sixty four on SPX, vix out two

909
00:48:13,400 --> 00:48:16,960
Speaker 3: point two zero points for Global Wall Street, and we

910
00:48:16,960 --> 00:48:20,400
Speaker 3: welcome you worldwide. Good morning in the Friday Pacific evening.

911
00:48:20,960 --> 00:48:24,800
Speaker 3: It's real simple. You have a two year US yield

912
00:48:24,880 --> 00:48:32,000
Speaker 3: now a full twenty basis points yield down, price up

913
00:48:32,080 --> 00:48:35,520
Speaker 3: on the two year yield as you get the markets open,

914
00:48:35,680 --> 00:48:37,080
Speaker 3: are John Tucker all right?

915
00:48:37,280 --> 00:48:40,000
Speaker 14: And the opening bill report being brought to you by Oppenheimer.

916
00:48:40,000 --> 00:48:43,840
Speaker 14: Oppenheimer focuses the power of their thinking on you, creating

917
00:48:43,880 --> 00:48:46,399
Speaker 14: customized plans to help achieve your goals. Put the power

918
00:48:46,400 --> 00:48:50,800
Speaker 14: of Oppenheimer thinking into your investing, wealth management, capital markets,

919
00:48:51,160 --> 00:48:52,120
Speaker 14: investment banking.

920
00:48:52,560 --> 00:48:53,120
Speaker 2: Right out of the.

921
00:48:53,080 --> 00:48:55,359
Speaker 14: Gate, we are lower has and P five hundred down

922
00:48:55,440 --> 00:48:58,719
Speaker 14: one percent, sixty two points lower sixty two seventy eight

923
00:48:58,760 --> 00:49:01,200
Speaker 14: on the index. The down Jones and Lavage down three

924
00:49:01,280 --> 00:49:04,000
Speaker 14: hundred seventy eight points. The NASDK one hundred right now

925
00:49:04,040 --> 00:49:06,399
Speaker 14: two hundred and seventy five points lower, That is down

926
00:49:06,520 --> 00:49:10,360
Speaker 14: one point two percent. Shares of Amazon helping lead the

927
00:49:10,400 --> 00:49:13,920
Speaker 14: declines right now seven percent lower, and shares of Apple

928
00:49:14,080 --> 00:49:16,720
Speaker 14: up in the early going. They are up right now

929
00:49:16,840 --> 00:49:20,800
Speaker 14: one and a half percent. That is your opening bell report,

930
00:49:20,880 --> 00:49:21,840
Speaker 14: poland Tom.

931
00:49:21,840 --> 00:49:23,839
Speaker 2: Thanks so much, John, so much. Good we're coming out.

932
00:49:24,000 --> 00:49:26,399
Speaker 3: Ernie Tdesky, thank you so much for joining us from

933
00:49:26,400 --> 00:49:29,160
Speaker 3: the budget lab at Yale in the last two hours.

934
00:49:29,200 --> 00:49:33,320
Speaker 3: Here's Tedesky reporting in as we go to anamwog here again,

935
00:49:33,440 --> 00:49:37,640
Speaker 3: down in negative four hundred on a market opening. Tedesky,

936
00:49:38,160 --> 00:49:41,439
Speaker 3: The two hundred and fifty three thousand negative two month

937
00:49:41,520 --> 00:49:47,120
Speaker 3: downward revision is the largest since at least nineteen seventy nine,

938
00:49:47,280 --> 00:49:52,440
Speaker 3: other than the COVID noise. Doctor Wang, I understand people

939
00:49:52,520 --> 00:49:55,560
Speaker 3: like you. You were at Chicago and you train to

940
00:49:55,640 --> 00:49:58,920
Speaker 3: be measured, get on a trend. We don't want to

941
00:49:58,920 --> 00:50:01,720
Speaker 3: cut rates until we really have a trend in place.

942
00:50:02,480 --> 00:50:05,520
Speaker 3: Isn't it a perfect time to just do a twenty

943
00:50:05,560 --> 00:50:08,000
Speaker 3: five beep cut and reassess.

944
00:50:08,880 --> 00:50:14,040
Speaker 8: I think the policy rule would say say yes, they

945
00:50:14,080 --> 00:50:17,200
Speaker 8: should be cutting now, But at the same time, I

946
00:50:17,239 --> 00:50:20,160
Speaker 8: think what the FED is thinking about is that inflation

947
00:50:20,280 --> 00:50:24,960
Speaker 8: might be surging in the next couple of months. And

948
00:50:25,040 --> 00:50:28,799
Speaker 8: so in my team, we are scraping online prices to

949
00:50:28,920 --> 00:50:32,120
Speaker 8: get a real time look at what how prices are doing.

950
00:50:32,680 --> 00:50:35,720
Speaker 13: And what we're seeing is actually a mixture.

951
00:50:35,840 --> 00:50:40,320
Speaker 8: We see some goods that has raised prices a lot

952
00:50:40,680 --> 00:50:43,839
Speaker 8: in the past three months, already feeling like maybe they

953
00:50:43,840 --> 00:50:47,360
Speaker 8: could not pass through all the taraf to the consumer

954
00:50:47,400 --> 00:50:50,160
Speaker 8: because they're seeing a drop in demand. So those things

955
00:50:50,200 --> 00:50:54,000
Speaker 8: are things like sporting equipments because you know, we really

956
00:50:54,080 --> 00:50:57,640
Speaker 8: have seen an audio equipment because those two categories have

957
00:50:57,800 --> 00:51:01,439
Speaker 8: seen well, the firms in those sectors thought they would

958
00:51:01,840 --> 00:51:04,959
Speaker 8: raise the price by over ten percent and consumers would

959
00:51:04,960 --> 00:51:07,200
Speaker 8: just take it, but turns out people are just not

960
00:51:07,400 --> 00:51:10,440
Speaker 8: as happy about that. But on the other hand, we're

961
00:51:10,440 --> 00:51:15,839
Speaker 8: starting to see toys prices going up, men's furnishings, apparels

962
00:51:15,880 --> 00:51:18,719
Speaker 8: and suits, sewing suits going up.

963
00:51:18,760 --> 00:51:23,399
Speaker 2: It's bow ties and they're killing it's killing the bow ties,

964
00:51:23,600 --> 00:51:24,520
Speaker 2: I think, and.

965
00:51:24,680 --> 00:51:25,160
Speaker 6: Let me do this.

966
00:51:25,200 --> 00:51:28,919
Speaker 2: I want to get this. Yeah, this is Neil Dutta here.

967
00:51:29,360 --> 00:51:34,080
Speaker 3: The prime age employment age prime age employment rate has

968
00:51:34,120 --> 00:51:35,160
Speaker 3: declined point.

969
00:51:34,920 --> 00:51:36,319
Speaker 2: Five percent over the last year.

970
00:51:36,400 --> 00:51:40,040
Speaker 3: This is not good and it's a reminder that unemployment

971
00:51:40,120 --> 00:51:45,120
Speaker 3: being low is not necessarily a fair representation of what's

972
00:51:45,160 --> 00:51:48,960
Speaker 3: going on in the job market. Dutta really pushing against it.

973
00:51:49,160 --> 00:51:52,279
Speaker 3: He's looking at non farm payrolls. Others are looking at

974
00:51:52,280 --> 00:51:54,080
Speaker 3: the comfort of four point two.

975
00:51:54,000 --> 00:51:57,120
Speaker 5: Percent, and along Calie Cox red Holts Wealth Management is

976
00:51:57,120 --> 00:51:59,319
Speaker 5: out on social saying the labor force declined for the

977
00:51:59,360 --> 00:52:02,640
Speaker 5: third straight month, the first time that's happened since twenty eleven.

978
00:52:03,200 --> 00:52:04,680
Speaker 5: What's going on there with the workforce?

979
00:52:05,000 --> 00:52:08,719
Speaker 8: Yeah, so the decline in the last two months, and

980
00:52:08,800 --> 00:52:11,120
Speaker 8: I think we haven't looked at the details for this month,

981
00:52:11,160 --> 00:52:13,400
Speaker 8: but I think the trend in the last three months

982
00:52:13,760 --> 00:52:16,759
Speaker 8: is that it's the youth, the people who are graduating

983
00:52:16,800 --> 00:52:18,880
Speaker 8: out of college, the people who are in their early

984
00:52:19,040 --> 00:52:23,560
Speaker 8: twenties that are driving this decline and labor force. And

985
00:52:23,640 --> 00:52:26,640
Speaker 8: I think, you know, I know, the narrative of there

986
00:52:26,719 --> 00:52:30,359
Speaker 8: is that it's immigration, it's undocumented, but actually I think

987
00:52:30,400 --> 00:52:33,000
Speaker 8: the dominant thing is the youth, and we need to

988
00:52:33,000 --> 00:52:35,719
Speaker 8: figure out what's the story there. There's some signs that

989
00:52:35,880 --> 00:52:39,920
Speaker 8: it's related to AI and that with firms trying to

990
00:52:41,000 --> 00:52:43,960
Speaker 8: I mean, replacing a lot of entry jobs, white collar

991
00:52:44,120 --> 00:52:47,759
Speaker 8: entry jobs with AI. There's just less need for you know,

992
00:52:48,120 --> 00:52:51,360
Speaker 8: interns or younger. It's just harder out there for people

993
00:52:51,360 --> 00:52:52,680
Speaker 8: graduating out of college.

994
00:52:52,760 --> 00:52:56,040
Speaker 3: We're calling interns this year junior analysts. I don't know why,

995
00:52:56,080 --> 00:52:57,799
Speaker 3: but that's what HR told me.

996
00:52:57,920 --> 00:53:01,080
Speaker 2: Anamong thank you, thank you, thank you. Really leading the

997
00:53:01,160 --> 00:53:01,640
Speaker 2: nation on.

998
00:53:01,760 --> 00:53:06,560
Speaker 3: Careful analysis of her labor economy. She's the Bloomberg Economics.

999
00:53:06,920 --> 00:53:11,799
Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify,

1000
00:53:11,880 --> 00:53:16,200
Speaker 1: and anywhere else you get your podcasts. Listen live each weekday,

1001
00:53:16,320 --> 00:53:19,759
Speaker 1: seven to ten am Eastern on Bloomberg dot com, the

1002
00:53:19,840 --> 00:53:23,880
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1003
00:53:23,920 --> 00:53:27,279
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1004
00:53:27,480 --> 00:53:29,200
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