1 00:00:02,520 --> 00:00:13,760 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 2 00:00:13,800 --> 00:00:17,880 Speaker 1: Surveillance Podcast. Catch us live weekdays at seven am Eastern 3 00:00:18,200 --> 00:00:21,960 Speaker 1: on Apple CarPlay or Android Auto with the Bloomberg Business app. 4 00:00:22,320 --> 00:00:25,640 Speaker 1: Listen on demand wherever you get your podcasts, or watch 5 00:00:25,760 --> 00:00:27,120 Speaker 1: us live on YouTube. 6 00:00:27,440 --> 00:00:30,360 Speaker 2: The reason Credit Suite was so good, Mark Flaherty and Oil, 7 00:00:30,440 --> 00:00:34,280 Speaker 2: et cetera, et cetera, was their research was gorgeous, Which 8 00:00:34,320 --> 00:00:36,720 Speaker 2: is why I hate laur Kelvisina because she sends over 9 00:00:36,760 --> 00:00:39,920 Speaker 2: one hundred and three page power point read it because 10 00:00:39,960 --> 00:00:41,920 Speaker 2: I got time to read every single screen. 11 00:00:41,960 --> 00:00:42,680 Speaker 3: What do you marry? 12 00:00:42,720 --> 00:00:46,080 Speaker 4: Meeker's in disguise, that's the mini pulse, that's the meeting. 13 00:00:46,400 --> 00:00:48,199 Speaker 4: We cut it down recently. It was getting up to 14 00:00:48,200 --> 00:00:49,880 Speaker 4: around like one hundred and thirty hundred and forty. 15 00:00:50,240 --> 00:00:51,920 Speaker 3: It's just sick. Laurie. 16 00:00:51,920 --> 00:00:54,320 Speaker 2: You're too young to remember this, but I remember LIFO 17 00:00:54,520 --> 00:00:59,240 Speaker 2: FIFO and all the accounting that went into more traditional companies. 18 00:00:59,720 --> 00:01:04,560 Speaker 2: Does big tech hyperscalers do they have accountable LIFEO fi 19 00:01:04,680 --> 00:01:06,640 Speaker 2: fo balance sheets. 20 00:01:06,959 --> 00:01:10,000 Speaker 4: That I'm not qualified to comment on. Tom, I'm not 21 00:01:10,040 --> 00:01:13,520 Speaker 4: really sure. But the reality is that we are seeing 22 00:01:13,520 --> 00:01:16,639 Speaker 4: the nervousness around that top ten cohort for one reason 23 00:01:16,720 --> 00:01:18,920 Speaker 4: or another. Right, is it cash flow? Are we at 24 00:01:18,920 --> 00:01:21,759 Speaker 4: a peak in the CAPEC cycle? How much are these 25 00:01:21,760 --> 00:01:25,800 Speaker 4: technologies being used? Are we overspending? That nervousness you know, 26 00:01:25,959 --> 00:01:28,440 Speaker 4: tends to rise and people start to pull things, you know, 27 00:01:28,480 --> 00:01:31,360 Speaker 4: from all over the place when we get to peak valuations. 28 00:01:31,360 --> 00:01:33,640 Speaker 4: And that's exactly what we saw last fall, and that's 29 00:01:33,680 --> 00:01:35,680 Speaker 4: what we're starting to see again, though I would say 30 00:01:35,720 --> 00:01:39,240 Speaker 4: it's not to the same degree. Give you a couple 31 00:01:39,319 --> 00:01:42,080 Speaker 4: of examples. I mean, talking to clients earlier this week 32 00:01:42,120 --> 00:01:44,280 Speaker 4: about you know, sort of the semi sell off that 33 00:01:44,360 --> 00:01:49,000 Speaker 4: we saw on Friday. The general vibe I was getting was, Yeah, 34 00:01:49,040 --> 00:01:50,920 Speaker 4: this stuff feels like it's been a little bit ahead 35 00:01:50,920 --> 00:01:54,160 Speaker 4: of itself, but we still like these stories longer term. 36 00:01:54,240 --> 00:01:55,920 Speaker 4: And if I go back to a month ago when 37 00:01:55,920 --> 00:01:57,600 Speaker 4: I was in Europe, I was talking to a lot 38 00:01:57,680 --> 00:02:00,920 Speaker 4: of clients in London and Zurich, I would say, in particular, 39 00:02:00,960 --> 00:02:02,880 Speaker 4: where they're like, we've been in the semis, we've been 40 00:02:02,880 --> 00:02:03,800 Speaker 4: on the AI theme. 41 00:02:04,600 --> 00:02:05,560 Speaker 5: Is there anything else we. 42 00:02:05,480 --> 00:02:08,120 Speaker 4: Should be looking at? We want to explore other opportunities. 43 00:02:08,120 --> 00:02:10,720 Speaker 4: You could sense that impulse to diversify, But at the 44 00:02:10,720 --> 00:02:12,440 Speaker 4: same time, when we would go through and look at 45 00:02:12,480 --> 00:02:15,520 Speaker 4: all the other sectors, the picking seemed pretty slim, and 46 00:02:15,560 --> 00:02:17,920 Speaker 4: I've picked up on that same vibe this week as well. 47 00:02:18,639 --> 00:02:21,760 Speaker 6: Small mid caps. The Russell outperforming here today. What do 48 00:02:21,800 --> 00:02:22,200 Speaker 6: you make of that? 49 00:02:22,520 --> 00:02:23,400 Speaker 3: So if you look at. 50 00:02:23,360 --> 00:02:26,400 Speaker 4: Russell, it's been outperforming since last fall, but it's been very, 51 00:02:26,520 --> 00:02:29,080 Speaker 4: very choppy. It's been sort of jagged, you know, with 52 00:02:29,120 --> 00:02:31,080 Speaker 4: big swings up and down, and one thing that seems 53 00:02:31,120 --> 00:02:33,680 Speaker 4: to trip small caps up. You know, the fundamentals are 54 00:02:33,720 --> 00:02:37,000 Speaker 4: fantastic right now in terms of jobs growth, three accelerating 55 00:02:37,040 --> 00:02:39,639 Speaker 4: ism is above fifty for several months in a row. 56 00:02:40,080 --> 00:02:42,600 Speaker 4: The animal spirits feel like they're coming back to the economy. 57 00:02:42,960 --> 00:02:45,720 Speaker 4: But at the same time, interest rates and when you 58 00:02:45,800 --> 00:02:48,080 Speaker 4: bake in hikes from the Fed or dial down your 59 00:02:48,120 --> 00:02:50,840 Speaker 4: dubbishness since twenty twenty two, that's been a surefire way 60 00:02:50,880 --> 00:02:52,640 Speaker 4: to trip up the small cap trade. So we've been 61 00:02:52,680 --> 00:02:54,440 Speaker 4: a little bit less enthusiastic here of. 62 00:02:54,480 --> 00:02:57,040 Speaker 2: Lake a little more time with Lori Kelvicina Ira Jersey 63 00:02:57,120 --> 00:03:00,360 Speaker 2: coming up. Jeff given as well. The tape does better. 64 00:03:00,440 --> 00:03:04,520 Speaker 2: Negative seventy was a negative fifty now negative thirty seven. 65 00:03:04,320 --> 00:03:06,840 Speaker 3: And the SMB futures. 66 00:03:06,840 --> 00:03:10,600 Speaker 2: The Vics twenty handle twenty point ninety seven is better 67 00:03:10,680 --> 00:03:13,400 Speaker 2: from twenty two to twenty one into a better twenty 68 00:03:13,440 --> 00:03:18,040 Speaker 2: point ninety seven. Even oil comes in off the back 69 00:03:18,080 --> 00:03:21,600 Speaker 2: and forth tweets, if you will, and newsfall from Iran 70 00:03:21,720 --> 00:03:26,720 Speaker 2: to sixteen hundred Pennsylvania Avenue. In the yield space, thirty 71 00:03:26,760 --> 00:03:29,200 Speaker 2: year bond five oh two becomes a five oh one. 72 00:03:29,720 --> 00:03:32,200 Speaker 2: I'm running it out to four decimal points because that's 73 00:03:32,200 --> 00:03:34,839 Speaker 2: the way we roll as well. Ten yere yield four 74 00:03:34,840 --> 00:03:42,000 Speaker 2: point five two percent. Discuss companies make profit versus the 75 00:03:42,120 --> 00:03:43,800 Speaker 2: nonprofit companies. 76 00:03:44,360 --> 00:03:46,280 Speaker 4: This is a complicated issue. I mean, it's one that 77 00:03:46,400 --> 00:03:49,000 Speaker 4: comes up quite a bit in smallcalf. We're seeing, you know, 78 00:03:49,080 --> 00:03:51,920 Speaker 4: kind of low earnings quality stocks out performed similar to 79 00:03:51,960 --> 00:03:53,920 Speaker 4: what we saw last year off the April eighth low. 80 00:03:54,280 --> 00:03:56,680 Speaker 4: That's something that tends to happen off recession typelows. But 81 00:03:56,680 --> 00:03:58,480 Speaker 4: we're also starting to see that show up in the 82 00:03:58,560 --> 00:04:01,280 Speaker 4: S and P five hundred as well. You Know, what 83 00:04:01,360 --> 00:04:05,040 Speaker 4: I would say is, especially when you get into small cap, 84 00:04:05,080 --> 00:04:07,800 Speaker 4: there's a question of our loss makers really low quality. 85 00:04:07,840 --> 00:04:11,480 Speaker 4: A lot of biotech stocks, for example, early stage technology companies. 86 00:04:12,720 --> 00:04:15,480 Speaker 4: You know, I have seen frankly, in the small cap space, 87 00:04:15,640 --> 00:04:18,000 Speaker 4: people are getting a little bit more comfortable with biotech, 88 00:04:18,480 --> 00:04:20,320 Speaker 4: which is not something I would have heard five and 89 00:04:20,400 --> 00:04:22,680 Speaker 4: ten years ago. And those are technically, you know, like 90 00:04:22,760 --> 00:04:25,800 Speaker 4: quote unquote low quality because of the earnings component, but 91 00:04:25,920 --> 00:04:28,400 Speaker 4: not really so I do think small caps, you know, 92 00:04:28,440 --> 00:04:30,840 Speaker 4: I'm starting to increasingly think they're getting us a bad 93 00:04:31,000 --> 00:04:32,760 Speaker 4: rap on the quality issue. 94 00:04:32,960 --> 00:04:35,960 Speaker 2: Laurie, thanks so much for coming in the new slow 95 00:04:36,040 --> 00:04:37,520 Speaker 2: is crazy. I don't know how you do it. I 96 00:04:37,560 --> 00:04:38,560 Speaker 2: don't know anybody in that. 97 00:04:39,120 --> 00:04:39,679 Speaker 4: I don't sleep. 98 00:04:40,640 --> 00:04:41,599 Speaker 3: Yeah, we don't sleep. 99 00:04:41,640 --> 00:04:44,279 Speaker 2: Literally, that's about five hours a night and it's one 100 00:04:44,320 --> 00:04:47,080 Speaker 2: hour here, three hours there kind of thing. And then 101 00:04:47,040 --> 00:04:48,640 Speaker 2: on the weekend and we take eight naps. 102 00:04:48,680 --> 00:04:50,599 Speaker 4: I had an hour and forty nine minute nap on 103 00:04:50,680 --> 00:04:51,640 Speaker 4: Sunday afternoon. 104 00:04:51,920 --> 00:04:56,880 Speaker 3: Yes, heaven. Yeah, you gag the children. 105 00:04:58,160 --> 00:04:58,720 Speaker 4: Their grandparents. 106 00:04:59,480 --> 00:05:03,120 Speaker 2: I thank you, Lloyd Kelvicina, thank you so much. Of course, 107 00:05:03,240 --> 00:05:06,719 Speaker 2: always and forever with RBC. We're gonna get Tira Jersey 108 00:05:06,720 --> 00:05:08,520 Speaker 2: here in a moment. We got to have an extended 109 00:05:08,560 --> 00:05:10,800 Speaker 2: time with him not only on what he sees off 110 00:05:10,800 --> 00:05:14,400 Speaker 2: this CPI report, but also is work on the World 111 00:05:14,400 --> 00:05:18,640 Speaker 2: Cup again. As I noticed on stub ub tickets issued. 112 00:05:18,760 --> 00:05:21,919 Speaker 2: Tickets released today for so many games at this World 113 00:05:21,960 --> 00:05:24,520 Speaker 2: Cup is like a huge deal. When was the last 114 00:05:24,520 --> 00:05:26,360 Speaker 2: time we talked about the Nis Alexis? 115 00:05:26,880 --> 00:05:31,200 Speaker 3: Oh a few minutes. It's been way too Our ticket 116 00:05:31,200 --> 00:05:32,839 Speaker 3: price has gone up since then. Yeah. 117 00:05:32,880 --> 00:05:36,640 Speaker 2: Jeff Gibbon joins how to develop market fixed income at 118 00:05:36,680 --> 00:05:39,840 Speaker 2: Manual Life Investor. Thank you for coming today and just 119 00:05:39,880 --> 00:05:45,320 Speaker 2: a crazy day. How do you synthesize a higher CPI? 120 00:05:46,320 --> 00:05:50,240 Speaker 2: And this angst about what about core a Manual Life? 121 00:05:50,240 --> 00:05:53,040 Speaker 2: How do you fold that into the bond story? Yeah? 122 00:05:53,200 --> 00:05:56,520 Speaker 7: I mean one thing to look at is, you know, 123 00:05:56,720 --> 00:05:58,000 Speaker 7: how temporary is this going to be? 124 00:05:58,040 --> 00:05:58,839 Speaker 3: And you know, one of the. 125 00:05:58,880 --> 00:06:00,800 Speaker 7: Dangers that we're in right now I was we're having 126 00:06:00,839 --> 00:06:03,000 Speaker 7: all these one off shocks and we try to push 127 00:06:03,040 --> 00:06:04,480 Speaker 7: it away and say it's one off, it's one off. 128 00:06:05,120 --> 00:06:07,720 Speaker 7: At what point in time does it become not one off? 129 00:06:08,400 --> 00:06:10,159 Speaker 7: You know, we're not trying to play too too much 130 00:06:10,200 --> 00:06:12,960 Speaker 7: into the recent run up in CPI as it is 131 00:06:13,000 --> 00:06:15,360 Speaker 7: more energy related and if we start to get oil 132 00:06:16,040 --> 00:06:18,479 Speaker 7: flowing through the straight again, maybe that comes off a 133 00:06:18,480 --> 00:06:21,200 Speaker 7: little bit. However, if we stay up here another three, four, 134 00:06:21,360 --> 00:06:24,159 Speaker 7: five months, then we're gonna have to you know, really 135 00:06:24,560 --> 00:06:26,359 Speaker 7: consider what the FED has to do to slow this 136 00:06:26,400 --> 00:06:27,160 Speaker 7: economy down. 137 00:06:27,680 --> 00:06:30,039 Speaker 6: We've got it seems like the bomb market's doing the 138 00:06:30,040 --> 00:06:33,240 Speaker 6: Fed's work. Here, We've got rates moving higher. Here, I'm 139 00:06:33,279 --> 00:06:37,359 Speaker 6: looking at the ten year four fifty two year. What 140 00:06:37,480 --> 00:06:39,359 Speaker 6: do you think we end the year on a tenure exactly? 141 00:06:39,800 --> 00:06:42,440 Speaker 7: You know, I do think we ended a ten year 142 00:06:42,480 --> 00:06:45,280 Speaker 7: around the four to fifty ish level. It's really hard 143 00:06:45,279 --> 00:06:47,920 Speaker 7: for me to see the tenure coming down a whole lot. 144 00:06:47,960 --> 00:06:51,200 Speaker 7: It's hard to see getting back into pricing in FED 145 00:06:51,240 --> 00:06:54,200 Speaker 7: cuts like we were at the end of February. You know, 146 00:06:54,400 --> 00:06:57,480 Speaker 7: there is a risk it goes a bit higher. However, 147 00:06:57,560 --> 00:06:58,880 Speaker 7: if we get to the point that we have to 148 00:06:59,360 --> 00:07:01,279 Speaker 7: price in the bed saying we're going to need to 149 00:07:01,279 --> 00:07:05,600 Speaker 7: crush inflation, I think that ends up being curved, flattener, 150 00:07:05,880 --> 00:07:08,520 Speaker 7: and maybe an inverted curve, because you know, I don't 151 00:07:08,520 --> 00:07:10,560 Speaker 7: think they're going to have to go gradually just to 152 00:07:10,680 --> 00:07:12,000 Speaker 7: you know, make themselves feel better. 153 00:07:12,680 --> 00:07:15,960 Speaker 6: So again, we got this inflation print today in line 154 00:07:16,000 --> 00:07:19,360 Speaker 6: with expectations, but it's higher, I mean, and how much 155 00:07:19,360 --> 00:07:22,320 Speaker 6: of that is just energy? I mean, I'm looking at 156 00:07:22,320 --> 00:07:24,520 Speaker 6: the core that's higher too, But I mean, I don't know. 157 00:07:24,840 --> 00:07:27,280 Speaker 7: Yeah, I mean, I think it's not just energy story. Right, 158 00:07:27,320 --> 00:07:29,920 Speaker 7: We're starting to see a bit stronger inflation back even 159 00:07:29,960 --> 00:07:31,680 Speaker 7: in January and February when you look at some of 160 00:07:31,720 --> 00:07:35,640 Speaker 7: the subcomponents, and so there's other things going on now 161 00:07:35,680 --> 00:07:39,200 Speaker 7: that what we don't know is, you know, energy prices 162 00:07:39,280 --> 00:07:42,360 Speaker 7: usually have a six to twelve month lag on the economy, 163 00:07:42,600 --> 00:07:45,080 Speaker 7: and does that put the consumer at risk when he 164 00:07:45,200 --> 00:07:46,480 Speaker 7: hit October this year? 165 00:07:46,840 --> 00:07:49,800 Speaker 2: What is a five thirty year bond signal? I mean, 166 00:07:50,440 --> 00:07:53,840 Speaker 2: and again after this inflation report, looking at really yields, 167 00:07:53,840 --> 00:07:57,240 Speaker 2: some of the hourly real yield statistics were negative. I mean, 168 00:07:57,280 --> 00:07:59,920 Speaker 2: what is the how does your day to day grine 169 00:08:00,120 --> 00:08:01,760 Speaker 2: ensure with a five percent thirty year? 170 00:08:02,000 --> 00:08:04,000 Speaker 7: Yeah, I mean, I you know, I worry a little 171 00:08:04,000 --> 00:08:05,920 Speaker 7: bit more about the tenure. If the tenure got up 172 00:08:05,920 --> 00:08:08,640 Speaker 7: to five percent, I'd be very concerned. As far as 173 00:08:08,640 --> 00:08:11,280 Speaker 7: where we're going a big move. I would take a 174 00:08:11,280 --> 00:08:14,240 Speaker 7: look at which mortgage rates. He's seeing housing prices across 175 00:08:14,280 --> 00:08:17,360 Speaker 7: the across the US slowing and you know in some 176 00:08:17,480 --> 00:08:19,920 Speaker 7: areas podcat is turning negative, and if you added another 177 00:08:19,920 --> 00:08:22,640 Speaker 7: fifty basis points to mortgage rates, I mean, I think 178 00:08:22,640 --> 00:08:25,840 Speaker 7: that's a problem. For the overall economy and in addition 179 00:08:25,920 --> 00:08:28,200 Speaker 7: to having higher energy prices at the same time. 180 00:08:28,960 --> 00:08:30,760 Speaker 6: How much credit risk are you taking these days? 181 00:08:31,000 --> 00:08:33,439 Speaker 7: You know, we're moving our credit risk a bit higher quality. 182 00:08:33,480 --> 00:08:35,080 Speaker 7: I mean, you don't have to reach for yield anymore. 183 00:08:35,080 --> 00:08:36,720 Speaker 7: And I think that's one of the things that you 184 00:08:36,760 --> 00:08:38,600 Speaker 7: can't be missed. Like, when's the last time we've been 185 00:08:38,640 --> 00:08:40,679 Speaker 7: able to learn four and a half percent on tenure 186 00:08:40,720 --> 00:08:43,120 Speaker 7: treasury and if you're throw in another hundred basis points, 187 00:08:43,160 --> 00:08:45,480 Speaker 7: so so for credit five and a half percent, that's 188 00:08:45,480 --> 00:08:47,920 Speaker 7: pretty good. And you're seeing fixed annuity buyers come in 189 00:08:47,960 --> 00:08:50,720 Speaker 7: the market because they like that print insurance companies, you know, 190 00:08:50,760 --> 00:08:53,720 Speaker 7: we you know, as a total return investor maybe five 191 00:08:53,760 --> 00:08:56,520 Speaker 7: percent thirty years, you know, a bit scary at times, 192 00:08:56,520 --> 00:08:59,760 Speaker 7: but an insurance company, they loving that environment. 193 00:09:00,040 --> 00:09:02,280 Speaker 6: Interesting, So that's kind of the place to be. I 194 00:09:02,320 --> 00:09:06,040 Speaker 6: think people want to talk to these bodcasts now, well. 195 00:09:05,960 --> 00:09:08,560 Speaker 3: Yeah, they have no right for years. Is it a 196 00:09:08,600 --> 00:09:11,600 Speaker 3: total return man your life or you just clipped the cooper. 197 00:09:11,920 --> 00:09:14,400 Speaker 7: We're more we're totally more total return approach. You know, 198 00:09:14,640 --> 00:09:17,000 Speaker 7: you know, we're benchmark against the AG but it's a 199 00:09:17,040 --> 00:09:21,280 Speaker 7: bit of AG aware and looking for a fair amount 200 00:09:21,280 --> 00:09:21,680 Speaker 7: of access. 201 00:09:21,679 --> 00:09:24,120 Speaker 3: Did you have v body at Boston University? 202 00:09:25,040 --> 00:09:27,720 Speaker 7: I was not fortunate enough to take one of his classes, 203 00:09:27,760 --> 00:09:30,000 Speaker 7: but I had obviously had to read his book. 204 00:09:30,640 --> 00:09:32,760 Speaker 3: I mean, Paul, you know this has got to be 205 00:09:32,800 --> 00:09:33,800 Speaker 3: a Duke equivalent. 206 00:09:34,000 --> 00:09:37,600 Speaker 2: Yeah, if you go academics from BU to I mean 207 00:09:37,600 --> 00:09:40,360 Speaker 2: you have to switch from Cornwalls, which is the bar 208 00:09:41,160 --> 00:09:42,000 Speaker 2: for BU, and you. 209 00:09:42,040 --> 00:09:44,480 Speaker 3: Got to go up to Marianne's. Okay, all right, I 210 00:09:44,520 --> 00:09:47,200 Speaker 3: mean that's a whole of a shift in Boston. It's 211 00:09:47,240 --> 00:09:48,120 Speaker 3: one of my little part. 212 00:09:48,679 --> 00:09:52,480 Speaker 2: I mean, Boston College in Boston University, they're just two 213 00:09:52,520 --> 00:09:54,280 Speaker 2: separate worlds, aren't. 214 00:09:54,040 --> 00:09:54,719 Speaker 3: They They are. 215 00:09:54,760 --> 00:09:57,280 Speaker 7: I mean it's teach pub versus Marianne's after a hockey 216 00:09:57,280 --> 00:09:58,560 Speaker 7: game all the day, all day long. 217 00:09:59,040 --> 00:10:01,960 Speaker 2: Yeah, I mean I don't think people understand like Duke 218 00:10:02,040 --> 00:10:04,760 Speaker 2: and in the UNC, how far are a part of 219 00:10:04,800 --> 00:10:05,760 Speaker 2: They like. 220 00:10:05,559 --> 00:10:06,520 Speaker 3: Literally about a mile. 221 00:10:06,679 --> 00:10:09,160 Speaker 7: Yeah, it's a little a mile, and they integrate like 222 00:10:09,200 --> 00:10:12,400 Speaker 7: when you the student sections the lines of blurred. 223 00:10:12,520 --> 00:10:12,920 Speaker 8: Yeah. 224 00:10:13,040 --> 00:10:14,120 Speaker 3: Absolutely, we'll have to see. 225 00:10:14,360 --> 00:10:16,920 Speaker 2: Thank you for coming in. We got massive breaking news 226 00:10:16,920 --> 00:10:19,200 Speaker 2: today that we've got to run to. Can you I 227 00:10:19,240 --> 00:10:21,640 Speaker 2: hope you can come back again when it's not nuts. 228 00:10:21,720 --> 00:10:24,200 Speaker 3: Jeffrey given had a developed. 229 00:10:23,760 --> 00:10:27,760 Speaker 2: Market fixing income and fixed income portfolio manager, a manual 230 00:10:27,760 --> 00:10:30,920 Speaker 2: life of Boston. So here's what we're going to do. 231 00:10:31,080 --> 00:10:33,240 Speaker 2: Hugely anticipate. I've got a lot of emails on this 232 00:10:33,720 --> 00:10:34,959 Speaker 2: is Ira coming on today. 233 00:10:35,040 --> 00:10:37,560 Speaker 3: Yeah, we're gonna do the World Cup, but. 234 00:10:37,480 --> 00:10:40,920 Speaker 2: We've got to do the inflation report first, and all 235 00:10:40,960 --> 00:10:45,599 Speaker 2: of his wonderful fixed income work as well. Ira, go 236 00:10:45,840 --> 00:10:50,560 Speaker 2: phobosy on me here and tell me what matters within 237 00:10:50,600 --> 00:10:56,120 Speaker 2: the four characteristics of the curve right now, discuss the premium, 238 00:10:56,200 --> 00:10:59,640 Speaker 2: the fancy stuff you guys work in every day. 239 00:10:59,720 --> 00:11:01,880 Speaker 9: Yes, so if you're talking about term premium, you know 240 00:11:01,920 --> 00:11:05,080 Speaker 9: basically the risk premium that you need to hold in 241 00:11:05,160 --> 00:11:08,200 Speaker 9: order to or get the extra yield you need in 242 00:11:08,280 --> 00:11:11,480 Speaker 9: order to hold a bond for the long term. You know, 243 00:11:11,520 --> 00:11:15,440 Speaker 9: that's actually been very stable for five years out. 244 00:11:15,280 --> 00:11:16,040 Speaker 8: The thirty years. 245 00:11:16,080 --> 00:11:18,640 Speaker 9: Over the last couple of months, it's the two year 246 00:11:18,760 --> 00:11:22,160 Speaker 9: really that's been moving around quite a lot. And initially 247 00:11:22,200 --> 00:11:26,240 Speaker 9: that was because inflation expectations jumped much higher, and now 248 00:11:26,280 --> 00:11:29,840 Speaker 9: it's really because the policy rate is now expected maybe 249 00:11:29,880 --> 00:11:33,199 Speaker 9: to be increased, So basically the Fed hiking interest rates. 250 00:11:33,200 --> 00:11:36,080 Speaker 9: So that's where you get two year yields up above 251 00:11:36,160 --> 00:11:39,319 Speaker 9: four percent and the yield curve flattening a little bit. 252 00:11:40,240 --> 00:11:41,920 Speaker 8: I think that's probably about done. 253 00:11:42,000 --> 00:11:44,920 Speaker 9: We put out a note just this morning noting that 254 00:11:44,960 --> 00:11:47,920 Speaker 9: we thought the two year yield was fully priced for 255 00:11:48,040 --> 00:11:51,880 Speaker 9: the realistic outcomes for the policy and for the FED, 256 00:11:51,920 --> 00:11:54,559 Speaker 9: and a big reason for that was this number today. 257 00:11:54,640 --> 00:11:57,880 Speaker 9: Because this number, this four point two percent year on 258 00:11:58,040 --> 00:12:01,360 Speaker 9: year CPI print, is price by the market to be 259 00:12:01,520 --> 00:12:04,400 Speaker 9: the high print of this cycle. So so I think 260 00:12:04,400 --> 00:12:06,800 Speaker 9: that's very important because if inflation starts to come down, 261 00:12:06,840 --> 00:12:08,080 Speaker 9: then two year yield's good stable. 262 00:12:08,240 --> 00:12:09,040 Speaker 3: I you agree with that. 263 00:12:09,240 --> 00:12:10,880 Speaker 2: I don't mean to be rude here, but this is 264 00:12:10,920 --> 00:12:13,839 Speaker 2: like saying Senegal is going to be France. Do you 265 00:12:13,640 --> 00:12:18,640 Speaker 2: that you believe four point two percent the peak? It probably? 266 00:12:18,720 --> 00:12:21,400 Speaker 2: It probably is now obviously there's a lot of risk 267 00:12:21,480 --> 00:12:24,280 Speaker 2: in that. But but but based on where the where 268 00:12:24,320 --> 00:12:27,120 Speaker 2: the oil futures curve is pricing based on the fact 269 00:12:27,160 --> 00:12:29,520 Speaker 2: that you you get a level adjustment, right, So we 270 00:12:29,600 --> 00:12:31,560 Speaker 2: have to be careful because I think a lot of 271 00:12:31,559 --> 00:12:33,920 Speaker 2: times people say, oh, there's still a lot of inflation, 272 00:12:34,040 --> 00:12:36,880 Speaker 2: because you know, bread prices are you know, five dollars 273 00:12:36,880 --> 00:12:39,800 Speaker 2: a you know a bag or whatever, but but the 274 00:12:39,920 --> 00:12:43,120 Speaker 2: issue is is that that a jump in UH in 275 00:12:43,200 --> 00:12:45,520 Speaker 2: prices to a new level doesn't mean that you're going 276 00:12:45,559 --> 00:12:48,439 Speaker 2: to get high a bigger change in the future, right. 277 00:12:48,440 --> 00:12:51,800 Speaker 2: It just means that the level is high of individual prices, 278 00:12:52,080 --> 00:12:54,360 Speaker 2: But it doesn't mean that that you're going to have 279 00:12:54,559 --> 00:12:58,880 Speaker 2: persistent inflation and persistently increasing prices even if prices never 280 00:12:58,960 --> 00:13:01,280 Speaker 2: go down, right. I think that's it's a kind of 281 00:13:01,320 --> 00:13:04,760 Speaker 2: one of the observational fallacies that a lot of people, 282 00:13:05,360 --> 00:13:07,400 Speaker 2: you know, wind up having because they'll say, oh, you know, 283 00:13:07,440 --> 00:13:09,240 Speaker 2: gas prices are still four dollars a gallon. 284 00:13:09,320 --> 00:13:12,280 Speaker 9: Yeah, but they're still at four. They're not going to five. Right, 285 00:13:12,320 --> 00:13:14,880 Speaker 9: That's the I think one of the issues that people 286 00:13:14,920 --> 00:13:18,160 Speaker 9: don't don't see. It's changed versus level. So yeah, I 287 00:13:18,200 --> 00:13:20,560 Speaker 9: think that four point two percent probably is the high now. 288 00:13:20,800 --> 00:13:23,040 Speaker 9: Of course, if we continue to run at three percent, 289 00:13:23,080 --> 00:13:25,280 Speaker 9: which is something that the market's also priced for over 290 00:13:25,320 --> 00:13:27,800 Speaker 9: the next year or so, you know, obviously it's going 291 00:13:27,840 --> 00:13:30,360 Speaker 9: to be difficult for the Federal Reserve to decrease interest 292 00:13:30,440 --> 00:13:34,360 Speaker 9: rates if you're still well above their targeted inflation level. 293 00:13:35,280 --> 00:13:37,360 Speaker 6: We haven't been, as some quoted, we haven't been in 294 00:13:37,480 --> 00:13:40,559 Speaker 6: two percent inflation and like forever, where did this two 295 00:13:40,640 --> 00:13:41,400 Speaker 6: percent number go? 296 00:13:41,520 --> 00:13:42,760 Speaker 3: Can we kick this to the curb? 297 00:13:44,160 --> 00:13:46,720 Speaker 9: Well, I actually think that it was kind a little 298 00:13:46,760 --> 00:13:48,680 Speaker 9: bit of a mistake to have any kind of hard 299 00:13:48,760 --> 00:13:51,640 Speaker 9: two percent number, right, So Paul, you know, you know, 300 00:13:51,720 --> 00:13:54,000 Speaker 9: we think back in the nineteen nineties, we were running 301 00:13:54,040 --> 00:13:56,760 Speaker 9: a bit above that, right, PC deflator was running around 302 00:13:56,800 --> 00:13:59,560 Speaker 9: two point three two point five percent. Things seemed fine, right, 303 00:13:59,600 --> 00:14:01,959 Speaker 9: because wages were growing faster than that and we had 304 00:14:02,000 --> 00:14:06,040 Speaker 9: a decent, decent economic activity. You know, I think the 305 00:14:06,040 --> 00:14:10,120 Speaker 9: Fed lost a little bit of flexibility and how they 306 00:14:10,160 --> 00:14:14,160 Speaker 9: approach their inflation target by by you know, having a 307 00:14:14,200 --> 00:14:16,720 Speaker 9: hard two percent target. And you know, quite frankly, that 308 00:14:16,800 --> 00:14:20,000 Speaker 9: is something Kevin Moorsh would like to would like to revisit. 309 00:14:20,160 --> 00:14:22,280 Speaker 9: So as he comes in next week and to his 310 00:14:22,360 --> 00:14:26,000 Speaker 9: first meeting as the FOMC chair, you know, he'll need 311 00:14:26,040 --> 00:14:29,640 Speaker 9: to He'll need to try to figure out with his colleagues, like, Hey, 312 00:14:29,640 --> 00:14:32,320 Speaker 9: should we actually have this hard two percent number or 313 00:14:32,360 --> 00:14:34,880 Speaker 9: should we think about it more as in is it 314 00:14:35,120 --> 00:14:37,600 Speaker 9: two point three percent two point five percent and stable? 315 00:14:37,720 --> 00:14:37,840 Speaker 8: Right? 316 00:14:37,920 --> 00:14:41,120 Speaker 9: That that's really probably more important in my view to 317 00:14:41,320 --> 00:14:43,760 Speaker 9: the health of the economy is give certainty to how 318 00:14:43,840 --> 00:14:46,720 Speaker 9: quickly prices are going to grow, and the economy will 319 00:14:46,720 --> 00:14:48,960 Speaker 9: figure it out around that, which it always has done. 320 00:14:48,920 --> 00:14:51,800 Speaker 2: Across America, Ira Jersey, with us driving all of Bloomberg 321 00:14:51,840 --> 00:14:57,280 Speaker 2: intelligence fixed income that covers definitive at credit squeeze years ago, Ira, 322 00:14:57,760 --> 00:15:02,800 Speaker 2: help us here off your remit with the complexity of 323 00:15:02,920 --> 00:15:09,000 Speaker 2: the fixed income transactions of the technology. Bro Paul and 324 00:15:09,040 --> 00:15:12,240 Speaker 2: I learned that if we see the word mezzaning, circle 325 00:15:12,280 --> 00:15:14,760 Speaker 2: it in the perspectives. This is back folks when there 326 00:15:14,800 --> 00:15:19,040 Speaker 2: was pencil and paper. We've gone way beyond mezzaning. Do 327 00:15:19,120 --> 00:15:23,440 Speaker 2: you see a complexity and a frenzy like two thousand 328 00:15:23,440 --> 00:15:23,880 Speaker 2: and six. 329 00:15:25,560 --> 00:15:27,920 Speaker 9: It's not quite as bad, but there are people who 330 00:15:27,960 --> 00:15:30,520 Speaker 9: were you know, I think, I think when you go 331 00:15:30,640 --> 00:15:34,760 Speaker 9: back to that period of time, remember we spent five 332 00:15:34,840 --> 00:15:37,160 Speaker 9: years with the Fed fundrate at one percent. 333 00:15:37,560 --> 00:15:40,120 Speaker 8: Interest rates were relatively low and stable. 334 00:15:40,600 --> 00:15:43,000 Speaker 9: And you had a lot of financial engineering and a 335 00:15:43,000 --> 00:15:45,520 Speaker 9: lot of new products that were trying to be used 336 00:15:45,520 --> 00:15:49,480 Speaker 9: for yield enhancement purposes. I actually think, and I wrote 337 00:15:49,480 --> 00:15:50,880 Speaker 9: about this actually when I was at. 338 00:15:50,760 --> 00:15:52,600 Speaker 8: Credits a long time ago. 339 00:15:53,120 --> 00:15:57,560 Speaker 9: Was one of the reasons why the markets created all 340 00:15:57,600 --> 00:16:00,400 Speaker 9: of these you know, CDOs and all of the triple 341 00:16:00,440 --> 00:16:05,320 Speaker 9: A tranches of different fixed income products was really because 342 00:16:05,560 --> 00:16:09,120 Speaker 9: the Federal Reserve didn't increase the money supply quickly enough. 343 00:16:09,160 --> 00:16:12,520 Speaker 9: And I know a lot of you know, academic economists 344 00:16:12,520 --> 00:16:15,440 Speaker 9: don't agree with me with this, but the fact this 345 00:16:15,520 --> 00:16:17,560 Speaker 9: is that money demand was going very quickly during that 346 00:16:17,600 --> 00:16:22,160 Speaker 9: period of time. And when money demand is outstripping money supply, 347 00:16:22,320 --> 00:16:25,080 Speaker 9: then obviously the market will create new kinds of money, 348 00:16:25,520 --> 00:16:27,560 Speaker 9: and then of course, once that doesn't become money, you 349 00:16:27,600 --> 00:16:30,000 Speaker 9: wind up putting on the financial crisis. I think in 350 00:16:30,000 --> 00:16:33,280 Speaker 9: today's environment, we have plenty of money out there. There's 351 00:16:33,360 --> 00:16:35,960 Speaker 9: some funding market needs that need to be addressed and 352 00:16:36,320 --> 00:16:39,360 Speaker 9: have been addressed by the Fed. But otherwise, no, we 353 00:16:39,600 --> 00:16:41,720 Speaker 9: don't see the same kind of you know, gearing that 354 00:16:41,760 --> 00:16:42,480 Speaker 9: we had back then. 355 00:16:42,800 --> 00:16:44,360 Speaker 3: Nobody cares, Okay, iira. 356 00:16:44,480 --> 00:16:47,600 Speaker 2: What they care about is two thirds of America doesn't 357 00:16:47,640 --> 00:16:50,200 Speaker 2: care about the World Cup. I guess a lot of 358 00:16:50,240 --> 00:16:53,920 Speaker 2: them do care about the World Cup. The world's coming 359 00:16:53,960 --> 00:16:56,520 Speaker 2: to America for the World Cup. And I saw on 360 00:16:56,640 --> 00:17:00,680 Speaker 2: stub ub today all sorts of games with new ticket issueance. 361 00:17:01,320 --> 00:17:05,080 Speaker 2: How bad has FEFA screwed up the tickets nationwide? 362 00:17:05,520 --> 00:17:08,680 Speaker 8: Yeah? I think they've made some you know, pretty big mistakes. 363 00:17:08,680 --> 00:17:10,960 Speaker 9: I mean they were trying to maximize I think their 364 00:17:11,000 --> 00:17:15,080 Speaker 9: their profits by you know, leaking out leaking out tickets. 365 00:17:15,119 --> 00:17:17,159 Speaker 9: But then you know, that became a problem for the 366 00:17:17,200 --> 00:17:20,080 Speaker 9: resellers and the like. There's a lot of people that 367 00:17:20,119 --> 00:17:21,800 Speaker 9: I've talked to in Europe, a lot of my friends 368 00:17:21,840 --> 00:17:23,520 Speaker 9: from when I was in graduate school and the like, 369 00:17:23,560 --> 00:17:25,800 Speaker 9: who are like, you know, tickets are crazy expensive. 370 00:17:25,920 --> 00:17:26,760 Speaker 8: How are we going to go? 371 00:17:26,920 --> 00:17:28,840 Speaker 9: Like when you know, when we went to Russia where 372 00:17:28,840 --> 00:17:31,040 Speaker 9: we went to cutter, like, yeah, there were some tickets 373 00:17:31,040 --> 00:17:32,800 Speaker 9: that were expensive, but we were able to get into 374 00:17:32,840 --> 00:17:33,960 Speaker 9: a match for you. 375 00:17:33,880 --> 00:17:35,240 Speaker 8: Know, one hundred euros or whatever. 376 00:17:35,280 --> 00:17:38,399 Speaker 9: And so these were eye popping kind of prices for 377 00:17:38,680 --> 00:17:40,520 Speaker 9: a lot of people, especially when you have to consider 378 00:17:40,520 --> 00:17:43,200 Speaker 9: you have to travel over you know, over an ocean, 379 00:17:43,240 --> 00:17:45,840 Speaker 9: and then you have all of the relatively high priced 380 00:17:46,200 --> 00:17:49,520 Speaker 9: accommodations in the United States compared to other places where 381 00:17:49,520 --> 00:17:51,520 Speaker 9: the World's Cup has been held over the last twenty 382 00:17:51,600 --> 00:17:54,640 Speaker 9: years or so, So there is a big sticker shock. 383 00:17:54,680 --> 00:17:56,800 Speaker 9: So I'm a little bit concerned that you won't get 384 00:17:57,080 --> 00:18:01,159 Speaker 9: the kind of environment that where you have a sellout crowd, 385 00:18:01,440 --> 00:18:03,639 Speaker 9: or you'll have a lot of a lot of maybe 386 00:18:03,680 --> 00:18:07,840 Speaker 9: domestic people going to games instead of people from these 387 00:18:07,840 --> 00:18:10,160 Speaker 9: countries to create a great stadium environment. 388 00:18:10,240 --> 00:18:12,520 Speaker 8: So I'm really interested to see how that's going to work. 389 00:18:12,720 --> 00:18:14,680 Speaker 2: We'll have to see our jersey. Thank you so much. 390 00:18:15,000 --> 00:18:19,480 Speaker 2: Driving all the fixed incoment, Bloomberg Intelligence is Surveillance World 391 00:18:19,520 --> 00:18:21,120 Speaker 2: Cup corresponded. 392 00:18:21,480 --> 00:18:22,160 Speaker 3: Stay with us. 393 00:18:22,440 --> 00:18:25,680 Speaker 2: More from Bloomberg Surveillance coming up after this. 394 00:18:32,920 --> 00:18:36,520 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live 395 00:18:36,560 --> 00:18:39,720 Speaker 1: weekday afternoons from seven to ten am Eastern. Listen on 396 00:18:39,800 --> 00:18:43,480 Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or 397 00:18:43,640 --> 00:18:45,080 Speaker 1: watch us live on YouTube. 398 00:18:45,320 --> 00:18:47,440 Speaker 3: Joining Center Studio usually in San Francisco. 399 00:18:47,600 --> 00:18:51,359 Speaker 2: Edward Lovelow driving all of our technology coverage. Open question, 400 00:18:51,840 --> 00:18:54,800 Speaker 2: How do you study SpaceX this morning? 401 00:18:55,880 --> 00:19:01,200 Speaker 10: I study it as a pitch on the economic of 402 00:19:01,320 --> 00:19:05,879 Speaker 10: a satellite of great scale, that is a data center. 403 00:19:06,320 --> 00:19:10,080 Speaker 10: So in a satellite, you have the body, and right now, 404 00:19:10,119 --> 00:19:13,159 Speaker 10: the body in any given satellite is a probe of 405 00:19:13,200 --> 00:19:16,960 Speaker 10: some kind. It creates data intents about down to Earth. 406 00:19:17,560 --> 00:19:21,360 Speaker 10: What SpaceX is pitching is a story where there are 407 00:19:21,440 --> 00:19:23,800 Speaker 10: thousands and thousands of satellites and in the body of 408 00:19:23,800 --> 00:19:27,760 Speaker 10: that satellite with massive soda arraisin reads is a server. 409 00:19:27,640 --> 00:19:30,359 Speaker 2: You're in Charlotte, sil Virginia and your lecture in CFA 410 00:19:30,480 --> 00:19:35,920 Speaker 2: Institute on this, what's your ex access to the hopes 411 00:19:35,960 --> 00:19:39,280 Speaker 2: and dreams of mister Musk? Is it three years? 412 00:19:39,920 --> 00:19:41,159 Speaker 3: Is it thirty years? 413 00:19:41,920 --> 00:19:44,720 Speaker 10: This is why it's worth us discussing this on air 414 00:19:44,840 --> 00:19:47,280 Speaker 10: right now Wednesday morning for an IPO that will price 415 00:19:47,280 --> 00:19:50,399 Speaker 10: tomorrow and trade Friday, because actually something has been happening 416 00:19:50,480 --> 00:19:54,400 Speaker 10: since Sunday night. Bankers around the country have been pitching 417 00:19:54,440 --> 00:19:58,200 Speaker 10: this idea in real time, and based on our reporting, 418 00:19:58,760 --> 00:20:04,200 Speaker 10: the institutional investors' long only asset managers are placing orders 419 00:20:04,200 --> 00:20:07,400 Speaker 10: for ten billion dollars of shares big blocks because they 420 00:20:07,480 --> 00:20:10,600 Speaker 10: believe in the economics of what Elon Musk is pitching 421 00:20:10,640 --> 00:20:12,520 Speaker 10: on the data center side. In other words, I'm saying 422 00:20:12,880 --> 00:20:16,480 Speaker 10: the road shows worked. Based on our reporting Sunday night, 423 00:20:16,480 --> 00:20:18,720 Speaker 10: they had a certain number of orders. By Wednesday morning 424 00:20:18,760 --> 00:20:20,720 Speaker 10: they had many more, and thus we arrived to a 425 00:20:20,720 --> 00:20:23,399 Speaker 10: place where they're oversubscribed. By the way that the math 426 00:20:23,520 --> 00:20:26,080 Speaker 10: on a space based data centers is the same as 427 00:20:26,080 --> 00:20:28,560 Speaker 10: a day central on Earth. It's a dollar per token. 428 00:20:28,640 --> 00:20:31,240 Speaker 10: How many dollars it takes to generate a token or 429 00:20:31,280 --> 00:20:33,920 Speaker 10: a dollar per killer? What the dollar to generate a killer? 430 00:20:33,960 --> 00:20:37,360 Speaker 10: What worth of compute which is measured in the electrical 431 00:20:37,440 --> 00:20:41,439 Speaker 10: draw It's exactly the same. I know, Paul, I. 432 00:20:41,440 --> 00:20:43,200 Speaker 3: See it in your face. It hasn't been done. 433 00:20:43,440 --> 00:20:47,280 Speaker 6: When did they expect to deploy some of this technology? 434 00:20:47,480 --> 00:20:49,920 Speaker 10: So this is why I say this is a live situation. 435 00:20:50,080 --> 00:20:53,560 Speaker 10: The roadshow has meaning. In the prospectus, they very clearly 436 00:20:53,600 --> 00:20:57,159 Speaker 10: outlined that they expected to put an orbital data center 437 00:20:57,160 --> 00:21:00,600 Speaker 10: in place twenty twenty eight into twenty twenty nine. The 438 00:21:00,640 --> 00:21:04,680 Speaker 10: bankers and SpaceX's representatives have been telling very important investors 439 00:21:04,680 --> 00:21:07,199 Speaker 10: ahead of the IPO that they actually might pull that 440 00:21:07,280 --> 00:21:10,199 Speaker 10: forward a little bit and do a demo, a test, 441 00:21:10,359 --> 00:21:14,240 Speaker 10: a pilot in twenty twenty seven. But given that three 442 00:21:14,359 --> 00:21:16,720 Speaker 10: days ago we saw the design of the thing for 443 00:21:16,760 --> 00:21:20,320 Speaker 10: the first time, and how many times have you rolled 444 00:21:20,359 --> 00:21:22,320 Speaker 10: your eyes at me or caution me on Elon Musk 445 00:21:22,400 --> 00:21:25,320 Speaker 10: stating a date and then see where we actually land. 446 00:21:25,359 --> 00:21:27,560 Speaker 10: So all of that gets taken into account. But he 447 00:21:27,600 --> 00:21:29,760 Speaker 10: is also in the boilerplate risk factors of the document, 448 00:21:29,920 --> 00:21:31,119 Speaker 10: you know, So that's how I view it. 449 00:21:31,200 --> 00:21:34,160 Speaker 6: Ages has Elon been on the road pitching this person. 450 00:21:34,320 --> 00:21:34,639 Speaker 3: Do we know? 451 00:21:34,880 --> 00:21:37,600 Speaker 10: You know, I don't have any reporting or evidence that 452 00:21:37,680 --> 00:21:40,199 Speaker 10: he has done much beyond the conversation he had with 453 00:21:40,280 --> 00:21:46,320 Speaker 10: Jamie Diamond. Brett Johnson is SpaceX's CFO. He's much less known. 454 00:21:46,840 --> 00:21:49,760 Speaker 10: He's basically space x is only ever CFO, and he 455 00:21:49,880 --> 00:21:52,280 Speaker 10: is going to preside over the finance org that does 456 00:21:52,320 --> 00:21:55,639 Speaker 10: the biggest IPO in history, much more engaged directly with 457 00:21:55,680 --> 00:22:00,800 Speaker 10: the bankers, the important shareholders. You will note that Ela Musk, 458 00:22:01,320 --> 00:22:03,760 Speaker 10: I don't know. I see the Elizabeth Warre and headlines 459 00:22:03,800 --> 00:22:07,159 Speaker 10: on the SEC. I don't really have any reporting on that, 460 00:22:07,240 --> 00:22:09,760 Speaker 10: but that's fine. I would say Ela Musk has continued 461 00:22:09,760 --> 00:22:11,000 Speaker 10: to post on X quite often. 462 00:22:11,280 --> 00:22:14,399 Speaker 3: So there's in this period two questions. 463 00:22:14,440 --> 00:22:16,639 Speaker 2: Let's start with this same blood low with this folks 464 00:22:16,720 --> 00:22:20,399 Speaker 2: the high ground on technology. Do you just assume SpaceX 465 00:22:20,440 --> 00:22:22,280 Speaker 2: and Tesla made at some point? 466 00:22:22,520 --> 00:22:25,919 Speaker 10: Yes, I mean, well, I don't assume the market assumes 467 00:22:26,320 --> 00:22:28,040 Speaker 10: that in the end SpaceX and Tesla. 468 00:22:28,040 --> 00:22:29,880 Speaker 3: Still this drives and I think. 469 00:22:29,680 --> 00:22:33,400 Speaker 2: Of George Noble definitive Fidelity Overseas and many many other 470 00:22:33,480 --> 00:22:35,800 Speaker 2: critics of all does he think the ed loud Low 471 00:22:35,840 --> 00:22:37,800 Speaker 2: world is just you know, yeah, it's going to hell 472 00:22:37,840 --> 00:22:44,000 Speaker 2: on the desk, Kerra Carlson, Bloomberg News. Yes, Tesla has 473 00:22:44,080 --> 00:22:49,760 Speaker 2: fifty nine robotaxis in three Texas cities, and yet people 474 00:22:49,840 --> 00:22:53,840 Speaker 2: talking to you say this is the second coming of whatever. Yeah, 475 00:22:53,880 --> 00:22:58,200 Speaker 2: I mean that's the discontinuous nature of the ed blood 476 00:22:58,280 --> 00:22:58,919 Speaker 2: low world. 477 00:22:59,160 --> 00:23:00,560 Speaker 3: Yeah, just discussed that. 478 00:23:01,280 --> 00:23:05,879 Speaker 10: So the thesis is that if Tesla gets there on 479 00:23:06,000 --> 00:23:08,920 Speaker 10: the end where they have fleets of thousands and thousands 480 00:23:08,960 --> 00:23:12,400 Speaker 10: of robotaxis, in other words, a Tesla vehicle that has 481 00:23:12,440 --> 00:23:16,200 Speaker 10: no human driver, it drives itself. There is an element 482 00:23:16,520 --> 00:23:19,240 Speaker 10: in that of onboard compute. The cars have computers on 483 00:23:19,320 --> 00:23:22,600 Speaker 10: them which helps them perceive the world around them. But 484 00:23:23,400 --> 00:23:27,640 Speaker 10: this is still AI where you are asking an underlying 485 00:23:28,080 --> 00:23:32,040 Speaker 10: algorithm AO model to do something that still requires some 486 00:23:32,160 --> 00:23:35,639 Speaker 10: kind of mathematics going on in data center. So the 487 00:23:35,720 --> 00:23:38,879 Speaker 10: link is if SpaceX is going to do thousands of 488 00:23:38,920 --> 00:23:41,600 Speaker 10: satellites and orbits that are data centers and they are 489 00:23:41,640 --> 00:23:44,119 Speaker 10: focused on what we call inference running the AI model, 490 00:23:44,840 --> 00:23:48,280 Speaker 10: Tesla becomes the first big customer of that. Gotcha, it 491 00:23:48,440 --> 00:23:52,320 Speaker 10: is Elon having a negotiation with Elon, how. 492 00:23:52,200 --> 00:23:54,960 Speaker 2: Is a robotaxi going to pick somebody up a terminal 493 00:23:55,040 --> 00:23:56,360 Speaker 2: one at JFK. 494 00:23:57,040 --> 00:23:57,720 Speaker 3: Good question. 495 00:23:57,840 --> 00:23:59,840 Speaker 10: How they've done it at other airports is to have 496 00:24:00,000 --> 00:24:01,600 Speaker 10: asignated pickup areas. 497 00:24:01,400 --> 00:24:07,080 Speaker 3: Very simples jf K. Yeah, you know Kansas City gorgeous 498 00:24:07,160 --> 00:24:11,680 Speaker 3: new airport. Frankly, Manila has a gorgeous new airport. Can 499 00:24:11,720 --> 00:24:13,280 Speaker 3: I give you a case study? SFO? 500 00:24:13,440 --> 00:24:17,159 Speaker 10: Right, so WEIMO off services SFO. Dear listener, if you 501 00:24:17,200 --> 00:24:19,000 Speaker 10: know what's you on YouTube, I'm waving my fingers in 502 00:24:19,040 --> 00:24:22,560 Speaker 10: the air in Asterisk operates at SFO. You have to 503 00:24:22,600 --> 00:24:25,440 Speaker 10: go out the terminal, up the escalator, onto the air 504 00:24:25,520 --> 00:24:29,679 Speaker 10: train change stop, go on another stop, walk five hundred 505 00:24:29,680 --> 00:24:31,760 Speaker 10: feet and then you can get picked up by a 506 00:24:31,760 --> 00:24:34,600 Speaker 10: WEIMO SFO. So like that's the reality of it. 507 00:24:34,880 --> 00:24:38,200 Speaker 3: What's going to happen Thursday? What's your I mean? 508 00:24:38,440 --> 00:24:40,520 Speaker 2: I don't want to pinion down if you're wrong. We 509 00:24:40,720 --> 00:24:42,320 Speaker 2: understand that I'm wrong all the time. 510 00:24:42,400 --> 00:24:45,600 Speaker 3: Well, look, do you what's your best guess that's going 511 00:24:45,640 --> 00:24:46,000 Speaker 3: to happen? 512 00:24:46,080 --> 00:24:49,560 Speaker 10: Thursday Friday, Kyle Porter and I reported that SpaceX had 513 00:24:49,920 --> 00:24:53,240 Speaker 10: had valued this and priced this IPO early at one 514 00:24:53,280 --> 00:24:56,199 Speaker 10: point seven seven trillion. A Musk replied on X saying false. 515 00:24:56,600 --> 00:24:58,919 Speaker 10: In the end, when all the documents came out. It 516 00:24:58,920 --> 00:25:00,439 Speaker 10: was one point seven to seven tri billion and one 517 00:25:00,480 --> 00:25:02,840 Speaker 10: hundred and thirty five dollars per share price, so we 518 00:25:02,920 --> 00:25:07,680 Speaker 10: got that right. However, because this is a typical and unusual, 519 00:25:07,760 --> 00:25:10,280 Speaker 10: they priced ahead of the road show. People don't know 520 00:25:10,320 --> 00:25:16,080 Speaker 10: what will happen. There is every legal, mechanical, and psychological 521 00:25:16,960 --> 00:25:20,320 Speaker 10: chance that the price goes way up. You know that 522 00:25:20,359 --> 00:25:23,760 Speaker 10: they price it higher. That we're talking about a company 523 00:25:23,880 --> 00:25:26,399 Speaker 10: in excess of two trillion. How it trades at the 524 00:25:27,240 --> 00:25:30,440 Speaker 10: Friday whenever that gets going, I'm not idea. It's academic, 525 00:25:30,480 --> 00:25:34,240 Speaker 10: isn't it. It doesn't matter, But right now the state of 526 00:25:34,280 --> 00:25:37,160 Speaker 10: player is so clear. This is a massively oversubscribed IPO 527 00:25:38,400 --> 00:25:40,720 Speaker 10: and people want to participate in it. 528 00:25:40,840 --> 00:25:43,920 Speaker 6: How about retail? I think they allocata initially maybe thirty thirty. 529 00:25:44,280 --> 00:25:45,320 Speaker 6: So how's that playing out? 530 00:25:45,560 --> 00:25:50,280 Speaker 10: There's an outstanding question, which is indirectly. Musk has promised 531 00:25:50,920 --> 00:25:55,399 Speaker 10: Tesla's very loyal, quite broad retail shareholder base that they 532 00:25:55,400 --> 00:25:58,040 Speaker 10: would get some kind of access to this IPO, and 533 00:25:58,080 --> 00:26:01,320 Speaker 10: that's not been codified, no mechanism for that, so I'd 534 00:26:01,359 --> 00:26:03,920 Speaker 10: be interested in that, you know. He Musk has talked 535 00:26:03,960 --> 00:26:06,960 Speaker 10: about rewarding loyalty in that sense. It'd be interesting to 536 00:26:07,000 --> 00:26:09,480 Speaker 10: see how those TESTA shareholders react if they weren't able 537 00:26:09,520 --> 00:26:13,159 Speaker 10: to participate. Remember, the institutional book closes four pm today. 538 00:26:13,359 --> 00:26:15,720 Speaker 10: But all these different platforms offering the retail trade that 539 00:26:15,760 --> 00:26:17,280 Speaker 10: I think that carries on till Thursday night. 540 00:26:17,280 --> 00:26:17,920 Speaker 8: I didn't know that. 541 00:26:18,080 --> 00:26:23,880 Speaker 6: Yeah today, yeah, yeah, all right, I'll get to get 542 00:26:23,880 --> 00:26:24,399 Speaker 6: my order in. 543 00:26:24,600 --> 00:26:27,440 Speaker 10: You're looking at me with great skepticism. But that's healthy, 544 00:26:27,560 --> 00:26:29,640 Speaker 10: Like how healthy is that? 545 00:26:29,640 --> 00:26:30,200 Speaker 3: That's good? 546 00:26:30,480 --> 00:26:32,440 Speaker 8: Yep, all right, I'm on it. 547 00:26:33,200 --> 00:26:35,080 Speaker 6: I'll take my index allocation. 548 00:26:35,640 --> 00:26:39,639 Speaker 3: That's how we roll. My love love great, Thank you, 549 00:26:39,720 --> 00:26:43,200 Speaker 3: thank you, thank you for so much. Stay with us. 550 00:26:43,440 --> 00:26:46,640 Speaker 2: More from Bloomberg Surveillance coming up after this. 551 00:26:53,920 --> 00:26:57,480 Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live 552 00:26:57,560 --> 00:27:01,080 Speaker 1: weekday afternoons from seven to ten am. Easter Listen on Apple, 553 00:27:01,119 --> 00:27:04,480 Speaker 1: Karplay and Android Otto with the Bloomberg Business Up, or 554 00:27:04,600 --> 00:27:06,120 Speaker 1: watch us live on YouTube. 555 00:27:06,280 --> 00:27:10,639 Speaker 2: Odetta Kushi joins US now Deputy Chief Economists, First American 556 00:27:11,320 --> 00:27:15,240 Speaker 2: out of Northeastern out of Saint John Fisher College, Paul, 557 00:27:15,359 --> 00:27:17,200 Speaker 2: Like you know, they open the other the PGA RA 558 00:27:17,640 --> 00:27:20,040 Speaker 2: at the Oak Kill up in Rochester. 559 00:27:20,119 --> 00:27:22,119 Speaker 3: The other year Saint John Fisher. I mean the kids 560 00:27:22,160 --> 00:27:23,760 Speaker 3: just roll out of bed, is that right? And they 561 00:27:24,240 --> 00:27:26,480 Speaker 3: they do eighteen holes at hops, very good, that's the 562 00:27:26,480 --> 00:27:29,560 Speaker 3: way they roll. It's Saint John Fisher a college. 563 00:27:29,600 --> 00:27:32,520 Speaker 2: Odetta, what do you expect to see in the CPA report? 564 00:27:32,600 --> 00:27:34,360 Speaker 3: What is the distinction for you? 565 00:27:36,200 --> 00:27:40,080 Speaker 11: What I'm really looking for is whether we're seeing inflation 566 00:27:40,400 --> 00:27:45,159 Speaker 11: broadening across categories. The consensus is that we'll have a 567 00:27:45,200 --> 00:27:48,480 Speaker 11: print above four percent. Consider that just a year ago 568 00:27:48,760 --> 00:27:52,800 Speaker 11: the inflation was with a two handle, and so the 569 00:27:52,880 --> 00:27:55,280 Speaker 11: question really is are we seeing it broaden outside of 570 00:27:55,359 --> 00:27:57,640 Speaker 11: just the energy sector into goods and services? 571 00:27:57,680 --> 00:27:59,920 Speaker 5: And that would really be the concern from the fence perspective. 572 00:28:00,040 --> 00:28:03,320 Speaker 2: I mean, off George Bory Paul Core CPI two point 573 00:28:03,440 --> 00:28:05,639 Speaker 2: ninety percent up from two point eight percent. 574 00:28:05,840 --> 00:28:07,720 Speaker 3: Can you imagine a three handle on core? 575 00:28:08,000 --> 00:28:10,400 Speaker 6: Boy, that's not what the market's looking for, Odetta. If 576 00:28:10,400 --> 00:28:13,320 Speaker 6: we do, in fact see higher core inflation, where do 577 00:28:13,320 --> 00:28:14,919 Speaker 6: you think it's coming from? Because a lot of folks 578 00:28:15,119 --> 00:28:17,120 Speaker 6: definitely feel it when they go to the gas station 579 00:28:17,200 --> 00:28:19,240 Speaker 6: to fill up the tank of gas. They fill it 580 00:28:19,520 --> 00:28:22,679 Speaker 6: at the shopping center when they go to buy groceries. 581 00:28:23,200 --> 00:28:25,359 Speaker 6: Where is inflation most problematic for you. 582 00:28:26,760 --> 00:28:29,280 Speaker 11: Well, you know, as a real estate economist, we see 583 00:28:29,280 --> 00:28:32,600 Speaker 11: that the higher gas prices is in facting construction costs. 584 00:28:32,800 --> 00:28:35,560 Speaker 11: We're seeing it flow through to diesel prices obviously, which 585 00:28:35,600 --> 00:28:38,920 Speaker 11: is which is very important for construction and higher and 586 00:28:39,520 --> 00:28:43,120 Speaker 11: certainly burdens them to breaking ground on more homes. 587 00:28:43,400 --> 00:28:45,560 Speaker 5: So that's certainly one area that we're monitoring. 588 00:28:46,400 --> 00:28:49,840 Speaker 6: Where are you seeing in your business here in real estate? 589 00:28:49,880 --> 00:28:52,520 Speaker 6: I mean we have mortgage rates, boy, you know, back 590 00:28:52,600 --> 00:28:55,080 Speaker 6: up to six and a half percent here, and we 591 00:28:55,200 --> 00:28:58,440 Speaker 6: just got a housing number yesterday, you know, still that 592 00:28:58,640 --> 00:29:01,920 Speaker 6: four handle four million used homes. 593 00:29:02,360 --> 00:29:03,160 Speaker 8: It seems tough for. 594 00:29:03,160 --> 00:29:05,720 Speaker 6: The real estate business. 595 00:29:05,520 --> 00:29:08,000 Speaker 11: It's been a challenging year, though I will see a 596 00:29:08,000 --> 00:29:11,120 Speaker 11: better year than last year. Mortgage rates while they've hit 597 00:29:11,160 --> 00:29:13,880 Speaker 11: about six and a half percent, mortgage rates are still 598 00:29:13,920 --> 00:29:17,240 Speaker 11: lower than a year ago. Inventory is still a bit 599 00:29:17,320 --> 00:29:20,200 Speaker 11: higher than it was a year ago, so that's helping 600 00:29:20,320 --> 00:29:24,400 Speaker 11: move transactions in the right direction, albeit very slowly. But 601 00:29:24,480 --> 00:29:27,800 Speaker 11: we did start the year with a rate of six 602 00:29:27,840 --> 00:29:30,400 Speaker 11: percent and now we've moved up to six and a 603 00:29:30,440 --> 00:29:32,560 Speaker 11: half so certainly that slowed the momentum. 604 00:29:32,920 --> 00:29:36,160 Speaker 2: So what's the inflation series you lean on? I mean, 605 00:29:36,280 --> 00:29:39,600 Speaker 2: is it trim this, trim that, Cleveland, the eighteen other 606 00:29:39,640 --> 00:29:43,280 Speaker 2: flavors we've got. What does a denkush you believe in? 607 00:29:44,480 --> 00:29:48,040 Speaker 11: You know, I'm classic look at the core inflation, and 608 00:29:48,080 --> 00:29:49,760 Speaker 11: then what I tend to do is break it out 609 00:29:49,800 --> 00:29:53,480 Speaker 11: into its main components, and I track core goods inflation, 610 00:29:54,000 --> 00:29:56,520 Speaker 11: core services inflation, and then I tend to break out 611 00:29:56,520 --> 00:29:57,560 Speaker 11: shelter on its own. 612 00:29:57,640 --> 00:29:59,080 Speaker 5: Shelter inflation makes up. 613 00:29:59,000 --> 00:30:01,840 Speaker 11: Forty percent of core, and so we like to see 614 00:30:01,840 --> 00:30:04,520 Speaker 11: what's happening with shelter and the good news there is 615 00:30:04,560 --> 00:30:08,640 Speaker 11: that you know, that tends to trail what's happening with 616 00:30:08,680 --> 00:30:11,400 Speaker 11: rents on new leases, and we know that we continue 617 00:30:11,440 --> 00:30:14,280 Speaker 11: to see acceleration in new leases, So that should drag 618 00:30:14,760 --> 00:30:18,600 Speaker 11: overall shelter inflation lower later this year. I think that's 619 00:30:18,640 --> 00:30:20,880 Speaker 11: a tailwind to getting inflation back down. 620 00:30:21,240 --> 00:30:24,960 Speaker 2: That's really important. Is that zeitgeist in the market right now? 621 00:30:25,400 --> 00:30:28,440 Speaker 2: This idea of oeer and you know, eight other ways 622 00:30:28,960 --> 00:30:31,640 Speaker 2: of calculating real estate disinflation. 623 00:30:32,200 --> 00:30:34,000 Speaker 3: Is that in the zeitgeist right now? Or is that 624 00:30:34,040 --> 00:30:35,040 Speaker 3: a surprise to come? 625 00:30:36,560 --> 00:30:39,760 Speaker 11: I think I think it's pretty well understood that shelter 626 00:30:39,880 --> 00:30:43,920 Speaker 11: inflation should continue to drag overall inflation lower. I think 627 00:30:43,960 --> 00:30:46,280 Speaker 11: all eyes right now are certainly on the energy sector 628 00:30:46,440 --> 00:30:49,520 Speaker 11: and whether we start to see those higher oil prices 629 00:30:49,560 --> 00:30:53,200 Speaker 11: flow into other portions of our of our inflation back. 630 00:30:53,080 --> 00:30:57,960 Speaker 6: Get affordability in housing here? Is there a solution out there? 631 00:30:58,080 --> 00:30:59,360 Speaker 6: Is it just build more houses? 632 00:31:01,000 --> 00:31:03,720 Speaker 11: I do think that the supply side should be getting 633 00:31:03,920 --> 00:31:07,200 Speaker 11: the attention here, because what happens if you juice up 634 00:31:07,200 --> 00:31:09,440 Speaker 11: the demand side of the equation in a supply and 635 00:31:09,440 --> 00:31:12,240 Speaker 11: strain market is you just start to see house prices 636 00:31:12,800 --> 00:31:16,240 Speaker 11: go up. And so I think building more homes, making 637 00:31:16,280 --> 00:31:20,719 Speaker 11: it less burdensome, less costly to build new homes is 638 00:31:20,800 --> 00:31:21,320 Speaker 11: the solution. 639 00:31:22,160 --> 00:31:24,320 Speaker 2: Thank you so much. The new slow folks this morning 640 00:31:24,400 --> 00:31:27,120 Speaker 2: is just killing me. O Data Cushion, Thank you so 641 00:31:27,240 --> 00:31:28,080 Speaker 2: much for joining us. 642 00:31:28,200 --> 00:31:33,000 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, 643 00:31:33,120 --> 00:31:36,880 Speaker 1: and anywhere else you get your podcasts. Listen live each 644 00:31:36,920 --> 00:31:40,760 Speaker 1: weekday seven to ten am Easter and on Bloomberg dot Com, 645 00:31:40,920 --> 00:31:44,720 Speaker 1: the iHeartRadio app, tune In, and the Bloomberg Business app. 646 00:31:45,000 --> 00:31:48,120 Speaker 1: You can also watch us live every weekday on YouTube 647 00:31:48,400 --> 00:31:50,440 Speaker 1: and always on the Bloomberg terminal