WEBVTT - Bloomberg Surveillance TV: January 13th, 2026

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News.

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<v Speaker 2>This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along

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<v Speaker 2>with Lisa Bromwitz and Amerie Hordern. Join us each day

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<v Speaker 2>for insight from the best in markets, economics, and geopolitics

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<v Speaker 2>from our global headquarters in New York City. We are

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<v Speaker 2>anywhere else you listen, and as always on the Bloomberg

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<v Speaker 2>Terminal and the Bloomberg Business App. This from Axios in

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<v Speaker 2>the last twenty four hours on Treasury Secretary Scott Beston,

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<v Speaker 2>here's the quote. The Secretary isn't happy. He let the

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<v Speaker 2>President know.

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<v Speaker 1>This is something that people keep talking about. His concern

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<v Speaker 1>was that it was going to royal markets, it would

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<v Speaker 1>be counterproductive, and they would actually make it more difficult

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<v Speaker 1>for them to nominate someone who would be more Trump

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<v Speaker 1>friendly to the Federal Reserve, which seems to be exactly

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<v Speaker 1>what is happening.

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<v Speaker 2>Joining us nas Patrick mccanry, the former chat the House

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<v Speaker 2>Financial Service Committee. Patrick, Welcome to the program. This pursuit

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<v Speaker 2>of the feder Reserve, does it introduce some financial stability risk.

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<v Speaker 3>Clearly, and this is the reason why you're reporting. We

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<v Speaker 3>just heard about Secretary Best and telling the present directly

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<v Speaker 3>is displeasure. Look, the substance of the question here is

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<v Speaker 3>whether or not the Chair of the Federal Reserve lined

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<v Speaker 3>before Congress. And what I would tell you is, having

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<v Speaker 3>experienced multiple dozens of testimonies by various FED chairs, the

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<v Speaker 3>FED chair coming to Congress is the most brief person

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<v Speaker 3>that appears before Congress period. The briefing book is really

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<v Speaker 3>the question here, not the FED chair. Was the briefing

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<v Speaker 3>book appropriately written to answer members of Congress questions about

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<v Speaker 3>the building project? I believe it was, And the amount

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<v Speaker 3>of discipline the FED puts into ensuring they have an

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<v Speaker 3>accurate briefing book for the FED, for any FED chair,

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<v Speaker 3>and I think that's the missing nuance of this story.

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<v Speaker 4>But there is no nuance here.

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<v Speaker 3>The President's flooding the zone on economic issues to open

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<v Speaker 3>the year. We're going to see a whole lot more

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<v Speaker 3>of this in the coming weeks. But he's coming out

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<v Speaker 3>guns of blazing with both progressive, populist and conservative and

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<v Speaker 3>market shaking ideas all in one week.

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<v Speaker 5>Buttrick you spent a ton of time with the FED Chair. Actually,

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<v Speaker 5>he has a ton of political capital on the Capitol.

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<v Speaker 5>He spent a lot of time with Republicans and Democrats.

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<v Speaker 5>Do you think that that's what we're seeing played out

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<v Speaker 5>right now? All those meetings he has taken all the

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<v Speaker 5>political capital he put into going into meeting senators and

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<v Speaker 5>meeting House members. When you hear senator like Kennedy saying

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<v Speaker 5>we need this like we need a hole in the head,

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<v Speaker 5>it sounds like they are upset with what the DOJ

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<v Speaker 5>is doing.

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<v Speaker 4>Yes, and that is exactly what you're seeing.

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<v Speaker 3>Is this is why we got to listen and watch

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<v Speaker 3>Bloomberg because this is the type of nuance you need

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<v Speaker 3>to understand. The FED Chair puts an enormous amount of

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<v Speaker 3>time each week into ensuring his relationships around Washington.

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<v Speaker 6>D C.

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<v Speaker 3>I'm the beneficiary of that with the last four FED

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<v Speaker 3>Chairs in my service in Congress, and it means that

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<v Speaker 3>if there's a jump ball, you give them the benefit

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<v Speaker 3>of the doubt because you have a relationship with them

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<v Speaker 3>and you know them.

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<v Speaker 4>That's the goal.

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<v Speaker 3>It doesn't always work, the outreach doesn't always work. Doesn't

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<v Speaker 3>mean you have a good relationship, but at the very least.

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<v Speaker 3>The FED chair and all FED chairs have put a

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<v Speaker 3>lot of effort into ensuring they have relationships on the

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<v Speaker 3>hill that they have they have a political capital in

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<v Speaker 3>the tank so that when times get sideways or bad,

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<v Speaker 3>they will they will defend you or be helpful to you.

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<v Speaker 3>And this is a moment where you see that Japal

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<v Speaker 3>has put an enormous amount of equity that he's built

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<v Speaker 3>up on the hill in both the House and Senate side.

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<v Speaker 4>Both with Republicans and Democrats.

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<v Speaker 5>Some market participants say that because of what is going on,

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<v Speaker 5>he's going to stay on the Federal reserve in his

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<v Speaker 5>governor's seat till twenty twenty eight. If he were to

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<v Speaker 5>do that, do you think Republicans will actually view that

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<v Speaker 5>move as him being basically not withholding up to the

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<v Speaker 5>independence of the FED. Because it's very non traditional for

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<v Speaker 5>a FED chair to do so well.

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<v Speaker 3>It's a term of office number one and number two

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<v Speaker 3>a tradition that former chairs roll off the FED board.

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<v Speaker 3>It's a good practice for former FED chairs to roll

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<v Speaker 3>off the board. It allows their successor of the time

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<v Speaker 3>and runway to get up to speed. But in this case,

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<v Speaker 3>these are I would say this phase threats to counterbalance

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<v Speaker 3>the president in the Department of Justices threats here, and

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<v Speaker 3>that shows that JPAL is not powerless in the situation.

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<v Speaker 3>The FAILL Reserve is not powerless in this situation. That's

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<v Speaker 3>one element of it. The other element of it is

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<v Speaker 3>that is clearly saying to the White House, think of

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<v Speaker 3>your nominees. Think of your nominees that have to go

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<v Speaker 3>before Capitol Hill in this context. And I think this

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<v Speaker 3>means that the President's first nominee to be share of

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<v Speaker 3>the Fileral Reserve is going to have one heck of

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<v Speaker 3>a time dealing with members of Congress given this context

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<v Speaker 3>of duj intervention.

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<v Speaker 2>Stay with us. More Bloomberg surveillance coming up after this.

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<v Speaker 2>So here's the latest. This morning. US productivity accelerating at

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<v Speaker 2>its fastest paced than two years, fueling hopes for further

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<v Speaker 2>AI driven gains. Norrian Rabini is the chairman of Rabini

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<v Speaker 2>Macro associate to me, writes the following, The US remains

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<v Speaker 2>at the center of a technology driven positive supply shock,

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<v Speaker 2>the racist growth and lowest inflation over time. Norrian joint

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<v Speaker 2>is now for more neurial Good morning, good to see you,

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<v Speaker 2>good seeing you. Fantastic to catch up with you, sir,

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<v Speaker 2>you polish not just for a year ahead, but three

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<v Speaker 2>to twenty thirty. Can you flash that out for us

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<v Speaker 2>a little bit more?

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<v Speaker 7>Yes, I mean everybody's talking about AI, J and AI,

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<v Speaker 7>but this is only one of the fifteen technology of

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<v Speaker 7>the future.

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<v Speaker 6>They're allreated to AI.

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<v Speaker 7>But is AI semiconductor by medical research, quantum fusion, defence tech, fintech,

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<v Speaker 7>new material science, you name it. And it's a race

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<v Speaker 7>between US and China. I don't think it's a zero

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<v Speaker 7>sum game. US is going to do well, China's going

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<v Speaker 7>to do well. But my estimate is that the US

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<v Speaker 7>potential growth is estimated today to be only one point

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<v Speaker 7>eighty percent, could be as i's four percent by the

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<v Speaker 7>end of the decade. And I've done a bit of

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<v Speaker 7>a bottom LP analysis. And by the way, the data

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<v Speaker 7>productivity after the gfc I was a productivity between two

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<v Speaker 7>thousand and nine and nineteen was only one percent. Since

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<v Speaker 7>twenty nineteen, in spite of the deep during COVID, that's

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<v Speaker 7>doubled to almost two percent one point nine in twenty

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<v Speaker 7>twenty four was two point four percent, and the number

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<v Speaker 7>from Q three suggests was almost five percent. And by

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<v Speaker 7>the way, the Atlanta Fed no cast for Q four

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<v Speaker 7>GDPs today is five point one percent, probably too high,

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<v Speaker 7>but given that one, given the job number, you'll have

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<v Speaker 7>another high PRODUCTIVY growth.

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<v Speaker 6>Now I don't think the product.

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<v Speaker 7>Growth is four percent or five percent, but there's definitely

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<v Speaker 7>an acceleration.

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<v Speaker 2>Jobs is key. Is a jobless growth so called jobless growth?

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<v Speaker 6>Yeah, well, it's a jobless growth. There are three stories.

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<v Speaker 7>One is that the GDP number are wrong and the

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<v Speaker 7>GDP number are going to be revised.

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<v Speaker 6>Towards the weaker labor numbers.

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<v Speaker 7>The other one is that now the gp growth is

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<v Speaker 7>strong and you're going to have some adjustment upward of

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<v Speaker 7>the revised data. I think the third explanation is the

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<v Speaker 7>more correct one. You can have strong GDP growth and

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<v Speaker 7>having weak labor growth because we're having a productivity revolution.

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<v Speaker 7>If you're looking, for example, at the revenue real revenue

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<v Speaker 7>per worker of SMP five hundred firms since the launch

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<v Speaker 7>of CHAD GPT in November twenty twenty two, the average

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<v Speaker 7>has increased for SMP five hundred firms by fifteen percent

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<v Speaker 7>in the last three years, so it's almost five percent

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<v Speaker 7>per year.

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<v Speaker 6>And if you look at the bisector, of.

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<v Speaker 7>Course, a lot of it is closer to twenty percent

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<v Speaker 7>in tech and communications services, but it's very large also

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<v Speaker 7>across the board. So both at the micro data level

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<v Speaker 7>SMPFA and the firms and the macro one number, we're

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<v Speaker 7>seeing a productive revolutionary in the numbers.

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<v Speaker 1>I'm kind of dealing with whiplash right now because we

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<v Speaker 1>just had the Roy Metel CEO on defense sector in

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<v Speaker 1>Europe booming for all the wrong reasons, this idea that

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<v Speaker 1>he's more worried about the state of the world than

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<v Speaker 1>ever before. And here doctor doom is coming on to

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<v Speaker 1>tell us about how productivity boom is going to bring

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<v Speaker 1>everything to a better place. Why are you less concerned

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<v Speaker 1>about this overlay of rearmament and militarization that is also

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<v Speaker 1>coming in tandem with its productivity boom.

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<v Speaker 7>Well, there are geopolitical risk in the world, and I'm

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<v Speaker 7>aware of them. The question is whether I have a

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<v Speaker 7>significant economic and market effect. Look at the biggest one,

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<v Speaker 7>the two well day were between Easily and Iran last June.

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<v Speaker 7>All prices went up a little bit, stock markets wobbled,

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<v Speaker 7>and then given the Dran did not attack the old

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<v Speaker 7>facility of the Gulfies or blocked the street of hormos.

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<v Speaker 7>It went away, and that was a big, big deal Venezuela.

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<v Speaker 7>You know, we can discuss that length, but the macro

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<v Speaker 7>and market implication are close to zero. It's just less

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<v Speaker 7>than a million barrels a day. Russia Ukraine is a mess,

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<v Speaker 7>but it's not going to have an impact on global market.

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<v Speaker 6>Economy the way it did in twenty twenty two.

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<v Speaker 7>So and US China, they are of course in a

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<v Speaker 7>competitive strategic competition, but right now the trade tension for

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<v Speaker 7>all the reasons we know, are some limited. So every

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<v Speaker 7>time there is a geopoliga risk, people say stuff could happen,

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<v Speaker 7>But so far those that we've seen in the last

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<v Speaker 7>few decades, living aside the seventies with the shocks of

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<v Speaker 7>Young Kippur and the a Islamic Revolution have not a

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<v Speaker 7>market effect.

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<v Speaker 8>Do you think, though, that the United States is going

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<v Speaker 8>to lose some of its luster as an investment haven

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<v Speaker 8>in terms of the ongoing conflict between the US and

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<v Speaker 8>traditional allies like Europe.

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<v Speaker 1>Have you seen anything like that or do you think

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<v Speaker 1>that's overstaid in productivity really is.

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<v Speaker 6>Going to rule the rust.

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<v Speaker 7>You know, I've been saying since last year that tech

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<v Speaker 7>trump stariffs because I think that the upside coming from

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<v Speaker 7>tech is two hundred business points. Well, if you add

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<v Speaker 7>all the impacts of the bad circulationary policies of Trump trade,

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<v Speaker 7>the restrictions of migration, physical definity, trying to affect the

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<v Speaker 7>independence of the FED, the rule of law, the maximum

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<v Speaker 7>From an empedia point of view, it could be a

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<v Speaker 7>negative fifty business points downside to potential growth. So you

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<v Speaker 7>have an upside of two hundred from technology, you have

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<v Speaker 7>a downside of fifty. Is a ratio four to one,

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<v Speaker 7>So tech Trump starff. So the stuff that is technology

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<v Speaker 7>is first or everything else including geopolitics is second or older.

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<v Speaker 5>Is this why the AI trade the market pretty much

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<v Speaker 5>shrugged off at independence yesterday as a serious concern.

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<v Speaker 7>You know, I believe that you know there is some

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<v Speaker 7>fraudiness of course in the AI sector. But if you

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<v Speaker 7>talk to all these companies, I think that they would

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<v Speaker 7>all argue that we are maybe to worst five years

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<v Speaker 7>away or best three years away from AGI. However you

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<v Speaker 7>want to define it. Now, if we are achieving artificial

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<v Speaker 7>general intelligence, the valuation of the say, not every of

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<v Speaker 7>the mark seven is going to reach AGI, but maybe

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<v Speaker 7>three or four will.

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<v Speaker 6>So the value of a firm that.

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<v Speaker 7>Is going to be having AGI is going to be

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<v Speaker 7>five xs of its current value.

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<v Speaker 6>So that's the RaSE.

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<v Speaker 7>So if you think of it this way, yeah, there

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<v Speaker 7>is some fraudings, there can be a correction. But with

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<v Speaker 7>US growth at two percent for the last few decades,

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<v Speaker 7>the average return on SMP five hundred was twelve percent

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<v Speaker 7>including dividends of Nasdaq was sixteen percent, and was with

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<v Speaker 7>two percent. Suppose growth is not two three, let alone

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<v Speaker 7>three and a half four. American exceptionalism has to become

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<v Speaker 7>even stronger, because if it was American exception it's with

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<v Speaker 7>one point eight percent road. With higher roads, it has

0:11:53.360 --> 0:11:55.520
<v Speaker 7>to be better than that on average. Now there'll be

0:11:55.520 --> 0:11:59.319
<v Speaker 7>winners and losers. But within the publicly traded firms, all

0:11:59.360 --> 0:12:02.600
<v Speaker 7>the carn ecolomy, and among the startups, many of them

0:12:02.600 --> 0:12:04.440
<v Speaker 7>are going to go bust. But if you're looking at

0:12:04.480 --> 0:12:07.040
<v Speaker 7>the medium the horizon with higher growth, you've got to

0:12:07.080 --> 0:12:10.040
<v Speaker 7>have higher returns. And we're seeing based on the data

0:12:10.040 --> 0:12:12.559
<v Speaker 7>on real revenue growth for a segreef Avander firms, then

0:12:12.600 --> 0:12:15.679
<v Speaker 7>most of those productivity grains are gotten by the firms.

0:12:16.040 --> 0:12:19.000
<v Speaker 7>Real wages are growing less than productivity. In liberal costs

0:12:19.080 --> 0:12:21.640
<v Speaker 7>are falling. That's why there is my least, that's why

0:12:21.640 --> 0:12:25.040
<v Speaker 7>people are worrying about affordability. But from a profitability point

0:12:25.080 --> 0:12:27.079
<v Speaker 7>of view, the corporate sector is doing great.

0:12:27.960 --> 0:12:31.440
<v Speaker 2>Stay with us more Bloomberg surveillance coming up after this.

0:12:40.760 --> 0:12:44.000
<v Speaker 2>Tifinitely wanting a pincoat joined us no more, Tifinitely welcome

0:12:44.040 --> 0:12:45.520
<v Speaker 2>to the program. We'd love you if you on one.

0:12:45.520 --> 0:12:47.640
<v Speaker 2>The data we just go up. But so the outlook

0:12:47.640 --> 0:12:50.000
<v Speaker 2>for inflation, is there a better story to tell?

0:12:52.400 --> 0:12:54.760
<v Speaker 9>Yeah, well, I mean it sounds like it was a

0:12:54.880 --> 0:12:57.920
<v Speaker 9>very mixed bag, as Mike McKee just described. You know,

0:12:58.040 --> 0:13:03.200
<v Speaker 9>it seems like the softer than expected numbers came really

0:13:03.240 --> 0:13:05.720
<v Speaker 9>from the good side, and even on the good side,

0:13:05.760 --> 0:13:07.720
<v Speaker 9>it was it was very much a mixed picture. So

0:13:07.760 --> 0:13:11.599
<v Speaker 9>you have TERRIORF related passed through that's happening at a

0:13:11.720 --> 0:13:15.400
<v Speaker 9>very uneven paced depending on industries. So you had electronic products,

0:13:15.880 --> 0:13:18.080
<v Speaker 9>you know, that appeared prices were down quite a bit,

0:13:18.120 --> 0:13:20.520
<v Speaker 9>but other things like apparel were up. So it's a

0:13:20.559 --> 0:13:23.319
<v Speaker 9>pretty it looks like a pretty confusing number, quite frankly,

0:13:23.600 --> 0:13:25.240
<v Speaker 9>you know. And on top of that, you did have

0:13:25.320 --> 0:13:29.200
<v Speaker 9>government related distortions because of the shutdown, you know, so

0:13:29.320 --> 0:13:31.080
<v Speaker 9>I think the FED will have to parse through this.

0:13:31.400 --> 0:13:33.560
<v Speaker 9>You know, the way that we read the you know,

0:13:33.600 --> 0:13:36.360
<v Speaker 9>the Tea leaves more recently is that after seventy five

0:13:36.400 --> 0:13:39.600
<v Speaker 9>basis points of cuts that they've implemented in the second

0:13:39.640 --> 0:13:42.360
<v Speaker 9>half of twenty twenty five, they're much closer to neutral.

0:13:42.360 --> 0:13:44.880
<v Speaker 9>They're on the higher end of their own range estimated

0:13:44.960 --> 0:13:47.880
<v Speaker 9>range for neutral, and as a result of that, with

0:13:47.920 --> 0:13:52.000
<v Speaker 9>the labor market stable, they they're pretty comfortable pausing here

0:13:52.080 --> 0:13:54.120
<v Speaker 9>to just get more information and see what happens.

0:13:54.360 --> 0:13:57.160
<v Speaker 1>It was quite a confusing number is an evergreen statement

0:13:57.240 --> 0:13:59.960
<v Speaker 1>for the past twelve months and probably the next twelve

0:14:00.040 --> 0:14:02.360
<v Speaker 1>lots of data that we're about to get. Tiffany, I

0:14:02.440 --> 0:14:04.360
<v Speaker 1>just wonder when do you think that we will get

0:14:04.400 --> 0:14:07.080
<v Speaker 1>a number that is not confusing, that gives us a

0:14:07.080 --> 0:14:09.720
<v Speaker 1>little bit more information, given the fact that this is

0:14:09.760 --> 0:14:13.600
<v Speaker 1>a muddied economy with slow hires, slow fire, the idea

0:14:13.679 --> 0:14:16.679
<v Speaker 1>that maybe you're getting disinflation, you're not getting a job's recovery,

0:14:16.679 --> 0:14:18.240
<v Speaker 1>but at the same time you're getting growth.

0:14:20.360 --> 0:14:23.080
<v Speaker 9>Yeah, yeah, I mean so, I do think that you know,

0:14:23.120 --> 0:14:26.280
<v Speaker 9>we we've heard from from various you know, companies and

0:14:26.560 --> 0:14:30.160
<v Speaker 9>other industry sources that the holiday shopping season was was

0:14:30.200 --> 0:14:31.920
<v Speaker 9>going to be a key season where they were trying

0:14:31.960 --> 0:14:35.960
<v Speaker 9>to hold prices, you know, maybe even you know, elevate

0:14:36.040 --> 0:14:40.000
<v Speaker 9>discounts in order to gain market share, and then more

0:14:40.040 --> 0:14:43.480
<v Speaker 9>potential tariff passed through would be likely in the first

0:14:43.480 --> 0:14:45.640
<v Speaker 9>part of next year. You know, we also had an

0:14:45.640 --> 0:14:49.080
<v Speaker 9>inventory story. You had a bunch of stocking ahead of tariffs.

0:14:49.080 --> 0:14:52.160
<v Speaker 9>You know, companies were holding higher inventories, you know, and

0:14:52.240 --> 0:14:54.560
<v Speaker 9>some of that was probably getting them through the holiday season.

0:14:54.800 --> 0:14:56.160
<v Speaker 9>So I think it's really going to be a little

0:14:56.160 --> 0:14:58.840
<v Speaker 9>bit of a test, you know, early next year, you know,

0:14:58.880 --> 0:15:01.280
<v Speaker 9>to see how companies react to this new regime.

0:15:01.360 --> 0:15:01.520
<v Speaker 8>You know.

0:15:01.560 --> 0:15:03.880
<v Speaker 9>The other part of this, of course, is that we

0:15:04.000 --> 0:15:08.640
<v Speaker 9>have a Supreme Court decision coming out that will have

0:15:08.720 --> 0:15:12.880
<v Speaker 9>implications for tariffs. The administration has talked about rebuilding the

0:15:12.880 --> 0:15:16.600
<v Speaker 9>current regime even if the Supreme Court strikes down you know,

0:15:16.640 --> 0:15:19.960
<v Speaker 9>the tariffs on legal issues, so that adds are wrinkled

0:15:19.960 --> 0:15:22.320
<v Speaker 9>to this, you know. And then the final thing that

0:15:22.680 --> 0:15:25.000
<v Speaker 9>you know, we'll have material implications is that we do

0:15:25.080 --> 0:15:28.200
<v Speaker 9>have offsetting fiscal stimulus that's coming. This will be one

0:15:28.240 --> 0:15:31.680
<v Speaker 9>of the biggest refund tax seasons in recent memories. So

0:15:31.720 --> 0:15:35.520
<v Speaker 9>the economy overall doing strong, they're winners and losers under

0:15:35.520 --> 0:15:38.120
<v Speaker 9>the surface, you know. And on top of that, we

0:15:38.160 --> 0:15:40.560
<v Speaker 9>are getting some fiscal stimulus, so we'll have to see

0:15:40.560 --> 0:15:43.520
<v Speaker 9>how inflation evolves amid all those factors. We think early

0:15:43.600 --> 0:15:46.080
<v Speaker 9>next year, which sector of the really year, excuse me,

0:15:46.120 --> 0:15:46.840
<v Speaker 9>which sector.

0:15:46.600 --> 0:15:48.360
<v Speaker 1>Of the economy, Tiffany, do you think is going to

0:15:48.440 --> 0:15:50.720
<v Speaker 1>drive inflation given the fact that people don't think it's

0:15:50.720 --> 0:15:53.480
<v Speaker 1>going to come from housing, and so far it hasn't

0:15:53.520 --> 0:15:55.440
<v Speaker 1>really come from manufacturing.

0:15:58.200 --> 0:16:00.480
<v Speaker 9>Yeah, well so, I mean, I I think that the

0:16:00.560 --> 0:16:03.640
<v Speaker 9>labor market as well, is not really a place that

0:16:03.680 --> 0:16:08.160
<v Speaker 9>you're seeing inflationary pressures. It's really it's really the wealth

0:16:08.200 --> 0:16:11.840
<v Speaker 9>effect right now that appears to be driving you know,

0:16:11.880 --> 0:16:15.800
<v Speaker 9>elevated domestic demand, more resilient consumption than I think anyone

0:16:16.080 --> 0:16:19.240
<v Speaker 9>was expecting. You know, we're tracking consumption growth in the

0:16:19.520 --> 0:16:21.560
<v Speaker 9>second half of the year, you know, two and a

0:16:21.600 --> 0:16:23.600
<v Speaker 9>half percent, and that's in a time when you have

0:16:23.680 --> 0:16:27.240
<v Speaker 9>real label real labor income growth at one So you're

0:16:27.280 --> 0:16:30.760
<v Speaker 9>clearly getting a wealth effect here that's keeping demand elevated,

0:16:31.080 --> 0:16:33.560
<v Speaker 9>you know, So that appears to be the source of

0:16:33.960 --> 0:16:37.280
<v Speaker 9>demand and some potential inflationary pressures, you know, and just

0:16:37.320 --> 0:16:39.360
<v Speaker 9>how that comes out in the data. Again, it's a

0:16:39.400 --> 0:16:42.280
<v Speaker 9>winners and losers economy, and that that should be reflected

0:16:42.280 --> 0:16:45.200
<v Speaker 9>in the CPI as well. The housing side has been

0:16:45.360 --> 0:16:48.240
<v Speaker 9>a relative loser here. It does look like to us

0:16:48.240 --> 0:16:52.120
<v Speaker 9>that rents will moderate, you know, quite dramatically. We think

0:16:52.160 --> 0:16:55.680
<v Speaker 9>they could be below a pre pandemic trend. But on

0:16:55.720 --> 0:16:57.600
<v Speaker 9>the other side of that, you're you are still getting

0:16:57.600 --> 0:16:59.760
<v Speaker 9>some of this TERRAF related pass through that's keeping core

0:16:59.800 --> 0:17:02.640
<v Speaker 9>good is elevated. You know, that should peak in the

0:17:02.640 --> 0:17:05.240
<v Speaker 9>first part of this year and moderate there after. But

0:17:05.240 --> 0:17:07.280
<v Speaker 9>but in the meantime we are we are still getting it.

0:17:07.560 --> 0:17:09.480
<v Speaker 5>Given this latest data, do you think it opens the

0:17:09.480 --> 0:17:11.159
<v Speaker 5>door for the Fed maybe not to cut, but to

0:17:11.200 --> 0:17:13.360
<v Speaker 5>be dubvish.

0:17:13.440 --> 0:17:15.840
<v Speaker 9>I mean, I think that the Fed will, you know,

0:17:16.040 --> 0:17:19.679
<v Speaker 9>I think I think they certainly will, you know, they will,

0:17:19.960 --> 0:17:23.000
<v Speaker 9>uh they they will say that inflation, you know it

0:17:23.040 --> 0:17:25.240
<v Speaker 9>does has looked better than expected, and I think I

0:17:25.240 --> 0:17:28.840
<v Speaker 9>think that's absolutely right, you know. So with that, you know,

0:17:28.840 --> 0:17:31.880
<v Speaker 9>I think there's certainly reason for them to have an

0:17:31.880 --> 0:17:36.120
<v Speaker 9>outlook of continued interest rate cuts towards their estimates of neutral.

0:17:36.400 --> 0:17:38.960
<v Speaker 9>So I think the conversation you know, from Federal Reserve

0:17:39.040 --> 0:17:42.800
<v Speaker 9>officials is throughout this year is really going to shift

0:17:43.040 --> 0:17:45.880
<v Speaker 9>from you know, where do we think neutral interest rate

0:17:45.920 --> 0:17:48.440
<v Speaker 9>policy really is at this point? You know, I think

0:17:48.520 --> 0:17:51.399
<v Speaker 9>post you know, after the teriff related price adjustments happened.

0:17:51.440 --> 0:17:54.480
<v Speaker 9>You know, underlying inflation you know, does look pretty good here.

0:17:54.800 --> 0:17:56.639
<v Speaker 9>And so when you have inflation that's getting close to

0:17:56.680 --> 0:18:00.040
<v Speaker 9>target and a labor market that's stable, you know, you

0:18:00.040 --> 0:18:02.080
<v Speaker 9>really need to think about where is neutral policy. So

0:18:02.119 --> 0:18:04.440
<v Speaker 9>that's the conversation we think they'll be having in twenty

0:18:04.440 --> 0:18:04.960
<v Speaker 9>twenty six.

0:18:05.720 --> 0:18:09.280
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0:18:09.280 --> 0:18:12.600
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