1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,360 Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each 4 00:00:18,480 --> 00:00:21,360 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,400 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,760 --> 00:00:27,400 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,480 --> 00:00:31,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,479 --> 00:00:36,760 Speaker 2: Bloomberg Terminal and the Bloomberg Business app. We begin this 10 00:00:36,840 --> 00:00:39,200 Speaker 2: sound with stocks looking for a third straight day of gains. 11 00:00:39,280 --> 00:00:42,760 Speaker 2: Daryl Kronk of Wells Fargo with optimism ahead, writing this, 12 00:00:43,080 --> 00:00:45,440 Speaker 2: we expect stock prices to march hard by year, rent 13 00:00:45,479 --> 00:00:48,839 Speaker 2: driven primarily by earnings growth that should broaden some more 14 00:00:48,920 --> 00:00:50,720 Speaker 2: cyclically or insed areas. 15 00:00:50,880 --> 00:00:51,919 Speaker 3: Daryl joins us now for more. 16 00:00:52,000 --> 00:00:52,200 Speaker 2: Darrel. 17 00:00:52,240 --> 00:00:53,280 Speaker 3: Good to see you, you too join. 18 00:00:53,280 --> 00:00:54,960 Speaker 2: A bit of heat coming out of the American story. 19 00:00:55,040 --> 00:00:56,720 Speaker 2: It's not bad, just a little bit of heat coming 20 00:00:56,720 --> 00:01:00,680 Speaker 2: out m services. Job openings will get claims later roast tomorrow. 21 00:01:00,840 --> 00:01:01,520 Speaker 3: It's not a good thing. 22 00:01:02,400 --> 00:01:04,440 Speaker 4: I think it's a good thing. You want that economic growth. 23 00:01:04,560 --> 00:01:07,240 Speaker 4: I mean, we walked into this year thinking the economy 24 00:01:07,280 --> 00:01:10,520 Speaker 4: would run hotter than most of our friends up and 25 00:01:10,520 --> 00:01:13,080 Speaker 4: down Wall Street, right, So we were a good half 26 00:01:13,080 --> 00:01:15,640 Speaker 4: a point above an economic growth. We thought rates would 27 00:01:15,640 --> 00:01:18,520 Speaker 4: be higher, we thought inflation would be meaningfully higher than 28 00:01:18,560 --> 00:01:20,480 Speaker 4: the consensus. We were almost a full point ahead of 29 00:01:20,520 --> 00:01:24,360 Speaker 4: everybody else on your end CPI for twenty twenty five. 30 00:01:25,080 --> 00:01:27,000 Speaker 4: And we think earnings will deliver. I mean you're already 31 00:01:27,000 --> 00:01:28,560 Speaker 4: seeing it here in the fourth quarter. We're on a 32 00:01:28,600 --> 00:01:32,240 Speaker 4: run rate of about five percent revenue growth and just 33 00:01:32,280 --> 00:01:35,400 Speaker 4: over ten percent earnings growth. Five percent revenue growth is 34 00:01:35,440 --> 00:01:38,199 Speaker 4: the real element, I think, right, because you can drive 35 00:01:38,240 --> 00:01:41,399 Speaker 4: that down in operating leverage through the margins and straight 36 00:01:41,440 --> 00:01:43,640 Speaker 4: to the bottom line. So if you can maintain that 37 00:01:43,720 --> 00:01:47,720 Speaker 4: kind of revenue growth and get decent nominal growth, let's 38 00:01:47,720 --> 00:01:49,680 Speaker 4: call it two and a half percent GDP growth with 39 00:01:50,600 --> 00:01:52,840 Speaker 4: we're gonna say three to three and a half percent inflation, 40 00:01:53,320 --> 00:01:55,160 Speaker 4: are your end targets three point three? 41 00:01:55,520 --> 00:01:58,440 Speaker 1: That's five and a half six percent nomenal If you. 42 00:01:58,400 --> 00:02:01,600 Speaker 5: Think that the economy was run hot last year, is 43 00:02:01,800 --> 00:02:04,559 Speaker 5: some of the uncertainty that we see right now coming 44 00:02:04,560 --> 00:02:09,040 Speaker 5: from policy that hampers corporate spending. Is that a feature 45 00:02:09,480 --> 00:02:12,519 Speaker 5: not a bug to help with the disinflationary process, where 46 00:02:12,520 --> 00:02:16,200 Speaker 5: otherwise some of these pro growth policies can be somewhat inflationary. 47 00:02:17,800 --> 00:02:20,640 Speaker 4: I I guess the way we've thought about, at least 48 00:02:20,680 --> 00:02:24,840 Speaker 4: is when the dust settles at year end, the positive 49 00:02:24,880 --> 00:02:26,000 Speaker 4: policy impacts. 50 00:02:25,680 --> 00:02:26,720 Speaker 1: Need to outweigh the negatives. 51 00:02:26,800 --> 00:02:26,920 Speaker 5: Right. 52 00:02:26,960 --> 00:02:28,680 Speaker 4: And you've got both ends of it, right, So you've 53 00:02:28,720 --> 00:02:31,239 Speaker 4: got tariffs and immigration you can call negative, and you 54 00:02:31,280 --> 00:02:33,160 Speaker 4: can call deregulation and. 55 00:02:33,160 --> 00:02:34,240 Speaker 1: Tax cuts positive. 56 00:02:34,600 --> 00:02:34,799 Speaker 3: Right. 57 00:02:34,880 --> 00:02:37,360 Speaker 4: We haven't got to the ladder yet, right, we're still 58 00:02:37,440 --> 00:02:38,960 Speaker 4: kind of you know, stewing on it. 59 00:02:39,000 --> 00:02:40,840 Speaker 1: We've been all about, you know, early. 60 00:02:40,639 --> 00:02:43,880 Speaker 4: Days, tariffs, what we do, control of the border, all 61 00:02:43,919 --> 00:02:48,200 Speaker 4: that stuff. So ironically, the markets have weathered that quite well, right, 62 00:02:48,520 --> 00:02:50,960 Speaker 4: I mean we're sitting here in a tight band, whether 63 00:02:51,000 --> 00:02:53,000 Speaker 4: you look at the stock market, the bond market, right, 64 00:02:53,000 --> 00:02:54,919 Speaker 4: which we're talking about with the tenure, thank you, We 65 00:02:55,520 --> 00:02:58,320 Speaker 4: remember that, you know, when the Feds first started cutting 66 00:02:58,400 --> 00:03:02,720 Speaker 4: rates in September of last year, rating the TENUREUS three seventy, right, 67 00:03:03,280 --> 00:03:07,160 Speaker 4: it's four forty five today. All of that's term premium, right, 68 00:03:07,200 --> 00:03:09,440 Speaker 4: because the long end of the curve is term premium, 69 00:03:09,520 --> 00:03:13,400 Speaker 4: a growth premium, and an inflation premium almost fifty fifty. 70 00:03:13,680 --> 00:03:14,760 Speaker 1: Or fifty five basis points. 71 00:03:14,760 --> 00:03:17,720 Speaker 4: So that's term premium, which is just a function of 72 00:03:17,760 --> 00:03:19,800 Speaker 4: the uncertainty around the policy. 73 00:03:19,919 --> 00:03:22,919 Speaker 5: Okay, so if you do get some of that term 74 00:03:22,919 --> 00:03:24,639 Speaker 5: premium taken out of the system, if you have longer 75 00:03:24,720 --> 00:03:26,600 Speaker 5: term yell, it's returned to sort of where they were 76 00:03:26,919 --> 00:03:30,120 Speaker 5: back on September eighteenth. How much is that part of 77 00:03:30,160 --> 00:03:31,639 Speaker 5: your call for the broadening out? 78 00:03:31,680 --> 00:03:33,120 Speaker 6: How important is that. 79 00:03:33,240 --> 00:03:35,480 Speaker 5: To see the rotation out of just some of the 80 00:03:35,800 --> 00:03:38,200 Speaker 5: magnificent seven stocks into the rest of the index? 81 00:03:38,480 --> 00:03:39,120 Speaker 1: Well, certainly. 82 00:03:39,240 --> 00:03:40,680 Speaker 4: So what I would say is this, like when you 83 00:03:40,720 --> 00:03:42,680 Speaker 4: think about twenty twenty five and what has to happen, 84 00:03:43,360 --> 00:03:45,600 Speaker 4: You've got two fives that need to happen. Tenure needs 85 00:03:45,640 --> 00:03:48,800 Speaker 4: to stay below five percent, right, Unemployment rate needs to 86 00:03:48,800 --> 00:03:52,520 Speaker 4: stay low five percent. Earning's growth needs to deliver, and 87 00:03:52,560 --> 00:03:55,480 Speaker 4: earning's breadth needs to broaden out to your point, Inflation 88 00:03:55,600 --> 00:03:57,120 Speaker 4: needs to stay less than three and a half percent. 89 00:03:57,480 --> 00:03:59,320 Speaker 4: The dollar, if you want to measure it by the 90 00:04:00,200 --> 00:04:03,880 Speaker 4: why needs to stay below one ten, right, And the 91 00:04:04,360 --> 00:04:07,320 Speaker 4: positives of policy need out to outweigh the negatives, right, 92 00:04:07,520 --> 00:04:10,120 Speaker 4: If you get those things to happen, I think you're 93 00:04:10,160 --> 00:04:12,520 Speaker 4: in a good place and markets can do quite well. 94 00:04:12,880 --> 00:04:15,360 Speaker 4: Any one of those spiking above some of those thresholds 95 00:04:15,360 --> 00:04:19,320 Speaker 4: start to inject risk into outlooks and the system. 96 00:04:19,360 --> 00:04:21,479 Speaker 7: Basically, I want to pick up on your point about tariffs, 97 00:04:21,480 --> 00:04:23,520 Speaker 7: and now you're saying the market's weathering it pretty well. 98 00:04:23,520 --> 00:04:25,960 Speaker 7: But isn't the market just pricing in the fact that 99 00:04:26,080 --> 00:04:28,680 Speaker 7: there will be eleven hour deals like we saw with 100 00:04:28,720 --> 00:04:29,600 Speaker 7: Canada Mexico. 101 00:04:30,760 --> 00:04:33,159 Speaker 4: Yeah, I mean I think you have to separate, right, 102 00:04:33,200 --> 00:04:34,640 Speaker 4: you know the old adage of like you've got to 103 00:04:34,640 --> 00:04:37,040 Speaker 4: take President Trump seriously but not literally. 104 00:04:37,120 --> 00:04:38,640 Speaker 1: We were learning that quickly, right. 105 00:04:40,640 --> 00:04:43,280 Speaker 4: Not all tariffs are created equal, right, remember Trump one 106 00:04:43,320 --> 00:04:46,560 Speaker 4: dot Oh, the tariffs were very surgical, right, it was 107 00:04:46,560 --> 00:04:49,680 Speaker 4: washing machine parts, solar panels and stealing aluminum. 108 00:04:49,760 --> 00:04:52,320 Speaker 1: This time, they're very broad. They're like a stick, right. 109 00:04:52,400 --> 00:04:55,400 Speaker 4: Twenty five percent on Canada, twenty five percent on Mexico, 110 00:04:55,440 --> 00:04:56,279 Speaker 4: ten percent on China. 111 00:04:56,320 --> 00:04:58,080 Speaker 1: They're at the country level, right. 112 00:04:57,880 --> 00:05:00,839 Speaker 4: So we're using the emergency powers and instead of three 113 00:05:00,839 --> 00:05:03,159 Speaker 4: oh one two thirty two powers this time, right, which 114 00:05:03,200 --> 00:05:05,840 Speaker 4: is a very different equation. I think, when it's all 115 00:05:05,880 --> 00:05:09,080 Speaker 4: said and done, you know, the the Canada, Mexico. 116 00:05:08,760 --> 00:05:09,760 Speaker 1: And call it the friends. 117 00:05:09,920 --> 00:05:14,080 Speaker 4: Tariffs including the the Eurozone are more about leverage and 118 00:05:14,120 --> 00:05:17,560 Speaker 4: getting what you want. China is more about geopolitics. Right, 119 00:05:17,680 --> 00:05:20,160 Speaker 4: That's where the real rub is with China. And I 120 00:05:20,200 --> 00:05:24,080 Speaker 4: would expect the durability the Chinese tariffs to stick and stay, 121 00:05:24,640 --> 00:05:28,400 Speaker 4: and that means very specific things for certain industries. 122 00:05:28,480 --> 00:05:28,640 Speaker 1: Right. 123 00:05:28,680 --> 00:05:31,320 Speaker 4: We still get most of our tech hardware and a 124 00:05:31,320 --> 00:05:34,200 Speaker 4: lot of our semis from parts of China. 125 00:05:34,320 --> 00:05:34,560 Speaker 1: Right. 126 00:05:34,680 --> 00:05:40,400 Speaker 4: Autos are a big element there, Metals, energy prices, those 127 00:05:40,400 --> 00:05:42,520 Speaker 4: are the areas. So it's gonna it's gonna come down 128 00:05:42,520 --> 00:05:46,080 Speaker 4: to those segments, sectors and industries that where the tariffs 129 00:05:46,080 --> 00:05:47,560 Speaker 4: are going to matter as they get applied. 130 00:05:47,720 --> 00:05:47,880 Speaker 8: Him. 131 00:05:48,080 --> 00:05:52,280 Speaker 7: Are you concerned at that point then about inflation rising, 132 00:05:52,360 --> 00:05:54,320 Speaker 7: because this is the opening salvo when it comes to 133 00:05:54,400 --> 00:05:55,160 Speaker 7: Chinese tariffs. 134 00:05:55,600 --> 00:05:56,200 Speaker 1: Yeah, I I. 135 00:05:56,400 --> 00:05:59,040 Speaker 4: Mean as I said, I I think are the inflation 136 00:05:59,240 --> 00:06:00,960 Speaker 4: is You can call it stick year, you can call 137 00:06:01,000 --> 00:06:03,120 Speaker 4: it more durable, whatever you want to call it. If 138 00:06:03,320 --> 00:06:05,680 Speaker 4: if when we walked into this year, the rest of 139 00:06:05,720 --> 00:06:08,400 Speaker 4: the streets said, you know, if you measured us CPI 140 00:06:08,560 --> 00:06:10,480 Speaker 4: as they were saying two to two and a half, 141 00:06:10,520 --> 00:06:12,159 Speaker 4: we were at three point three right, which is that 142 00:06:12,200 --> 00:06:12,960 Speaker 4: full point a head. 143 00:06:13,160 --> 00:06:14,320 Speaker 1: Which is why when you. 144 00:06:14,240 --> 00:06:16,200 Speaker 4: Look at go back to Atleasa's tenure, I know we 145 00:06:16,279 --> 00:06:18,440 Speaker 4: got to keep coming back to this, which is why 146 00:06:18,640 --> 00:06:21,800 Speaker 4: our ten year Sorry John didn't she yes. 147 00:06:21,920 --> 00:06:23,200 Speaker 3: She doesn't own the ten year bond. 148 00:06:25,480 --> 00:06:28,120 Speaker 4: Why we have the tenuere a year end this year 149 00:06:28,160 --> 00:06:31,240 Speaker 4: at four seventy five, Like we don't think when we 150 00:06:31,240 --> 00:06:34,080 Speaker 4: were doing the math right about everybody else was in 151 00:06:34,120 --> 00:06:36,320 Speaker 4: the threes on the ten year right for year end 152 00:06:36,320 --> 00:06:36,839 Speaker 4: twenty five. 153 00:06:37,920 --> 00:06:40,320 Speaker 1: You can't make that math work right. So I think 154 00:06:40,440 --> 00:06:41,200 Speaker 1: rates are higher. 155 00:06:41,240 --> 00:06:43,839 Speaker 4: I think inflation is more durable, and that inflation premium 156 00:06:43,880 --> 00:06:47,040 Speaker 4: is the year goes on gets stacked into the into the. 157 00:06:46,960 --> 00:06:49,320 Speaker 3: Eelds scope best. And they said, so it's a bradmos. 158 00:06:50,520 --> 00:06:50,599 Speaker 5: Ye. 159 00:06:51,200 --> 00:06:51,479 Speaker 3: Well, I. 160 00:06:53,040 --> 00:06:55,440 Speaker 7: Spoke Aid last night and they said, no, he watches 161 00:06:55,520 --> 00:06:57,599 Speaker 7: everything every indicy. They're like, also, he looks at the 162 00:06:57,600 --> 00:06:59,480 Speaker 7: barrels on the market. He wants to know where oil. 163 00:06:59,320 --> 00:07:01,279 Speaker 2: Is everything, no doubt about that. But I think coming 164 00:07:01,279 --> 00:07:04,760 Speaker 2: into this year, just bigger picture, we thought maybe because 165 00:07:04,760 --> 00:07:06,640 Speaker 2: they were going to run this hot, there would be 166 00:07:06,720 --> 00:07:08,960 Speaker 2: a risk that the deficit would get away from them. 167 00:07:09,000 --> 00:07:11,920 Speaker 2: The treasury yields would run away as well. January, you'd 168 00:07:12,000 --> 00:07:14,760 Speaker 2: started to push up back towards five percent. We've retreated 169 00:07:14,760 --> 00:07:17,760 Speaker 2: by forty basis points. When you hear the Treasury Secretary 170 00:07:17,800 --> 00:07:20,680 Speaker 2: say things like I'm focused on the tenure yield, how 171 00:07:20,720 --> 00:07:23,360 Speaker 2: much comfort do you take from that? Because we talked 172 00:07:23,400 --> 00:07:25,160 Speaker 2: about this to close out last year. Would they be 173 00:07:25,200 --> 00:07:29,600 Speaker 2: constrained regulated by stocks or regulated by bunts? I think 174 00:07:29,640 --> 00:07:31,040 Speaker 2: a lot of people thought that maybe they might be 175 00:07:31,040 --> 00:07:33,280 Speaker 2: regulated by the bond market. Do you take any comfort 176 00:07:33,320 --> 00:07:33,600 Speaker 2: from that? 177 00:07:34,440 --> 00:07:36,400 Speaker 1: I do think that's the right focal point. 178 00:07:36,480 --> 00:07:38,960 Speaker 4: Right, rates matter in this environment because it matters for 179 00:07:39,200 --> 00:07:42,200 Speaker 4: equity evaluations, It will matter ultimately for earnings, it matters 180 00:07:42,200 --> 00:07:45,600 Speaker 4: for small caps. Right, So I look, there was a 181 00:07:45,600 --> 00:07:47,280 Speaker 4: lot of short positions sitting right on the four and 182 00:07:47,280 --> 00:07:49,960 Speaker 4: a half percent line on the tenure that scrambled to cover, 183 00:07:50,080 --> 00:07:52,640 Speaker 4: which is why we ended up at four forty yesterday 184 00:07:52,680 --> 00:07:56,120 Speaker 4: on the back of the Treasury refunding, which was no news, right, 185 00:07:56,200 --> 00:07:59,360 Speaker 4: And we didn't see, you know, Treasury Secretary Busset turn 186 00:07:59,400 --> 00:08:02,200 Speaker 4: around and say I'm going to start layering out more 187 00:08:02,320 --> 00:08:04,800 Speaker 4: and heavier auctions in the ten and thirty year, right, 188 00:08:04,840 --> 00:08:06,960 Speaker 4: the three, the ten and the thirty were all spot 189 00:08:07,040 --> 00:08:09,720 Speaker 4: on where expectations were and have been for the last 190 00:08:09,720 --> 00:08:11,800 Speaker 4: four months. So this whole idea that they're going to 191 00:08:11,840 --> 00:08:15,120 Speaker 4: stop issuing as many bills and start issuing more long 192 00:08:15,200 --> 00:08:17,480 Speaker 4: bonds maybe in the future, but it's not in the 193 00:08:17,480 --> 00:08:21,440 Speaker 4: current right. And if that happens, then you start increasing supply. 194 00:08:21,760 --> 00:08:25,400 Speaker 1: Right. The risk you run is the auctions get sloppy, John. 195 00:08:25,360 --> 00:08:28,280 Speaker 4: And we saw that back in October of twenty twenty three, 196 00:08:28,360 --> 00:08:31,120 Speaker 4: where there just wasn't enough demand. Everybody was crowding to 197 00:08:31,160 --> 00:08:32,880 Speaker 4: the short side of the curve on the demand, and 198 00:08:32,920 --> 00:08:35,600 Speaker 4: the bid tocover ratios on those long auctions were messy. 199 00:08:35,679 --> 00:08:37,600 Speaker 2: And then yet it made some changes, and it looks 200 00:08:37,640 --> 00:08:39,480 Speaker 2: like those changes might be sticking, at least for now. Now, 201 00:08:39,480 --> 00:08:52,079 Speaker 2: I'm just going to see it Downald Trunk wels Fanka 202 00:08:52,480 --> 00:08:55,080 Speaker 2: joining Guess now is at Mills of Raymond James now 203 00:08:55,280 --> 00:08:57,840 Speaker 2: ed welcome to the program. I wonder what consequences this 204 00:08:57,920 --> 00:09:01,040 Speaker 2: might have, if any, for the tax cuts over the 205 00:09:01,120 --> 00:09:02,079 Speaker 2: next few months. 206 00:09:02,600 --> 00:09:04,959 Speaker 8: Yeah, John, there's a lot to talk about here, because 207 00:09:05,040 --> 00:09:07,120 Speaker 8: you know, the first thought I have is, as soon 208 00:09:07,120 --> 00:09:10,520 Speaker 8: as the Treasury Secretary says Donald Trump is not focused 209 00:09:10,559 --> 00:09:13,960 Speaker 8: on the Fed lowering rates. We're almost near guaranteed getting 210 00:09:14,000 --> 00:09:16,080 Speaker 8: a headline from Donald Trump saying the Fed needs to 211 00:09:16,080 --> 00:09:17,520 Speaker 8: lower the front end of the rates. 212 00:09:18,200 --> 00:09:19,280 Speaker 9: I do think that. 213 00:09:19,320 --> 00:09:22,800 Speaker 8: When I hear these comments, it is going to be 214 00:09:22,880 --> 00:09:25,920 Speaker 8: difficult to do as much of the tax cuts as 215 00:09:25,960 --> 00:09:30,040 Speaker 8: Republicans want to do. Another thing in that interview, Treasury 216 00:09:30,080 --> 00:09:33,679 Speaker 8: Secretary Besson said that they should do a score that 217 00:09:33,720 --> 00:09:39,280 Speaker 8: would allow Republicans to make the tax cuts permanent, extending 218 00:09:39,320 --> 00:09:41,920 Speaker 8: out current baseline. If we are going to see a 219 00:09:42,080 --> 00:09:46,040 Speaker 8: four or five trillion dollar plus increase in the debt 220 00:09:46,080 --> 00:09:49,040 Speaker 8: and the deficit over the next ten years, that's more 221 00:09:49,080 --> 00:09:52,280 Speaker 8: than what the bond market's been looking for. And finally, 222 00:09:52,320 --> 00:09:54,240 Speaker 8: I guess the thing I would highlight here is that 223 00:09:54,280 --> 00:09:57,240 Speaker 8: in Trump one point zero, everyone was focused on the 224 00:09:57,280 --> 00:10:01,160 Speaker 8: equity market and that was the barometer of Trump's success. Increasingly, 225 00:10:01,280 --> 00:10:03,960 Speaker 8: clients at Raymond James have been asking me, is the 226 00:10:04,000 --> 00:10:08,160 Speaker 8: bond market the new barometer? And last night Treasury Secretary 227 00:10:08,320 --> 00:10:11,760 Speaker 8: best And kind of made that official that we're going 228 00:10:11,840 --> 00:10:14,200 Speaker 8: to be watching the tenuere to see how successful Trump 229 00:10:14,280 --> 00:10:15,240 Speaker 8: policies are going to be. 230 00:10:15,440 --> 00:10:16,080 Speaker 6: And ed, isn't that. 231 00:10:16,080 --> 00:10:18,440 Speaker 7: Because the bond market has a seat at the table 232 00:10:18,480 --> 00:10:21,560 Speaker 7: when it comes to what you're discussing this huge tax 233 00:10:21,600 --> 00:10:23,360 Speaker 7: bill and whether or not they can go as far 234 00:10:23,400 --> 00:10:24,120 Speaker 7: as they'd like to go. 235 00:10:25,120 --> 00:10:27,560 Speaker 8: Yeah, And when I've talked to folks in and around 236 00:10:27,640 --> 00:10:29,600 Speaker 8: kind of the Trump administration, one of the things that 237 00:10:29,640 --> 00:10:33,360 Speaker 8: they want to highlight is tax cuts are only one 238 00:10:33,520 --> 00:10:36,160 Speaker 8: part of the story. They want to talk about the 239 00:10:36,200 --> 00:10:39,600 Speaker 8: deregulatory agenda. They want to talk about, Doge. They want 240 00:10:39,640 --> 00:10:41,800 Speaker 8: to talk about the amount of money that's going to 241 00:10:41,840 --> 00:10:45,200 Speaker 8: be collected Anne Marie from all of the tariffs that 242 00:10:45,240 --> 00:10:48,240 Speaker 8: are going into place. And so if you want to 243 00:10:48,280 --> 00:10:51,160 Speaker 8: get what the Treasury Secretary is describing, I think the 244 00:10:51,200 --> 00:10:53,200 Speaker 8: market has to be prepared that there's going to be 245 00:10:53,400 --> 00:10:57,440 Speaker 8: other sources of tax revenue that's coming in and other 246 00:10:57,679 --> 00:11:01,800 Speaker 8: cuts to the federal government spent. And so the aggressiveness 247 00:11:01,800 --> 00:11:04,719 Speaker 8: that we are seeing right now by Elon Muskin Doge 248 00:11:05,040 --> 00:11:08,319 Speaker 8: is part and parcel giving political cover for the Hill 249 00:11:08,360 --> 00:11:10,800 Speaker 8: to go a little bit further or a lot further 250 00:11:11,040 --> 00:11:12,600 Speaker 8: than they thought they might be able to do. 251 00:11:12,920 --> 00:11:15,040 Speaker 7: Well, let's discuss how they're going to do that. Centators 252 00:11:15,080 --> 00:11:17,439 Speaker 7: will sit down with Trump this weekend and they're talking 253 00:11:17,480 --> 00:11:21,200 Speaker 7: about this two path bill. I caught up with Congressman 254 00:11:21,400 --> 00:11:24,560 Speaker 7: Jason Smith yesterday, who still wants this one big, beautiful bill, 255 00:11:24,760 --> 00:11:27,840 Speaker 7: but that seems to be collapsing in real time. What's 256 00:11:27,880 --> 00:11:31,839 Speaker 7: your take on the next steps for the Republicans in Congress. 257 00:11:32,640 --> 00:11:35,720 Speaker 8: Well, next step, Sammary, is getting a budget. You can't 258 00:11:35,760 --> 00:11:39,120 Speaker 8: start the budget reconciliation process. You have nothing to reconcile 259 00:11:39,240 --> 00:11:42,120 Speaker 8: until you pass the budget. And so this is where 260 00:11:42,160 --> 00:11:45,400 Speaker 8: the fact that Republicans have as slim as possible of 261 00:11:45,440 --> 00:11:48,960 Speaker 8: a majority, you lose one vote, you can't get this done. 262 00:11:49,080 --> 00:11:51,480 Speaker 8: So Donald Trump is also going to be having a 263 00:11:51,480 --> 00:11:54,760 Speaker 8: conversation later today with House Republicans. He's going to see 264 00:11:54,760 --> 00:11:57,920 Speaker 8: if he can get them to pass something to start 265 00:11:57,960 --> 00:12:01,840 Speaker 8: the process. They're still fighting over process. Until you figure 266 00:12:01,840 --> 00:12:05,000 Speaker 8: out the process, you can't get a bill. I absolutely 267 00:12:05,000 --> 00:12:07,800 Speaker 8: still think we're going to get the tax bill done. 268 00:12:07,920 --> 00:12:08,840 Speaker 9: It could be permanent. 269 00:12:08,880 --> 00:12:11,840 Speaker 8: They could add tax cuts to this if they use 270 00:12:12,360 --> 00:12:15,440 Speaker 8: the score that they're talking about. But until there is 271 00:12:15,600 --> 00:12:18,880 Speaker 8: leadership from the White House to instruct them on what 272 00:12:19,080 --> 00:12:21,400 Speaker 8: to do, we don't know what we get from the 273 00:12:21,480 --> 00:12:22,640 Speaker 8: Hill until that point. 274 00:12:22,880 --> 00:12:25,040 Speaker 5: And I loved how we started this conversation about how 275 00:12:25,080 --> 00:12:27,080 Speaker 5: important the tenure is and how this might be the 276 00:12:27,160 --> 00:12:29,679 Speaker 5: ultimate check on the market. I thought that the photograph 277 00:12:30,160 --> 00:12:33,120 Speaker 5: that we showed really set it up perfectly. Where you 278 00:12:33,120 --> 00:12:35,000 Speaker 5: have Donald Trump in the middle, and you have Scott 279 00:12:35,040 --> 00:12:38,480 Speaker 5: Besson on one side, bond representative, and then you have 280 00:12:38,559 --> 00:12:41,480 Speaker 5: Howard Lutnik on the other side, who in some ways 281 00:12:41,480 --> 00:12:44,160 Speaker 5: the stock representative, growth representative, trying to get some of 282 00:12:44,200 --> 00:12:47,680 Speaker 5: these other things across. Who has the louder voice, the 283 00:12:47,760 --> 00:12:50,640 Speaker 5: louder influence over the man in the middle, Donald Trump, 284 00:12:50,640 --> 00:12:52,600 Speaker 5: at a time where there are a lot of competing egos, 285 00:12:52,800 --> 00:12:55,600 Speaker 5: a lot of competing wishes, and it's not clear just 286 00:12:55,679 --> 00:12:58,760 Speaker 5: how constrained some of those people are going to be 287 00:12:59,080 --> 00:13:00,480 Speaker 5: by say the ten yield. 288 00:13:01,559 --> 00:13:03,880 Speaker 8: Yeah, Lisa, I guess my flippant answer to that would 289 00:13:03,880 --> 00:13:06,880 Speaker 8: be the last person who spoke to him. That's what 290 00:13:06,920 --> 00:13:10,440 Speaker 8: we have seen countless times. In this he has once 291 00:13:10,520 --> 00:13:13,840 Speaker 8: again instilled what we'd call a team of rivals. And 292 00:13:13,880 --> 00:13:18,359 Speaker 8: we've seen this and elsewhere too on trade on Tariff's 293 00:13:18,360 --> 00:13:21,880 Speaker 8: there is a huge match between Team Econ, which is 294 00:13:21,920 --> 00:13:26,079 Speaker 8: Scott Bessen's World versus Team Tariff that is Lutnick. That's 295 00:13:26,120 --> 00:13:28,640 Speaker 8: going to be Jamison Greer, as mentioned, he's having his 296 00:13:28,760 --> 00:13:30,840 Speaker 8: hearing today for US Trade representative. 297 00:13:31,000 --> 00:13:32,080 Speaker 9: That's Peter Navarro. 298 00:13:32,880 --> 00:13:36,360 Speaker 8: So what I've been instructed to do when I'm listening 299 00:13:36,400 --> 00:13:40,439 Speaker 8: to all these competing voices is find areas of commonality, 300 00:13:40,760 --> 00:13:43,880 Speaker 8: and that's going to be the likely policy. And one 301 00:13:43,920 --> 00:13:45,679 Speaker 8: of the things that I think the market has been 302 00:13:45,720 --> 00:13:49,480 Speaker 8: missing is the most dubvish view coming out of that 303 00:13:49,640 --> 00:13:53,120 Speaker 8: kind of team of rivals on tariffs is only starting 304 00:13:53,120 --> 00:13:55,680 Speaker 8: at two point five percent of a universal tariff and 305 00:13:55,720 --> 00:13:58,920 Speaker 8: getting to somewhere to ten to twenty percent. If that's 306 00:13:58,960 --> 00:14:01,199 Speaker 8: the dubbish view, I want to know what the hawkish 307 00:14:01,280 --> 00:14:01,800 Speaker 8: view is. 308 00:14:02,400 --> 00:14:04,520 Speaker 5: At that point ed, how do you advise clients? How 309 00:14:04,520 --> 00:14:08,080 Speaker 5: do you advise companies that want to make plans, want 310 00:14:08,120 --> 00:14:10,640 Speaker 5: to understand what their footprint should look like, want to 311 00:14:10,720 --> 00:14:13,600 Speaker 5: understand where they can expand in the world. Are you 312 00:14:13,679 --> 00:14:16,120 Speaker 5: telling them to just hold off and that frankly, they 313 00:14:16,160 --> 00:14:17,520 Speaker 5: will not know just what. 314 00:14:17,440 --> 00:14:19,080 Speaker 6: That hawkish view is and how high. 315 00:14:18,880 --> 00:14:19,320 Speaker 5: It could go. 316 00:14:20,320 --> 00:14:22,480 Speaker 8: Yeah, I'm not telling them to hold off, but I 317 00:14:22,520 --> 00:14:24,880 Speaker 8: am telling them to expect volatility. I was at a 318 00:14:24,880 --> 00:14:27,760 Speaker 8: conference yesterday down at our headquarters in Saint Pete at 319 00:14:27,840 --> 00:14:31,280 Speaker 8: Raymond James talking about how volatility is back and that 320 00:14:31,480 --> 00:14:34,800 Speaker 8: you have to kind of not react to everything to 321 00:14:35,000 --> 00:14:38,280 Speaker 8: get some of the big conversation right. And so there 322 00:14:38,360 --> 00:14:41,080 Speaker 8: are a number of things out of this administration that 323 00:14:41,080 --> 00:14:43,680 Speaker 8: could be viewed as market positive. There are other things 324 00:14:43,680 --> 00:14:45,920 Speaker 8: that could be viewed as market negative. The way in 325 00:14:45,960 --> 00:14:49,920 Speaker 8: which they implement that, the timing in the degree, all 326 00:14:49,960 --> 00:14:53,240 Speaker 8: are going to be the big conversations of twenty twenty five. 327 00:14:53,560 --> 00:14:55,120 Speaker 9: But don't stay paralyzed. 328 00:14:55,200 --> 00:14:59,040 Speaker 8: Because we stay paralyzed, you miss out on a lot 329 00:14:59,040 --> 00:15:01,680 Speaker 8: of opportunity. Been doing this job for a while, I 330 00:15:01,720 --> 00:15:04,840 Speaker 8: can always tell you the risk, but that has not 331 00:15:04,960 --> 00:15:07,040 Speaker 8: been the right strategy before, and I don't think it's 332 00:15:07,040 --> 00:15:08,280 Speaker 8: the right strategy now, Lisa. 333 00:15:08,400 --> 00:15:10,480 Speaker 2: Sequencing matter is that I think we've all been saying 334 00:15:10,520 --> 00:15:12,680 Speaker 2: out over the last several months. We wanted to know 335 00:15:12,680 --> 00:15:14,920 Speaker 2: what would come first. We found out the focus was 336 00:15:14,960 --> 00:15:17,680 Speaker 2: on trade, and pretty quickly for this market. At the moment, 337 00:15:17,720 --> 00:15:19,920 Speaker 2: I wonder how quickly things could change again when we 338 00:15:20,000 --> 00:15:22,200 Speaker 2: really start to see what's going to happen with the 339 00:15:22,240 --> 00:15:24,320 Speaker 2: tax package. When do we start to get a better 340 00:15:24,360 --> 00:15:26,440 Speaker 2: idea of the contours of That's it going to take weeks? 341 00:15:26,640 --> 00:15:27,080 Speaker 3: Months? 342 00:15:27,120 --> 00:15:30,680 Speaker 8: How long I think we'll get some idea within the 343 00:15:30,680 --> 00:15:32,440 Speaker 8: next couple of weeks. As I mentioned, you have to 344 00:15:32,440 --> 00:15:36,200 Speaker 8: pass the budget first. In Republicans, if we can get 345 00:15:36,240 --> 00:15:41,320 Speaker 8: a budget in the February March time period, people will 346 00:15:41,320 --> 00:15:43,640 Speaker 8: get optimistic on what can get done. 347 00:15:43,960 --> 00:15:45,840 Speaker 9: And then I want to see what score they're using. 348 00:15:45,880 --> 00:15:48,240 Speaker 8: It's a technical thing, but if they use a score 349 00:15:48,280 --> 00:15:50,440 Speaker 8: that says extend out current policy, which is what the 350 00:15:50,480 --> 00:15:53,800 Speaker 8: Treasury Secretary is expecting to say, that's where we have 351 00:15:53,880 --> 00:15:56,160 Speaker 8: the conversation about these tax cuts being permanent. 352 00:15:56,360 --> 00:15:57,840 Speaker 9: That's not priced into the market. 353 00:15:58,120 --> 00:16:00,760 Speaker 8: If we are in March and April talk about permanent 354 00:16:00,760 --> 00:16:04,080 Speaker 8: tax cuts as a high probability event, that's a market 355 00:16:04,160 --> 00:16:05,360 Speaker 8: positive from where I sit. 356 00:16:05,560 --> 00:16:07,280 Speaker 9: It might have an impact on the. 357 00:16:07,200 --> 00:16:09,760 Speaker 8: Tenure that the Treasury Secretary does not want, and that 358 00:16:09,840 --> 00:16:11,320 Speaker 8: might be the binding constraint. 359 00:16:11,800 --> 00:16:13,360 Speaker 9: But I do expect. 360 00:16:12,960 --> 00:16:17,600 Speaker 8: That we will have moments of clarity followed by everything 361 00:16:17,640 --> 00:16:21,360 Speaker 8: falling apart before it ultimately gets done. And one thing 362 00:16:21,400 --> 00:16:24,920 Speaker 8: I say about DC is that things appear impossible right 363 00:16:25,000 --> 00:16:27,800 Speaker 8: up until the moment they're inevitable. But I do think 364 00:16:27,800 --> 00:16:30,600 Speaker 8: it is inevitable this year we will get something done 365 00:16:30,680 --> 00:16:31,400 Speaker 8: on tax cuts. 366 00:16:31,440 --> 00:16:33,280 Speaker 2: And this was brittiant looking forward to being on the 367 00:16:33,360 --> 00:16:35,800 Speaker 2: journey with you as most of frankmonc jans on a 368 00:16:35,800 --> 00:16:48,000 Speaker 2: path forward for the year had Sonya masking a ups 369 00:16:48,000 --> 00:16:49,920 Speaker 2: stop and buying for more Sonya get to see you? 370 00:16:50,640 --> 00:16:52,640 Speaker 2: What are you looking for from tomorrow's number? And to 371 00:16:52,720 --> 00:16:55,440 Speaker 2: Jonathan Pingo's point of ittakes this why is January so 372 00:16:55,600 --> 00:16:56,880 Speaker 2: hard to forecast? 373 00:16:57,920 --> 00:17:01,360 Speaker 10: You know, January tends to be quiet, seasonal. There's also 374 00:17:01,520 --> 00:17:04,440 Speaker 10: weather effects as well, so we have this impact of seasonality, 375 00:17:04,480 --> 00:17:06,400 Speaker 10: and we've had this historically, I think for at least 376 00:17:06,440 --> 00:17:10,000 Speaker 10: a few years that is amplified in January compared to 377 00:17:10,040 --> 00:17:12,359 Speaker 10: other months. But in addition, here we're going to have 378 00:17:12,400 --> 00:17:16,080 Speaker 10: benchmark revisions, so the underlying assumptions of how we're estimating 379 00:17:16,160 --> 00:17:19,119 Speaker 10: data might change as well from the Census Bureau. So 380 00:17:19,160 --> 00:17:22,400 Speaker 10: we're looking forward to hundred k. But really, as we've published, 381 00:17:22,840 --> 00:17:24,879 Speaker 10: this is just an exercise and predicting noise. 382 00:17:25,840 --> 00:17:29,200 Speaker 5: An exercise and predicting noise, we should collect these and 383 00:17:29,280 --> 00:17:32,240 Speaker 5: exercise and predicting noise in a random number generator. 384 00:17:32,280 --> 00:17:33,119 Speaker 6: This is fantastic. 385 00:17:33,440 --> 00:17:35,680 Speaker 5: I am curious about what your takeaway is, just more 386 00:17:35,720 --> 00:17:38,960 Speaker 5: broadly from the random number generator, you know, exercise and 387 00:17:39,000 --> 00:17:43,280 Speaker 5: noise the stagnancy of this market. That's not a stagnation 388 00:17:43,400 --> 00:17:45,040 Speaker 5: of this market. The idea that we're not seeing a 389 00:17:45,080 --> 00:17:46,800 Speaker 5: lot of hiring or we're not seeing a lot of firing. 390 00:17:47,640 --> 00:17:51,840 Speaker 5: Do you take that as being implicitly a negative, suggesting 391 00:17:52,000 --> 00:17:55,600 Speaker 5: a brittleness that makes this labor market more susceptible to 392 00:17:55,640 --> 00:17:57,440 Speaker 5: some sort of shock. That's the way some people have 393 00:17:57,520 --> 00:17:58,239 Speaker 5: been describing it. 394 00:17:58,520 --> 00:18:01,280 Speaker 10: Well, that's possible, yes, and tariffs could be one of 395 00:18:01,320 --> 00:18:05,040 Speaker 10: those shocks, actually, and we would expect the unemployment rate 396 00:18:05,080 --> 00:18:08,440 Speaker 10: to go up if there if the tariffs against you know, Canada, Mexico, 397 00:18:08,560 --> 00:18:13,280 Speaker 10: China are in fact sustained, especially Canada and Mexico. But 398 00:18:13,400 --> 00:18:15,640 Speaker 10: on the other hand, the US is doing considerably better 399 00:18:15,680 --> 00:18:17,840 Speaker 10: than the rest of the world, so that is a. 400 00:18:17,880 --> 00:18:18,760 Speaker 6: Strength for us. 401 00:18:18,800 --> 00:18:21,439 Speaker 7: Of course, JP Morgan had this survey and they talk 402 00:18:21,480 --> 00:18:23,879 Speaker 7: about inflation teriffs of the biggest impact on markets in 403 00:18:23,920 --> 00:18:24,720 Speaker 7: twenty twenty five. 404 00:18:24,880 --> 00:18:26,720 Speaker 6: I know we're just joking here, but no seriousness. 405 00:18:26,760 --> 00:18:29,879 Speaker 7: Doesn't even matter what the non farm payroll number is tomorrow. 406 00:18:31,200 --> 00:18:34,440 Speaker 10: In terms of the exercise and predicting noise, probably. 407 00:18:34,119 --> 00:18:34,920 Speaker 6: Less so well. 408 00:18:35,040 --> 00:18:39,280 Speaker 10: Of course, in a sense we would expect, you know, 409 00:18:39,320 --> 00:18:41,960 Speaker 10: I if for example, the number comes in considerably lower 410 00:18:42,000 --> 00:18:43,800 Speaker 10: than what the market expects, I would think the market 411 00:18:43,840 --> 00:18:46,720 Speaker 10: would react. Of course, now the number comes in close 412 00:18:46,840 --> 00:18:49,119 Speaker 10: as usual, folks are probably going to look through it 413 00:18:49,160 --> 00:18:50,600 Speaker 10: more and refocus on tariffs. 414 00:18:50,720 --> 00:18:52,119 Speaker 6: Well, okay, so let's talk about tariffs. 415 00:18:52,119 --> 00:18:55,840 Speaker 7: Then you don't think Canada Mexico get implemented and implemented, 416 00:18:56,160 --> 00:18:58,199 Speaker 7: but we still have China. This is just the opening 417 00:18:58,240 --> 00:19:00,680 Speaker 7: salvo Trump set himself and he says he's going. 418 00:19:00,600 --> 00:19:03,120 Speaker 6: After the European Union next. How do you think about 419 00:19:03,200 --> 00:19:04,200 Speaker 6: terrorts the rest of the year. 420 00:19:04,640 --> 00:19:06,600 Speaker 10: We would think of it as if they were to 421 00:19:06,600 --> 00:19:10,120 Speaker 10: get implemented. There are really two ways to think about it, right, 422 00:19:10,119 --> 00:19:13,280 Speaker 10: two paths. One is just the thread of tariffs that 423 00:19:13,600 --> 00:19:17,639 Speaker 10: is causing uncertainty already for businesses, and we've seen this 424 00:19:17,720 --> 00:19:21,080 Speaker 10: in the ISM manufacturing survey for example, LSM manufacturing as 425 00:19:21,119 --> 00:19:23,679 Speaker 10: well and others regional surveys. And the other one is 426 00:19:23,680 --> 00:19:25,840 Speaker 10: the actual impact of tariffs if they were to get 427 00:19:25,880 --> 00:19:29,480 Speaker 10: implemented and they had staying power. And in the latter 428 00:19:29,560 --> 00:19:32,360 Speaker 10: case it's a bit easier to estimate, though there's still 429 00:19:32,400 --> 00:19:35,679 Speaker 10: considerable uncertainty. We would expect a bigger hit to grow send. 430 00:19:35,560 --> 00:19:39,440 Speaker 2: Inflation, actually something largely absent from this conversation. An absent 431 00:19:39,480 --> 00:19:41,280 Speaker 2: I would say, from the news conference with Sham and 432 00:19:41,320 --> 00:19:44,320 Speaker 2: Power in the past week. Why are conversation about the 433 00:19:44,600 --> 00:19:47,560 Speaker 2: files in Los Angeles and the disruption we all expect 434 00:19:47,560 --> 00:19:48,440 Speaker 2: in the economic data. 435 00:19:48,520 --> 00:19:49,560 Speaker 3: What happened to that story? 436 00:19:49,800 --> 00:19:52,679 Speaker 10: Well, that's a terrible it's a terrible tragedy, of course, 437 00:19:53,359 --> 00:19:56,359 Speaker 10: but unlike the staying power of tariffs, we would expect 438 00:19:56,400 --> 00:19:59,960 Speaker 10: there to be rebuilding exercise and reversion to trend from. 439 00:20:00,480 --> 00:20:02,639 Speaker 2: So you're not expecting any disruption in the economication in 440 00:20:02,680 --> 00:20:03,240 Speaker 2: the weeks to come. 441 00:20:03,680 --> 00:20:05,840 Speaker 10: We are expecting this to show up in the in 442 00:20:05,880 --> 00:20:09,960 Speaker 10: part in the NFP, for example, later this week, but 443 00:20:10,040 --> 00:20:11,960 Speaker 10: we're not expecting this to be an effect for. 444 00:20:12,600 --> 00:20:13,320 Speaker 6: The rest of the year. 445 00:20:13,440 --> 00:20:15,080 Speaker 3: Necessarily that would persist. 446 00:20:15,240 --> 00:20:17,200 Speaker 2: Got it, Sonya, It's going to see you as always, 447 00:20:17,240 --> 00:20:19,760 Speaker 2: Sonya Meskan, There of ubs on the data we get. 448 00:20:19,840 --> 00:20:33,200 Speaker 2: Tomorrow's read Halfmanley, co founder of manis Ai and author 449 00:20:33,240 --> 00:20:36,440 Speaker 2: of Superagency What Could Possibly Go Right? Without AI Future 450 00:20:36,680 --> 00:20:38,800 Speaker 2: joined us now read It's good to see you, I 451 00:20:38,800 --> 00:20:40,520 Speaker 2: said as you walked into the room. There's a book 452 00:20:40,560 --> 00:20:42,280 Speaker 2: I need to read What Could Go Right? Because I'm 453 00:20:42,320 --> 00:20:45,040 Speaker 2: very worried about what things could go wrong. Let's put 454 00:20:45,080 --> 00:20:48,040 Speaker 2: it that way. You in the book approach something really important. 455 00:20:48,119 --> 00:20:51,440 Speaker 2: But as we make these technological revolutions, these advancements over 456 00:20:51,600 --> 00:20:55,800 Speaker 2: human history, actually it benefits human agency. And I'm worried 457 00:20:55,840 --> 00:20:58,240 Speaker 2: that maybe with AI it goes in a different direction. 458 00:20:58,480 --> 00:21:00,760 Speaker 2: Help me out and tell me why it could go well. 459 00:21:00,800 --> 00:21:02,960 Speaker 11: The short answer is it gives you superpowers, right, and 460 00:21:02,960 --> 00:21:04,920 Speaker 11: it gives you superpowers across a large number of things. 461 00:21:04,960 --> 00:21:09,520 Speaker 11: Everyone should go try chat, GPT, inflections, pie and traffics Claude. 462 00:21:10,119 --> 00:21:10,800 Speaker 9: Give it a try. 463 00:21:10,880 --> 00:21:13,119 Speaker 11: You can find what should I make for dinner? How 464 00:21:13,160 --> 00:21:16,320 Speaker 11: do I get medical advice that's available to me? How 465 00:21:16,480 --> 00:21:19,359 Speaker 11: I might have a difficult conversation with a colleague? You know, 466 00:21:19,400 --> 00:21:22,199 Speaker 11: how might I actually do things in parenting that might 467 00:21:22,240 --> 00:21:25,200 Speaker 11: be different? You know, all of those things are are 468 00:21:25,200 --> 00:21:27,080 Speaker 11: our superpowers. 469 00:21:26,280 --> 00:21:28,960 Speaker 2: That we get each Run Lisa round to the bus, 470 00:21:29,000 --> 00:21:31,119 Speaker 2: I am. Do you want to share with the audience 471 00:21:31,160 --> 00:21:32,120 Speaker 2: what you do? 472 00:21:31,720 --> 00:21:34,000 Speaker 5: You can You can manipulate what your kids look at 473 00:21:34,000 --> 00:21:36,600 Speaker 5: if you send them links to things that then change 474 00:21:36,600 --> 00:21:39,720 Speaker 5: their algorithms that then give them more news feeds in 475 00:21:39,840 --> 00:21:42,439 Speaker 5: their in their feed. I mean, there are ways that 476 00:21:42,440 --> 00:21:44,199 Speaker 5: you can kind of play the system a little bit, 477 00:21:44,200 --> 00:21:45,200 Speaker 5: and I think that that's proper. 478 00:21:45,280 --> 00:21:47,359 Speaker 11: Yeah, exactly. And by the way it helps them learn, 479 00:21:47,520 --> 00:21:50,000 Speaker 11: it gets some news about the environment around them. I mean, 480 00:21:50,200 --> 00:21:51,440 Speaker 11: this is one of the things that is if you're 481 00:21:51,480 --> 00:21:55,400 Speaker 11: not actually in fact using these AI agents to learn 482 00:21:55,480 --> 00:21:57,399 Speaker 11: right now, you should. And like, for example, one of 483 00:21:57,400 --> 00:21:59,800 Speaker 11: the ways that I do when I approach a difficult subjects, 484 00:22:00,000 --> 00:22:03,080 Speaker 11: for example quantum computing, I stick a technical paper in 485 00:22:03,280 --> 00:22:05,480 Speaker 11: and I say, explain this to me like I'm twelve. 486 00:22:05,920 --> 00:22:07,680 Speaker 3: Superpowers, superpowers. 487 00:22:07,840 --> 00:22:09,879 Speaker 2: Yes, okay, So my next question is going to be 488 00:22:10,040 --> 00:22:13,160 Speaker 2: how should we participate and how we shake this intelligence? 489 00:22:13,200 --> 00:22:14,760 Speaker 2: And Leaser has given us one ie, Dick, could you 490 00:22:14,800 --> 00:22:15,439 Speaker 2: give us an time? 491 00:22:16,040 --> 00:22:19,359 Speaker 11: Well, I think part of the key thing is my 492 00:22:19,440 --> 00:22:22,720 Speaker 11: very first chapter is about chat GPT, where humanity enters 493 00:22:22,760 --> 00:22:24,959 Speaker 11: the chat. You've got hundreds of millions of people who 494 00:22:25,000 --> 00:22:28,600 Speaker 11: are interacting with it, and the company watches what works 495 00:22:28,600 --> 00:22:30,680 Speaker 11: and what doesn't work and then improves it. So by 496 00:22:30,840 --> 00:22:34,119 Speaker 11: simply going and experimenting and getting which kind of things 497 00:22:34,119 --> 00:22:38,080 Speaker 11: are the things that help you elevate your agency, then 498 00:22:38,400 --> 00:22:42,520 Speaker 11: actually in fact helps the company know, oh these things 499 00:22:42,560 --> 00:22:44,960 Speaker 11: really work, Oh these things need to be improved. 500 00:22:44,920 --> 00:22:47,879 Speaker 5: At the same time you talk about technical papers, and 501 00:22:47,920 --> 00:22:50,639 Speaker 5: one thing that AI does really well is work with 502 00:22:50,720 --> 00:22:54,280 Speaker 5: technical details, not so much, the social not so much. 503 00:22:54,320 --> 00:22:56,919 Speaker 5: When you have to have certain biases that are baked 504 00:22:57,040 --> 00:23:00,399 Speaker 5: into some of these algorithms, what are the limitations to 505 00:23:00,480 --> 00:23:02,920 Speaker 5: this in sort of broad raised application at a time 506 00:23:02,920 --> 00:23:06,399 Speaker 5: where people are saying this could do qualitative jobs and 507 00:23:06,440 --> 00:23:09,639 Speaker 5: there could potentially be a lot of biases baked in. 508 00:23:10,200 --> 00:23:15,320 Speaker 11: So every major group is working intensely on biases. And actually, 509 00:23:15,320 --> 00:23:18,000 Speaker 11: one of the things that we did with Inflection and 510 00:23:18,200 --> 00:23:21,679 Speaker 11: PIE personal intelligence PUN intended was to teach it to 511 00:23:21,720 --> 00:23:26,000 Speaker 11: be kind and empathetic, to have EQ as important as IQ. 512 00:23:26,600 --> 00:23:28,680 Speaker 11: And actually you see that now in the tropics claud 513 00:23:28,720 --> 00:23:30,480 Speaker 11: and other things, as it's kind of spreading and so 514 00:23:31,040 --> 00:23:34,000 Speaker 11: you can actually have these kinds of interactions be trained 515 00:23:34,040 --> 00:23:36,399 Speaker 11: in them, and this is kind of reinforcement learning by 516 00:23:36,440 --> 00:23:39,960 Speaker 11: human feedback to actually be much better than your average human. 517 00:23:40,119 --> 00:23:42,399 Speaker 5: The reason why I find this so fascinating is because 518 00:23:43,000 --> 00:23:45,320 Speaker 5: I think about my children and what careers they potentially 519 00:23:45,400 --> 00:23:47,840 Speaker 5: could have, and I'm like, no, not programmer, because that's 520 00:23:47,840 --> 00:23:49,560 Speaker 5: going to be dead. You know, all of these other ones. 521 00:23:49,600 --> 00:23:52,680 Speaker 5: Probably if you can be empathetic, human those human skills 522 00:23:52,720 --> 00:23:54,480 Speaker 5: are probably going to be more needed. That's what people 523 00:23:54,480 --> 00:23:55,919 Speaker 5: are saying. Are you saying those two are going to 524 00:23:55,920 --> 00:23:57,040 Speaker 5: go out the Waydow? I mean, what is this due 525 00:23:57,040 --> 00:23:57,640 Speaker 5: to employment? 526 00:23:57,920 --> 00:24:02,040 Speaker 11: So first, I actually think programming skill jobs aren't going 527 00:24:02,080 --> 00:24:04,240 Speaker 11: out the door. I think there's human application, but I 528 00:24:04,240 --> 00:24:06,359 Speaker 11: think it's also human application of like. 529 00:24:06,359 --> 00:24:07,400 Speaker 3: EQ as well. 530 00:24:07,480 --> 00:24:10,840 Speaker 11: So the fact that you have a for example, say 531 00:24:10,840 --> 00:24:13,320 Speaker 11: a medical assistant that can help you with something, or 532 00:24:13,359 --> 00:24:15,080 Speaker 11: a coach that might be able to talk with something, 533 00:24:15,240 --> 00:24:17,720 Speaker 11: doesn't mean you don't want a human coach. It's more 534 00:24:17,720 --> 00:24:21,320 Speaker 11: coaches the better right and being able to make it work. 535 00:24:21,560 --> 00:24:23,840 Speaker 7: You're talking about AI for the good, but what about 536 00:24:23,880 --> 00:24:25,440 Speaker 7: AI in the hands of adversaries? 537 00:24:26,760 --> 00:24:31,560 Speaker 11: Well, so superpowers, superpowers for terrorists, superpowers for criminals, superpowers 538 00:24:31,560 --> 00:24:33,399 Speaker 11: for rogue states. That's one of the things that we 539 00:24:33,440 --> 00:24:36,120 Speaker 11: need to be careful about how we navigate. Once again, 540 00:24:36,480 --> 00:24:39,119 Speaker 11: all of the major groups actually have security groups that 541 00:24:39,160 --> 00:24:40,879 Speaker 11: are working on this to try to make sure and 542 00:24:41,200 --> 00:24:43,760 Speaker 11: that's I think part of the having call so called 543 00:24:43,840 --> 00:24:46,320 Speaker 11: red teaming plans and kind of trying to make sure 544 00:24:46,320 --> 00:24:48,480 Speaker 11: that that's as minimized as much as possible. 545 00:24:48,520 --> 00:24:50,399 Speaker 7: How do think the US government should be approaching this. 546 00:24:50,720 --> 00:24:53,560 Speaker 7: The market's freaked out because of deep seek and how 547 00:24:53,640 --> 00:24:57,080 Speaker 7: much potentially the CCP is putting money into their version 548 00:24:57,160 --> 00:24:59,680 Speaker 7: of AI. But when you're in China and you want 549 00:24:59,680 --> 00:25:01,920 Speaker 7: to look at things on deep seek that are particilarly 550 00:25:01,960 --> 00:25:04,639 Speaker 7: critical to the CCP, it will not show you. So 551 00:25:04,680 --> 00:25:06,680 Speaker 7: how does the US government go about this? 552 00:25:07,240 --> 00:25:09,800 Speaker 11: Well, so I think it's important that the US government 553 00:25:10,840 --> 00:25:13,280 Speaker 11: kind of continues some of the threads that the previous 554 00:25:13,280 --> 00:25:16,080 Speaker 11: executive order did, which is, you know, you have red 555 00:25:16,119 --> 00:25:19,920 Speaker 11: teaming things that you actually do world leadership about what 556 00:25:20,000 --> 00:25:22,399 Speaker 11: kind of things are happening. I mean there's connections in 557 00:25:22,440 --> 00:25:25,520 Speaker 11: the UK AI Safety and Suit and the US one 558 00:25:25,560 --> 00:25:27,640 Speaker 11: and the French one, and I think these are important 559 00:25:27,680 --> 00:25:30,280 Speaker 11: to do. But I think that this is one of 560 00:25:30,280 --> 00:25:32,360 Speaker 11: the things where there will be multiple AIS and part 561 00:25:32,359 --> 00:25:34,480 Speaker 11: of the reason why I want AI not to just 562 00:25:34,520 --> 00:25:39,040 Speaker 11: be artificial intelligence or amplification intelligence, but also American intelligence 563 00:25:39,160 --> 00:25:39,679 Speaker 11: as part. 564 00:25:39,520 --> 00:25:40,120 Speaker 1: Of what we're doing. 565 00:25:40,320 --> 00:25:43,400 Speaker 7: What do you make then, of the tech industry being 566 00:25:43,520 --> 00:25:46,200 Speaker 7: very close to this administration. I'm not just talking about 567 00:25:46,200 --> 00:25:47,720 Speaker 7: your former friend Elon Musk. I was at the White 568 00:25:47,720 --> 00:25:49,800 Speaker 7: House yesterday and Bill Gates was walking. 569 00:25:49,520 --> 00:25:51,120 Speaker 6: Into the West Wing for meetings. 570 00:25:51,160 --> 00:25:56,160 Speaker 7: Do you think they can help the administration basically get 571 00:25:56,200 --> 00:25:58,639 Speaker 7: to there faster when it comes to safe AI. 572 00:25:59,440 --> 00:26:02,280 Speaker 11: In the short absolutely, I think it's if you said, 573 00:26:02,600 --> 00:26:05,280 Speaker 11: of any kind of Western democracy government in the world, 574 00:26:05,400 --> 00:26:08,600 Speaker 11: most especially, of course, you know, American presidency, American government, 575 00:26:08,960 --> 00:26:11,280 Speaker 11: should they be connected with the tech industry talking about 576 00:26:11,280 --> 00:26:13,080 Speaker 11: how tech creating the future? What are the things that 577 00:26:13,119 --> 00:26:16,040 Speaker 11: we can do to make better American industry, better, American society, 578 00:26:16,080 --> 00:26:19,720 Speaker 11: better lies for American citizens? The short answer is absolutely what. 579 00:26:19,760 --> 00:26:21,960 Speaker 2: You make in the backlashed against Dale Musk more recently 580 00:26:22,000 --> 00:26:24,679 Speaker 2: about hazing film from the government, Well. 581 00:26:25,040 --> 00:26:28,680 Speaker 11: In government, the move fast and break things maybe should be, 582 00:26:28,960 --> 00:26:31,359 Speaker 11: you know a little bit more compassionate and judicious. 583 00:26:31,760 --> 00:26:33,040 Speaker 3: Is that what you think the price should be. 584 00:26:33,760 --> 00:26:36,800 Speaker 11: I think that the question should be is trying to say, hey, look, 585 00:26:37,160 --> 00:26:39,879 Speaker 11: there's reason government doesn't work like companies, even though I 586 00:26:39,920 --> 00:26:42,399 Speaker 11: think there's efficiency that's really good and we need to 587 00:26:42,400 --> 00:26:43,560 Speaker 11: respect those reasons too. 588 00:26:43,960 --> 00:26:47,720 Speaker 7: Do you feel that you're going to basically get some 589 00:26:47,760 --> 00:26:51,240 Speaker 7: sort of repudiation because of where your politics were ahead 590 00:26:51,240 --> 00:26:54,840 Speaker 7: of this election, and given how Trump has basically cosied up. 591 00:26:54,760 --> 00:26:56,359 Speaker 6: To a lot of individuals in the tech world. 592 00:26:56,359 --> 00:26:58,280 Speaker 7: I have not seen you yet at mar Lago in 593 00:26:58,280 --> 00:27:00,000 Speaker 7: inauguration or walking into the West. 594 00:27:01,880 --> 00:27:04,919 Speaker 11: Look, I think the thing that we most want as 595 00:27:04,960 --> 00:27:08,200 Speaker 11: American citizens is for our government to succeed, to succeed 596 00:27:08,240 --> 00:27:11,840 Speaker 11: for our industry, succeed for our citizens. And so that's 597 00:27:11,880 --> 00:27:14,399 Speaker 11: what I most want, and I think we all do. 598 00:27:14,920 --> 00:27:17,639 Speaker 5: You have been an incredible investor. You are an early 599 00:27:17,680 --> 00:27:21,720 Speaker 5: investor in open Ai, you invested in LinkedIn, just so 600 00:27:21,840 --> 00:27:24,840 Speaker 5: many of the behemoths currently. Do you see a lot 601 00:27:24,880 --> 00:27:27,639 Speaker 5: of upstarts right now that look like they could become 602 00:27:28,160 --> 00:27:32,040 Speaker 5: the next big thing in some of this machine learning technology. 603 00:27:33,160 --> 00:27:36,760 Speaker 11: So the short answer is yes, although picking them is 604 00:27:36,800 --> 00:27:38,880 Speaker 11: one of the difficult things about being a venture capitalist, 605 00:27:38,880 --> 00:27:42,600 Speaker 11: and there's a lot of different options. Back a few 606 00:27:42,680 --> 00:27:45,520 Speaker 11: years ago, I was arguing that we were five large tech. 607 00:27:45,400 --> 00:27:46,400 Speaker 3: Companies heading to ten. 608 00:27:47,040 --> 00:27:49,720 Speaker 11: But I wouldn't necessarily have predicted that Nvidio would have 609 00:27:49,720 --> 00:27:52,280 Speaker 11: so quickly become one of those, you know, into the 610 00:27:52,320 --> 00:27:54,280 Speaker 11: seven and then going to ten. And so I think 611 00:27:54,359 --> 00:27:56,359 Speaker 11: that's we are in that progress, and I think there 612 00:27:56,359 --> 00:27:59,639 Speaker 11: are a number of startups that are creating amazing technology. 613 00:27:59,640 --> 00:28:01,840 Speaker 11: And then the question is product market fitt scale. 614 00:28:01,960 --> 00:28:04,560 Speaker 5: What do you think the next technological evolution is going 615 00:28:04,640 --> 00:28:07,520 Speaker 5: to be? They could potentially be a sort of chat 616 00:28:07,560 --> 00:28:10,600 Speaker 5: GPT moment or a deep seek moment, or one of 617 00:28:10,640 --> 00:28:13,320 Speaker 5: these sort of breakthrough A has. 618 00:28:13,960 --> 00:28:15,840 Speaker 11: One of the things I think we're going to see 619 00:28:15,880 --> 00:28:20,240 Speaker 11: this year. All of the major AI companies are working 620 00:28:20,280 --> 00:28:23,680 Speaker 11: on amplifying coding and one of the things like for example, 621 00:28:23,880 --> 00:28:25,720 Speaker 11: you know for your kids other things, thank you will 622 00:28:25,760 --> 00:28:29,280 Speaker 11: be yes, you have to bring up the UH will 623 00:28:29,320 --> 00:28:32,800 Speaker 11: be Actually all of us will have a software engineering 624 00:28:32,800 --> 00:28:35,040 Speaker 11: assistant and that will make all of our work a 625 00:28:35,040 --> 00:28:37,240 Speaker 11: lot better. And that's one of the things I think 626 00:28:37,280 --> 00:28:39,360 Speaker 11: hasn't yet entered the consciousness. So I think that's one 627 00:28:39,360 --> 00:28:41,880 Speaker 11: of the things that's coming. And then, of course, you know, 628 00:28:41,920 --> 00:28:44,160 Speaker 11: with what I'm doing with Manus, I'm hopeful that we 629 00:28:44,200 --> 00:28:48,880 Speaker 11: will have some really great early results in caring cancer and. 630 00:28:48,840 --> 00:28:51,520 Speaker 2: How we can accelerate the scientific process. I say, we're 631 00:28:51,560 --> 00:28:54,040 Speaker 2: rulled up with you on that page. You're very successful. 632 00:28:54,040 --> 00:28:56,080 Speaker 2: Thank you sir. Ready to appreciate your time. Thank you, 633 00:28:56,200 --> 00:28:59,120 Speaker 2: good to see it. Rid Hoffman, Manus AI, and a 634 00:28:59,120 --> 00:29:03,080 Speaker 2: whole lot more. This is the Bloomberg Surveillance Podcast, bringing 635 00:29:03,160 --> 00:29:06,760 Speaker 2: you the best in markets, economics, angiot politics. You can 636 00:29:06,800 --> 00:29:09,600 Speaker 2: watch the show live on Bloomberg TV weekday mornings from 637 00:29:09,600 --> 00:29:12,880 Speaker 2: six am to nine am Eastern. Subscribe to the podcast 638 00:29:12,920 --> 00:29:16,479 Speaker 2: on Apple, Spotify, or anywhere else you listen, and as always, 639 00:29:16,480 --> 00:29:19,040 Speaker 2: on the Bloomberg Terminal and the Bloomberg Business app