1 00:00:02,520 --> 00:00:07,040 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. 2 00:00:12,480 --> 00:00:16,560 Speaker 2: This is the Bloomberg Surveillance Podcast. Catch us live weekdays 3 00:00:16,560 --> 00:00:19,880 Speaker 2: at seven am Eastern on Apple CarPlay or Android Auto 4 00:00:19,920 --> 00:00:23,159 Speaker 2: with the Bloomberg Business app. Listen on demand wherever you 5 00:00:23,239 --> 00:00:26,440 Speaker 2: get your podcasts, or watch us live on YouTube. 6 00:00:26,920 --> 00:00:29,120 Speaker 3: Richard Claret is here, the vice chairman of the FED, 7 00:00:29,160 --> 00:00:36,400 Speaker 3: a prodigious economists associated with dynamics stochastic general equilibrium theory. 8 00:00:36,520 --> 00:00:39,559 Speaker 3: We're not going there. People drive off the road, but 9 00:00:39,640 --> 00:00:42,239 Speaker 3: we are thrilled at the former vice chairman is with 10 00:00:42,360 --> 00:00:46,880 Speaker 3: us this morning. James Carter, James o'carter has to fill 11 00:00:46,960 --> 00:00:51,280 Speaker 3: Michael Blumenthal's slot. He migrates the FED chare over the 12 00:00:51,320 --> 00:00:56,480 Speaker 3: Treasury Secretary and goes, now what and he picked Paul Voker. 13 00:00:57,080 --> 00:00:59,720 Speaker 3: Where were you when he did that? And it's seventy nine. 14 00:01:00,080 --> 00:01:01,880 Speaker 3: You would at Illinois at the time. 15 00:01:02,480 --> 00:01:03,000 Speaker 4: I was not. 16 00:01:03,200 --> 00:01:06,480 Speaker 5: I had just graduated Illinois and I think I was 17 00:01:06,520 --> 00:01:09,360 Speaker 5: in my car driving out to Boston to start graduate school. 18 00:01:09,560 --> 00:01:11,399 Speaker 3: Did you go Paul who? Oh? 19 00:01:11,440 --> 00:01:15,360 Speaker 5: No, that he was already known at least in macro 20 00:01:15,520 --> 00:01:16,200 Speaker 5: circles then. 21 00:01:16,280 --> 00:01:17,840 Speaker 3: But yeah, it's. 22 00:01:17,560 --> 00:01:18,800 Speaker 6: It's just a big deal. 23 00:01:18,880 --> 00:01:21,360 Speaker 3: It was a big It was a huge deal. Yeah, 24 00:01:21,760 --> 00:01:24,880 Speaker 3: the store the inflation worries we have now, and part 25 00:01:24,920 --> 00:01:28,240 Speaker 3: of that is, OMG, back to the sixties, that we're 26 00:01:28,240 --> 00:01:31,600 Speaker 3: going to get inflation, not like what vulgar faced, but 27 00:01:31,840 --> 00:01:34,039 Speaker 3: a higher inflation. Do you buy it? 28 00:01:35,319 --> 00:01:35,840 Speaker 6: Oh no, No. 29 00:01:36,280 --> 00:01:38,080 Speaker 5: Ultimately we're going to get the rate of inflation the 30 00:01:38,120 --> 00:01:41,319 Speaker 5: FED once and and I think the FED once inflation. 31 00:01:41,040 --> 00:01:42,400 Speaker 6: Around two percent. 32 00:01:42,440 --> 00:01:44,880 Speaker 5: There's always shocks and noise, but but that's where we're 33 00:01:44,880 --> 00:01:45,520 Speaker 5: going to end up. 34 00:01:46,160 --> 00:01:47,400 Speaker 4: How are we going to get there? I mean, are 35 00:01:47,400 --> 00:01:50,000 Speaker 4: they going to have to? I mean it just feels 36 00:01:50,000 --> 00:01:53,240 Speaker 4: like that that inflation is kind of stickier around this level. 37 00:01:53,280 --> 00:01:57,520 Speaker 4: Here's how do you think this is going to play out? 38 00:01:58,480 --> 00:01:59,559 Speaker 6: Well? I agree. 39 00:01:59,640 --> 00:02:02,120 Speaker 5: In fact, if anything, you know, the bumpy road analogy 40 00:02:02,160 --> 00:02:06,440 Speaker 5: has proven to be a good one. Progress continued in 41 00:02:06,520 --> 00:02:08,880 Speaker 5: twenty four but slowed, you know. 42 00:02:09,000 --> 00:02:10,480 Speaker 6: I think we maybe discussed. 43 00:02:10,080 --> 00:02:13,760 Speaker 5: When I was on your show before hearkening back to 44 00:02:13,800 --> 00:02:17,120 Speaker 5: the eighties, and so what we could see is what 45 00:02:17,160 --> 00:02:20,440 Speaker 5: we used to call opportunistic disinflation. That is, you do 46 00:02:20,480 --> 00:02:22,800 Speaker 5: the heavy lift and get inflation close to where you 47 00:02:22,840 --> 00:02:24,800 Speaker 5: want it, so now say two and a half, but 48 00:02:24,840 --> 00:02:27,680 Speaker 5: you basically wait till the next recession to cover that 49 00:02:27,760 --> 00:02:30,880 Speaker 5: last mile, and so that's what we may see inflation 50 00:02:31,120 --> 00:02:34,640 Speaker 5: in the load of mid twos until the next downturn. 51 00:02:35,720 --> 00:02:37,840 Speaker 4: Are you forecasting a downturn anytime? 52 00:02:38,280 --> 00:02:41,560 Speaker 5: Oh no, no, no, no, But remember we haven't repealed 53 00:02:41,560 --> 00:02:44,960 Speaker 5: the business cycle so on. I think the unconditional chance 54 00:02:45,000 --> 00:02:46,600 Speaker 5: of a recession is about one and six. 55 00:02:46,680 --> 00:02:48,440 Speaker 6: So at some point we're going to have a recession. 56 00:02:48,560 --> 00:02:50,840 Speaker 3: April of four years back when the Red Sox had 57 00:02:50,840 --> 00:02:55,400 Speaker 3: a chance, Richard Claire to fed let me quote exactly, folks, 58 00:02:55,639 --> 00:02:57,480 Speaker 3: I mean, I mean, this is just what it's about. 59 00:02:58,040 --> 00:03:01,160 Speaker 3: Get the Sparta gets angry at me when I quote Latin. Okay, 60 00:03:01,240 --> 00:03:04,880 Speaker 3: he's like, you know, time, give it up, Clarita. Inflation 61 00:03:05,000 --> 00:03:07,960 Speaker 3: to average is two percent over time represents an ex 62 00:03:08,040 --> 00:03:13,440 Speaker 3: anti aspiration of the FOMC, but not a time inconsistent 63 00:03:14,080 --> 00:03:17,359 Speaker 3: ex post commitment. Yeah, you lost some of us there, 64 00:03:17,400 --> 00:03:22,040 Speaker 3: all difference equation, guy, What is a time inconsistent ex 65 00:03:22,160 --> 00:03:23,080 Speaker 3: post commitment? 66 00:03:23,560 --> 00:03:27,000 Speaker 5: Well yeah, I think that was probably why share Clarido 67 00:03:27,120 --> 00:03:32,560 Speaker 5: channeling Professor Clarita. The basic point was that price stability 68 00:03:32,600 --> 00:03:36,360 Speaker 5: means that expectations of inflation are anchored at a low number, 69 00:03:36,400 --> 00:03:40,160 Speaker 5: so say two percent, they're always going to be shocks, oil, shocks, whatever. 70 00:03:40,360 --> 00:03:42,160 Speaker 6: But you want people to expect. 71 00:03:41,720 --> 00:03:44,360 Speaker 5: Over five years that inflation is going to be two percent, 72 00:03:44,440 --> 00:03:48,880 Speaker 5: and so really inflation targeting is really about targeting expected inflation. 73 00:03:48,920 --> 00:03:50,600 Speaker 6: And so the basic idea there is, if. 74 00:03:50,520 --> 00:03:52,600 Speaker 5: You want people to expect inflation is going to be 75 00:03:52,720 --> 00:03:54,840 Speaker 5: too you want to try to keep it at two 76 00:03:55,000 --> 00:03:55,600 Speaker 5: on average. 77 00:03:55,640 --> 00:03:57,120 Speaker 3: Okay, I'm going to go to the New School of 78 00:03:57,200 --> 00:04:01,200 Speaker 3: Social research, Kyle Brunner in company. There's something new. It's 79 00:04:01,240 --> 00:04:04,360 Speaker 3: called the debt in the deficit? Are we losing our 80 00:04:04,440 --> 00:04:07,880 Speaker 3: anchored ability with the debt in the deficit where it is? 81 00:04:08,120 --> 00:04:10,160 Speaker 5: Well, it makes the Fed's job a hell of a 82 00:04:10,200 --> 00:04:12,800 Speaker 5: lot harder, There's no doubt about it. And I'm glad 83 00:04:12,840 --> 00:04:15,920 Speaker 5: Tom that you mentioned both debt and deficit because they're 84 00:04:15,920 --> 00:04:18,520 Speaker 5: both relevant. The deficit is how much we're borrowing every 85 00:04:18,560 --> 00:04:21,120 Speaker 5: year going forward. The debt is how much we borrowed 86 00:04:21,160 --> 00:04:23,880 Speaker 5: in the last two hundred and fifty years, and that 87 00:04:23,960 --> 00:04:26,440 Speaker 5: number is now north of one hundred percent of GDP. 88 00:04:26,640 --> 00:04:28,440 Speaker 5: And the last time we saw a number like that 89 00:04:28,880 --> 00:04:30,920 Speaker 5: was in nineteen forty five, at the end of World 90 00:04:31,000 --> 00:04:33,640 Speaker 5: War Too. Indeed, Ryan Hart and Rogueoff wrote a book 91 00:04:33,680 --> 00:04:35,920 Speaker 5: ten years ago that said, you know, usually when debt 92 00:04:35,960 --> 00:04:39,000 Speaker 5: gets one hundred percent of GDP, bad stuff happens, and 93 00:04:39,040 --> 00:04:41,559 Speaker 5: so it will make the Fed's job harder for sure. 94 00:04:42,080 --> 00:04:44,920 Speaker 7: When I've been on Wall Street since nineteen eighty six, 95 00:04:44,960 --> 00:04:47,040 Speaker 7: we've been talking about deficits. 96 00:04:46,520 --> 00:04:49,599 Speaker 4: And the dead since nineteen eighty at least. Then is 97 00:04:49,640 --> 00:04:53,120 Speaker 4: it ever going to come to roosts? What will it be? 98 00:04:53,160 --> 00:04:56,200 Speaker 7: We have an auction for United States treasures and nobody 99 00:04:56,200 --> 00:04:56,680 Speaker 7: shows up. 100 00:04:56,720 --> 00:05:00,000 Speaker 5: Well, it's a great point because I started my career 101 00:05:00,080 --> 00:05:03,680 Speaker 5: around the same time, also in Boston. Yeah, so the 102 00:05:03,720 --> 00:05:07,479 Speaker 5: boy has now cried wolf for forty years, but they're 103 00:05:07,720 --> 00:05:10,919 Speaker 5: back in those days people were angsting about debt and deficits, 104 00:05:10,960 --> 00:05:14,040 Speaker 5: but debt was thirty percent of GDP, not one hundred 105 00:05:14,640 --> 00:05:17,279 Speaker 5: and so as the numbers get bigger, but the US 106 00:05:17,320 --> 00:05:19,680 Speaker 5: can kick this can down the road because we still 107 00:05:19,720 --> 00:05:21,320 Speaker 5: are the global reserve currency. 108 00:05:21,360 --> 00:05:22,240 Speaker 6: So let me take a while. 109 00:05:22,320 --> 00:05:24,880 Speaker 3: We welcome all of you across the nation, and I 110 00:05:25,080 --> 00:05:26,960 Speaker 3: can't say enough about the schedule to they thank you, 111 00:05:27,040 --> 00:05:30,279 Speaker 3: liz In Saunders and Craig Moffatt, the former vice chairman 112 00:05:30,560 --> 00:05:33,560 Speaker 3: the other Federal Reserve System, Richard claireta Columbia and PIMCO 113 00:05:34,320 --> 00:05:37,719 Speaker 3: with us this morning. Richard Claida, let's go back to 114 00:05:38,200 --> 00:05:43,279 Speaker 3: Girtler in Clarida and the theory, the mathematics, the complexities 115 00:05:43,320 --> 00:05:47,080 Speaker 3: of DSGE. You've had the courage to say, I'm thinking 116 00:05:47,240 --> 00:05:50,520 Speaker 3: simpler now, Oh yeah. Do we have an operative theory 117 00:05:50,560 --> 00:05:54,120 Speaker 3: at the Equals Building? If everyone's thinking simpler in the 118 00:05:54,160 --> 00:05:56,920 Speaker 3: new humility, well, I don't think. 119 00:05:56,800 --> 00:05:59,240 Speaker 5: The Eccles building are now the Martin Building can afford 120 00:05:59,240 --> 00:06:02,160 Speaker 5: to be that theoretical. Indeed, my four years at the 121 00:06:02,360 --> 00:06:05,679 Speaker 5: FAD really impressed upon me that there's there's a limit 122 00:06:05,760 --> 00:06:07,120 Speaker 5: to how far theory can take you. 123 00:06:07,160 --> 00:06:09,080 Speaker 6: It's a good place to start, you know. 124 00:06:09,160 --> 00:06:11,520 Speaker 5: I think all central banks, including the FAD, are trying 125 00:06:11,520 --> 00:06:15,920 Speaker 5: to learn lessons about the inflation and the disinflation, and 126 00:06:16,360 --> 00:06:20,640 Speaker 5: I think an appropriate level of humility is probably warranted 127 00:06:20,720 --> 00:06:21,160 Speaker 5: right now. 128 00:06:22,080 --> 00:06:22,719 Speaker 4: The labor market. 129 00:06:22,800 --> 00:06:25,520 Speaker 7: We're going to get some more labor market data today 130 00:06:25,560 --> 00:06:28,000 Speaker 7: with initial jobs claims and then on Friday with the 131 00:06:28,880 --> 00:06:32,960 Speaker 7: non farm payrolls. I don't know, four point two percent. 132 00:06:33,000 --> 00:06:34,640 Speaker 7: That seems like a good labor market. 133 00:06:35,360 --> 00:06:36,560 Speaker 6: It's a great labor market. 134 00:06:36,880 --> 00:06:40,080 Speaker 5: You know. The the unemployment rate right before the pandemic 135 00:06:40,800 --> 00:06:45,320 Speaker 5: was running right around three point nine four percent. The 136 00:06:45,400 --> 00:06:49,679 Speaker 5: unemployment right now is historically low. Wage gains exceed inflation. 137 00:06:49,800 --> 00:06:52,640 Speaker 5: It is a good labor market. The labor market clearly 138 00:06:52,680 --> 00:06:54,120 Speaker 5: was overheating a couple of years ago. 139 00:06:54,200 --> 00:06:55,400 Speaker 6: But it is a good labor You. 140 00:06:55,320 --> 00:06:57,760 Speaker 3: Just said it's a great it's a good labor market. 141 00:06:57,800 --> 00:07:00,240 Speaker 3: I've heard you say it's a solid economy. We had 142 00:07:00,320 --> 00:07:03,359 Speaker 3: eighty two point eight percent of our listeners and viewers 143 00:07:03,360 --> 00:07:06,720 Speaker 3: saying the vice chairman's nuts, okay, and that it's a 144 00:07:06,800 --> 00:07:12,200 Speaker 3: disaggregated economy. Well, and there's people out there, charge card debt, bankruptcies, 145 00:07:12,360 --> 00:07:16,239 Speaker 3: people can't get jobs, et cetera. Rent's coming down out west. 146 00:07:16,520 --> 00:07:20,120 Speaker 3: How does a FED prosecute a barbel America? 147 00:07:20,400 --> 00:07:23,400 Speaker 5: Well, okay, so I'm glad you gave me an entree here. 148 00:07:23,440 --> 00:07:25,400 Speaker 5: So when I said it's a good labor market, you 149 00:07:25,400 --> 00:07:28,080 Speaker 5: would rather be operating with a four percent unemployment than 150 00:07:28,080 --> 00:07:32,000 Speaker 5: a fourteen percent unemployment. But absolutely, Tom, Indeed, if anything, 151 00:07:32,040 --> 00:07:34,360 Speaker 5: I think the last five years have impressed upon me 152 00:07:35,040 --> 00:07:38,040 Speaker 5: how important it is both for macro economists and thinking 153 00:07:38,080 --> 00:07:42,000 Speaker 5: about the political economy of macro to understand that there's 154 00:07:42,080 --> 00:07:44,600 Speaker 5: you know, there are halves and has nuts. And you know, 155 00:07:44,600 --> 00:07:46,680 Speaker 5: if you own your home and if you own stocks, 156 00:07:46,680 --> 00:07:50,040 Speaker 5: you've had a great five years. But forty percent of 157 00:07:50,040 --> 00:07:52,440 Speaker 5: Americans don't own. They rent, and they don't own stocks, 158 00:07:52,480 --> 00:07:54,600 Speaker 5: and for them, all of this talk about a great 159 00:07:54,600 --> 00:07:57,800 Speaker 5: economy just seems like gibberish. So let me acknowledge the 160 00:07:57,880 --> 00:08:00,960 Speaker 5: point thirty seconds here, just finish the thought. 161 00:08:01,320 --> 00:08:06,200 Speaker 3: Can a FED prosecute one monetary policy for two John 162 00:08:06,320 --> 00:08:07,320 Speaker 3: Edwards Americas? 163 00:08:08,840 --> 00:08:11,440 Speaker 5: Well, the Fed only has one, really one tool, which 164 00:08:11,520 --> 00:08:14,320 Speaker 5: is interest rates or job vooning about interest rates. 165 00:08:14,360 --> 00:08:16,480 Speaker 6: And so what the Fed at best can do is 166 00:08:16,520 --> 00:08:16,880 Speaker 6: it can. 167 00:08:16,880 --> 00:08:19,200 Speaker 5: Keep the average rate of unemployment low, and it can 168 00:08:19,240 --> 00:08:22,680 Speaker 5: keep the average rate of inflation low. But the factors 169 00:08:22,680 --> 00:08:25,160 Speaker 5: that we just discussed and even more factors, are really 170 00:08:25,200 --> 00:08:27,720 Speaker 5: beyond what monetary policy can address. 171 00:08:28,040 --> 00:08:31,239 Speaker 3: Paul wants to get to the adult conversation on tariff, 172 00:08:31,280 --> 00:08:34,079 Speaker 3: so I'll be the rude one. Can you serve a 173 00:08:34,160 --> 00:08:36,719 Speaker 3: treasury with mister pissent? Have you made the trip to 174 00:08:36,800 --> 00:08:40,120 Speaker 3: mar A Lago? Are you under any consideration by the 175 00:08:40,160 --> 00:08:43,080 Speaker 3: administration for your value services? 176 00:08:43,080 --> 00:08:50,400 Speaker 5: I love doing what I'm doing, so the answer is no. 177 00:08:48,679 --> 00:08:49,720 Speaker 3: That's your que Paul. 178 00:08:49,760 --> 00:08:52,600 Speaker 6: I was just putting the Clarity Time Out. 179 00:08:52,559 --> 00:08:55,760 Speaker 7: Chair and Lisa Matteo has been reporting on more tariff 180 00:08:55,840 --> 00:08:58,200 Speaker 7: news here coming from this president seems to be an 181 00:08:58,200 --> 00:09:01,679 Speaker 7: economic policy tool that this incoming president really is going 182 00:09:01,720 --> 00:09:04,120 Speaker 7: to rely upon. Can you give us your, I don't 183 00:09:04,120 --> 00:09:07,280 Speaker 7: know your two cents on tariffs and kind of how 184 00:09:07,280 --> 00:09:08,240 Speaker 7: would you think about them? 185 00:09:08,720 --> 00:09:12,600 Speaker 5: Okay, tariffs are complicated because they have multiple effects. One 186 00:09:12,720 --> 00:09:14,960 Speaker 5: is one thing we know for sure they do raise revenue. 187 00:09:16,000 --> 00:09:16,840 Speaker 6: The other thing we. 188 00:09:16,800 --> 00:09:19,840 Speaker 5: Know is they'll put upper pressure on the price of imports. 189 00:09:19,880 --> 00:09:24,080 Speaker 5: How much is hard to estimate, depends on if companies 190 00:09:24,120 --> 00:09:29,320 Speaker 5: absorbed in the margins. They can also invite retaliation, which 191 00:09:29,360 --> 00:09:31,600 Speaker 5: also then influences our ability to. 192 00:09:33,160 --> 00:09:36,680 Speaker 6: Export. And so it's really been a number of. 193 00:09:36,720 --> 00:09:39,880 Speaker 5: Decades since we've had broad based tariffs. I think you'd 194 00:09:39,920 --> 00:09:42,319 Speaker 5: have to go back really to the early nineteen fifties 195 00:09:42,360 --> 00:09:44,920 Speaker 5: to look at levels of tariffs like some are talking 196 00:09:44,920 --> 00:09:47,840 Speaker 5: about now. So pretty complicated, but we know for sure 197 00:09:47,840 --> 00:09:49,680 Speaker 5: they raise revenue and they put upper pressure. 198 00:09:49,720 --> 00:09:51,600 Speaker 4: Do they bene for it? Do they raise revenue for 199 00:09:51,600 --> 00:09:52,280 Speaker 4: the US government? 200 00:09:52,920 --> 00:09:56,160 Speaker 5: Well, mechanically, because if you import something and you have 201 00:09:56,200 --> 00:09:58,560 Speaker 5: to pay a tariff on it, that revenue which is 202 00:09:58,600 --> 00:10:00,960 Speaker 5: now zero roughly zero will go up. 203 00:10:01,080 --> 00:10:03,679 Speaker 3: Okay, I was in the Claire didn't know this, but 204 00:10:03,720 --> 00:10:07,080 Speaker 3: I was in the back of the classroom at Columbia. Okay, 205 00:10:07,440 --> 00:10:10,920 Speaker 3: the curve went down when I showed up. This is 206 00:10:11,000 --> 00:10:14,400 Speaker 3: way more complex than the media discusses. And the answer 207 00:10:14,480 --> 00:10:17,200 Speaker 3: is there's a thing called a dead weight loss in 208 00:10:17,280 --> 00:10:22,280 Speaker 3: our in our tariffs price theory, professor, describe what a 209 00:10:22,400 --> 00:10:25,240 Speaker 3: dead weight loss is for our listeners and viewers. 210 00:10:25,880 --> 00:10:30,840 Speaker 5: Well, boy, that's that's uh, that is econ I'm ask question. 211 00:10:31,000 --> 00:10:33,400 Speaker 3: Paul Kruman caught up and said, asked him about dead weight. 212 00:10:33,920 --> 00:10:38,959 Speaker 5: Essentially, the revenue that the government raises is more than 213 00:10:39,000 --> 00:10:42,760 Speaker 5: offset by the losses to consumers and producers relative to 214 00:10:42,800 --> 00:10:47,320 Speaker 5: their ability to either consume goods or produce goods. And 215 00:10:47,400 --> 00:10:49,760 Speaker 5: so that's that's the dead weight loss. 216 00:10:49,320 --> 00:10:52,000 Speaker 3: My definition, it's a lose game. 217 00:10:52,920 --> 00:10:56,360 Speaker 5: Well, but the important proviso that almost any tax that 218 00:10:56,440 --> 00:11:00,280 Speaker 5: raises revenue generates some sort of a loss, whether or 219 00:11:00,280 --> 00:11:02,319 Speaker 5: not it's the consumption tax or investment tax. 220 00:11:02,520 --> 00:11:05,200 Speaker 3: But the heart of the matter here to go to Krugman, 221 00:11:05,280 --> 00:11:06,120 Speaker 3: is magnitude. 222 00:11:06,160 --> 00:11:07,120 Speaker 6: Oh, sure, you can do. 223 00:11:07,240 --> 00:11:10,880 Speaker 3: It's almost like negative interest rates. You can do. Tariff 224 00:11:11,160 --> 00:11:15,000 Speaker 3: light doesn't matter. Yeah, and what the president elect wants 225 00:11:15,120 --> 00:11:18,520 Speaker 3: is a magnitude of big tariffs. Is there a tip 226 00:11:18,559 --> 00:11:21,280 Speaker 3: point where Trump's right and they work. 227 00:11:22,640 --> 00:11:25,920 Speaker 6: Well? Again, it depends on how long they stay on. 228 00:11:26,360 --> 00:11:26,520 Speaker 8: You know. 229 00:11:26,600 --> 00:11:29,360 Speaker 5: One view is that you put tariffs on countries basically 230 00:11:29,480 --> 00:11:32,320 Speaker 5: then come to the negotiating table and then they come off. 231 00:11:32,360 --> 00:11:33,840 Speaker 6: And so it's very importantly going. 232 00:11:33,760 --> 00:11:36,800 Speaker 5: To depend upon the detail of the tariffs, whether or 233 00:11:36,800 --> 00:11:39,959 Speaker 5: not there's retaliation, and whether or not there is an endgame. 234 00:11:40,000 --> 00:11:42,400 Speaker 5: And really without answering that, it's really hard to make 235 00:11:42,400 --> 00:11:43,880 Speaker 5: an informed assessment. 236 00:11:44,400 --> 00:11:46,840 Speaker 7: One of the economic discussions over the last year or 237 00:11:46,880 --> 00:11:49,199 Speaker 7: two has been US exceptionalism. 238 00:11:49,280 --> 00:11:51,480 Speaker 4: Yeah, vis be some of our large trading partners. 239 00:11:51,640 --> 00:11:53,600 Speaker 7: Let's look at China here, we had some more data 240 00:11:53,640 --> 00:11:56,600 Speaker 7: about the China yields falling here. As a global economic 241 00:11:56,640 --> 00:12:00,560 Speaker 7: advisor at PIMCO, what is your view of China here? 242 00:12:00,600 --> 00:12:04,520 Speaker 7: How concerned should the world's economy be about the Chinese economy? 243 00:12:04,640 --> 00:12:07,680 Speaker 5: Well, I think, look, China is huge in terms of 244 00:12:07,720 --> 00:12:12,839 Speaker 5: the size of the economy now and importantly, there are 245 00:12:12,840 --> 00:12:16,319 Speaker 5: some important and I think ongoing challenges, including the fact, 246 00:12:16,440 --> 00:12:18,160 Speaker 5: you know, they've got the first thing of a big 247 00:12:18,200 --> 00:12:21,360 Speaker 5: real estate bubble they have a high unemployment rate among 248 00:12:21,400 --> 00:12:24,400 Speaker 5: their youth, and of course the rest of the world, 249 00:12:24,400 --> 00:12:26,760 Speaker 5: including the US and Europe, is going to be more 250 00:12:27,360 --> 00:12:30,640 Speaker 5: aggressive in terms of resisting a surge of China exports 251 00:12:30,679 --> 00:12:33,440 Speaker 5: and so near in long term, it's a challenging environment. 252 00:12:33,760 --> 00:12:36,160 Speaker 3: Paul Krugman with US on Friday. Wow, it's great to 253 00:12:36,559 --> 00:12:40,240 Speaker 3: have Clarinon. Krugman's what Luberg says about I have on 254 00:12:40,320 --> 00:12:44,760 Speaker 3: my reading desk. I'm two chapters in Ned phelps fabulous 255 00:12:44,800 --> 00:12:50,000 Speaker 3: book summarizing his work. Explain why people should read Ned Phelps. 256 00:12:49,800 --> 00:12:54,240 Speaker 5: Well, Ned, my colleague and dear friend for thirty five years, 257 00:12:54,320 --> 00:12:56,520 Speaker 5: is literally one of the giants of economics, won the 258 00:12:56,559 --> 00:13:00,800 Speaker 5: Nobel Prize, incredibly creative, along with Milton free Even, essentially 259 00:13:00,920 --> 00:13:05,600 Speaker 5: began to define modern macro and also his work on 260 00:13:05,679 --> 00:13:10,720 Speaker 5: growth and innovation and entrepreneurship just uh, just a treasure 261 00:13:10,760 --> 00:13:11,880 Speaker 5: and brilliant. 262 00:13:11,520 --> 00:13:14,320 Speaker 3: And so brilliant. He had a second career with dynamism 263 00:13:14,559 --> 00:13:17,600 Speaker 3: and the enthusiasm and the economy. You heard it from 264 00:13:17,679 --> 00:13:20,640 Speaker 3: Richard Clarita. Don't take it for me. I'll get Phelps's 265 00:13:20,720 --> 00:13:23,600 Speaker 3: new book out on Twitter and LinkedIn. It's Jewel Even 266 00:13:23,679 --> 00:13:26,959 Speaker 3: mentions Clarida. You know a Dina the party you gotta 267 00:13:27,640 --> 00:13:29,160 Speaker 3: he gave Phelps' parking spot. 268 00:13:29,720 --> 00:13:32,120 Speaker 5: I say, during my four years as chair, we had 269 00:13:32,120 --> 00:13:41,199 Speaker 5: three Nobel laureates so here n yeah, the Barrel and 270 00:13:41,320 --> 00:13:44,240 Speaker 5: then Stiglitz and then Vickory before. 271 00:13:43,960 --> 00:13:46,040 Speaker 3: That, and you were not on speaking terms with any 272 00:13:46,040 --> 00:13:48,920 Speaker 3: of the good. We got to go and took the fire. 273 00:13:49,000 --> 00:13:52,079 Speaker 3: Richard CLAREDA thank you so much with you co. 274 00:13:58,280 --> 00:14:01,680 Speaker 2: You're listening to The Bloomberg ser Valen's podcast. Catch us 275 00:14:01,800 --> 00:14:05,280 Speaker 2: Live weekday afternoons from seven to ten am Eastern. Listen 276 00:14:05,320 --> 00:14:08,839 Speaker 2: on Apple CarPlay and Android Auto with the Bloomberg Business app, 277 00:14:09,040 --> 00:14:10,840 Speaker 2: or watch us live on YouTube. 278 00:14:10,960 --> 00:14:14,959 Speaker 3: Lindsay Newman, I really can't say enough about her perspective 279 00:14:15,000 --> 00:14:18,080 Speaker 3: here with G zero media, and you know there are 280 00:14:18,240 --> 00:14:20,640 Speaker 3: their top ten risks and you know it's sort of 281 00:14:20,920 --> 00:14:23,480 Speaker 3: pretty grim about it. It's like a G zero world 282 00:14:23,480 --> 00:14:26,840 Speaker 3: and he's looking at at his jungle here, Lindsey. Sure 283 00:14:27,200 --> 00:14:29,920 Speaker 3: have you been reading in on Greenland and Panama? 284 00:14:31,400 --> 00:14:32,000 Speaker 9: Absolutely? 285 00:14:32,040 --> 00:14:32,560 Speaker 10: Tom who was? 286 00:14:32,600 --> 00:14:34,480 Speaker 8: And I have to say I've been to Panama. I 287 00:14:34,480 --> 00:14:36,880 Speaker 8: have not been to Greenland. Certainly flown over Greenland living 288 00:14:36,920 --> 00:14:38,080 Speaker 8: here in London. 289 00:14:38,360 --> 00:14:39,320 Speaker 10: Look what we heard. 290 00:14:39,240 --> 00:14:43,720 Speaker 8: Yesterday from the President elect Trump is really what strikes 291 00:14:43,760 --> 00:14:47,400 Speaker 8: me most, Tom. And this is not an isolation a story. Right, 292 00:14:47,680 --> 00:14:50,680 Speaker 8: If we think about the first term of President Trump, 293 00:14:50,680 --> 00:14:53,480 Speaker 8: to make America greater, grant America first, it was really 294 00:14:53,520 --> 00:14:56,760 Speaker 8: about bringing jobs and manufacturing back to America. There was 295 00:14:56,800 --> 00:14:59,760 Speaker 8: a concern about the US turning inward. When we see 296 00:14:59,840 --> 00:15:03,800 Speaker 8: him yesterday talking about perhaps annexing Canada, making it the 297 00:15:03,840 --> 00:15:08,040 Speaker 8: fifty first state, taking back the Panama Canal, his ambitions 298 00:15:08,040 --> 00:15:10,920 Speaker 8: for Greenland. This is a very different set of aspirations 299 00:15:10,920 --> 00:15:14,040 Speaker 8: that he has for his second term foreign policy approach. 300 00:15:14,880 --> 00:15:17,440 Speaker 3: You've got in your top ten risk. First of all, 301 00:15:17,520 --> 00:15:20,160 Speaker 3: I had Bremer's doing the hoodie thing. Now I mean 302 00:15:20,160 --> 00:15:22,920 Speaker 3: he's really you know right, he's really cutting a cash 303 00:15:23,000 --> 00:15:29,040 Speaker 3: Look there, I look, Lindsay Newman, the idea of the 304 00:15:29,160 --> 00:15:32,480 Speaker 3: rule of don is one of your risks. Is this 305 00:15:32,520 --> 00:15:35,960 Speaker 3: a different Donald Trump this time around versus eight years ago. 306 00:15:37,560 --> 00:15:39,760 Speaker 8: This is a Donald Trump who is facing down the 307 00:15:39,800 --> 00:15:42,800 Speaker 8: prospects of one more term in office. And what we 308 00:15:42,840 --> 00:15:46,280 Speaker 8: really see from him is he is different. His approach, 309 00:15:46,680 --> 00:15:49,680 Speaker 8: not just his approach, but also his perspective is vastly 310 00:15:49,720 --> 00:15:52,160 Speaker 8: different than what comes from what has come before him. 311 00:15:52,640 --> 00:15:55,240 Speaker 8: If we take the nearest example of that, of course, 312 00:15:55,240 --> 00:15:57,680 Speaker 8: as President Biden, and we know that administration was really 313 00:15:57,720 --> 00:16:01,360 Speaker 8: about consensus building, negotiations almost to a fault. So how 314 00:16:01,400 --> 00:16:03,440 Speaker 8: many envoys do we see if we take the Middle 315 00:16:03,480 --> 00:16:05,760 Speaker 8: East theater, how many envoys do we see fly back 316 00:16:05,760 --> 00:16:08,360 Speaker 8: and forth? Bill Burns back and forth, Anthony B. Lincoln 317 00:16:08,400 --> 00:16:11,480 Speaker 8: back and forth to almost know out, you know, to 318 00:16:11,560 --> 00:16:13,320 Speaker 8: no avail. We're still in the middle of the conflict. 319 00:16:13,320 --> 00:16:14,360 Speaker 8: The hostages are not home. 320 00:16:14,800 --> 00:16:18,480 Speaker 10: And with Trumps, he's taking a very different approach, right. 321 00:16:18,560 --> 00:16:21,160 Speaker 8: The approach is, let me scan the landscape, let me 322 00:16:21,200 --> 00:16:23,240 Speaker 8: look for the points of tension. Let me look and 323 00:16:23,280 --> 00:16:25,640 Speaker 8: see how the US may be disadvantage. What are the 324 00:16:25,680 --> 00:16:28,880 Speaker 8: interests that the US wants to pursue, and what are 325 00:16:28,880 --> 00:16:32,560 Speaker 8: the levers that the administration can pull to create forcing 326 00:16:32,600 --> 00:16:36,640 Speaker 8: functions and advance Trump and Trump's Administration's ambitions. And we 327 00:16:36,680 --> 00:16:39,080 Speaker 8: know we saw yesterday and you Las Guest was just 328 00:16:39,120 --> 00:16:41,240 Speaker 8: talking about this, We know a couple of those already. 329 00:16:41,280 --> 00:16:42,640 Speaker 10: Of course, it's going to be tariffs. 330 00:16:42,960 --> 00:16:45,360 Speaker 8: He sees that as the solution not just for the 331 00:16:46,240 --> 00:16:48,560 Speaker 8: trade discrepancies, but he sees it as a solution for 332 00:16:48,600 --> 00:16:52,240 Speaker 8: how he could perhaps pursue those ambitions with Greenland. And 333 00:16:52,280 --> 00:16:55,200 Speaker 8: it's also what also came through very clearly yesterday was 334 00:16:55,240 --> 00:16:57,760 Speaker 8: about energy policy, the differences in energy policy. 335 00:16:57,800 --> 00:16:59,280 Speaker 10: We're going to He's saying, you know, we're going to. 336 00:16:59,320 --> 00:17:01,440 Speaker 8: Drill day one, and he went on and on about 337 00:17:01,480 --> 00:17:03,880 Speaker 8: those six hundred and twenty five million acres that Biden 338 00:17:03,880 --> 00:17:08,560 Speaker 8: has just recently taken offline that obviously irked President elect 339 00:17:08,560 --> 00:17:11,480 Speaker 8: Trump quite quite clearly. So energy policy is another lever 340 00:17:11,600 --> 00:17:12,560 Speaker 8: that he's going to be pulling. 341 00:17:12,640 --> 00:17:13,639 Speaker 3: Oh, I'm exhausted. 342 00:17:14,800 --> 00:17:18,840 Speaker 7: It's exactly so, lindsay, how do you think our big 343 00:17:18,880 --> 00:17:23,000 Speaker 7: trading partners are going to interact and deal with Trump? 344 00:17:23,119 --> 00:17:25,040 Speaker 4: President elect Trump over the next four years. 345 00:17:25,760 --> 00:17:26,680 Speaker 10: Yeah, it's a great question. 346 00:17:26,720 --> 00:17:29,359 Speaker 8: I mean you're saying, Tom that you're already exhausted, Paul, 347 00:17:29,359 --> 00:17:31,399 Speaker 8: you're asking how the Europe, how Europe is going to 348 00:17:31,680 --> 00:17:33,840 Speaker 8: deal with This is actually the column before the storm, 349 00:17:33,880 --> 00:17:36,639 Speaker 8: I hate to tell you. And you know, it's been 350 00:17:36,680 --> 00:17:38,560 Speaker 8: a stormy week for Europe if you look at what 351 00:17:38,560 --> 00:17:40,120 Speaker 8: Elon Musk has been saying. 352 00:17:40,359 --> 00:17:44,800 Speaker 10: On X on that platform. We know I've been writing 353 00:17:44,840 --> 00:17:47,080 Speaker 10: in my columns for G Zero that you. 354 00:17:47,000 --> 00:17:51,160 Speaker 8: Know, Europe and Trump's allies, the US's historical allies, they're 355 00:17:51,200 --> 00:17:52,400 Speaker 8: already packing their go bags. 356 00:17:52,400 --> 00:17:55,200 Speaker 10: They're thinking about this. How are they going to be prepared? 357 00:17:55,240 --> 00:17:58,639 Speaker 8: You see, for example, defensive spend is now no longer 358 00:17:58,680 --> 00:18:01,800 Speaker 8: two percent is not the is Yeah right, Trump himself 359 00:18:01,840 --> 00:18:05,359 Speaker 8: said yesterday five percent. That's going to raise some eyebrows 360 00:18:05,400 --> 00:18:08,720 Speaker 8: in Europe today. But they're looking to be more flexible 361 00:18:08,720 --> 00:18:11,240 Speaker 8: on defensive spends. Lindsay says he's going to sit He's 362 00:18:11,240 --> 00:18:13,280 Speaker 8: willing to sit down. Pujin has said he's willing to 363 00:18:13,280 --> 00:18:17,639 Speaker 8: sit down. So everybody's looking to be to know what 364 00:18:17,680 --> 00:18:18,720 Speaker 8: it is to be in Trump world. 365 00:18:18,800 --> 00:18:21,320 Speaker 3: Okay, you got the top ten risks out and folks, 366 00:18:21,320 --> 00:18:24,320 Speaker 3: we're gonna, you know, instead of doing this in one interview, 367 00:18:24,600 --> 00:18:27,000 Speaker 3: which I've told Ian I'll never do, We're going to 368 00:18:27,080 --> 00:18:29,560 Speaker 3: spread it out over January. We're thrilled that Lindsay k 369 00:18:29,560 --> 00:18:33,280 Speaker 3: Newman can be with us from Jezero Media. And you know, Lindsay, 370 00:18:33,520 --> 00:18:35,800 Speaker 3: I look what Ian said to CBS. He said, it's 371 00:18:35,800 --> 00:18:39,399 Speaker 3: Trump's way or the highway. What does Secretary of State 372 00:18:39,560 --> 00:18:42,920 Speaker 3: Rubio do whether it's Trump's way or the highway? 373 00:18:44,640 --> 00:18:47,760 Speaker 8: Well, we know that this is Ian is absolutely correct. 374 00:18:47,760 --> 00:18:51,280 Speaker 8: There he's put in place. Trump has put in place 375 00:18:51,760 --> 00:18:53,760 Speaker 8: a cabinet around him, or his ambition is to put 376 00:18:53,760 --> 00:18:56,439 Speaker 8: together this cabinet around him that they all know. 377 00:18:56,560 --> 00:18:59,199 Speaker 10: Rubyo knows that the buck stops with Trump. So Rubio 378 00:18:59,280 --> 00:19:00,080 Speaker 10: has his ambition. 379 00:19:00,320 --> 00:19:04,000 Speaker 8: He has his sort of hardline ways with China, his 380 00:19:04,600 --> 00:19:08,359 Speaker 8: hawkishness on China, which does dovetail nicely with what Trump 381 00:19:08,440 --> 00:19:12,480 Speaker 8: is after, but ultimately it will be Trump's policy, and 382 00:19:12,600 --> 00:19:14,560 Speaker 8: those around him, like Rubio know that. 383 00:19:15,840 --> 00:19:20,240 Speaker 3: Fascinating. I just what's are the top ten risks, Lindsay, 384 00:19:20,200 --> 00:19:22,959 Speaker 3: are you really focused on? Which is the You know, 385 00:19:23,440 --> 00:19:25,880 Speaker 3: I haven't even read the entire document yet, but which 386 00:19:25,960 --> 00:19:27,480 Speaker 3: is the top risk for Lindsay Newman? 387 00:19:28,720 --> 00:19:31,840 Speaker 8: Yeah, well, I will absolutely say that Ian's view of 388 00:19:31,880 --> 00:19:34,560 Speaker 8: the world as and Eurasia groups of the world around 389 00:19:35,440 --> 00:19:38,439 Speaker 8: the G zero winning, which just means that the world 390 00:19:38,520 --> 00:19:38,800 Speaker 8: is in. 391 00:19:38,760 --> 00:19:40,680 Speaker 10: A point of geopolitical recession. 392 00:19:41,560 --> 00:19:44,800 Speaker 8: That is the lens through which Eurasia Group is seeing 393 00:19:44,960 --> 00:19:47,600 Speaker 8: all of those other related risks, and that is sort 394 00:19:47,600 --> 00:19:50,639 Speaker 8: of a thread line of the world in disorder. The 395 00:19:51,000 --> 00:19:55,360 Speaker 8: multilateral institutions no longer having that same level of buying, 396 00:19:55,480 --> 00:19:58,160 Speaker 8: the US sort of retrenching and retreating from its role 397 00:19:58,200 --> 00:19:59,200 Speaker 8: as global guardian. 398 00:19:59,800 --> 00:20:01,920 Speaker 10: That is the top risk for your Asia group. 399 00:20:02,119 --> 00:20:04,439 Speaker 8: And I would also throw my hat and tied to 400 00:20:04,480 --> 00:20:07,480 Speaker 8: Greenland these issues of ungoverned spaces. I mean, why is 401 00:20:07,520 --> 00:20:10,159 Speaker 8: Trump so interested in Greenland? He's now saying because of 402 00:20:10,240 --> 00:20:12,399 Speaker 8: national security, because of its placement in the world. 403 00:20:12,440 --> 00:20:13,760 Speaker 10: It's the bridge to the Arctic. 404 00:20:14,400 --> 00:20:17,159 Speaker 8: And we know these ideas like ungoverned spaces, both in 405 00:20:17,240 --> 00:20:20,080 Speaker 8: sea and in actual space, will be increasing. 406 00:20:19,720 --> 00:20:22,200 Speaker 10: Geopolitical risk for the years and decades ahead. 407 00:20:22,720 --> 00:20:24,639 Speaker 3: This has been brilliant, Lindsey, when you figure out what 408 00:20:24,680 --> 00:20:27,840 Speaker 3: the new Washington consensus has, let me know, Lindsey Newman 409 00:20:27,880 --> 00:20:29,240 Speaker 3: with G zero Media. 410 00:20:29,040 --> 00:20:32,960 Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday 411 00:20:33,000 --> 00:20:35,800 Speaker 2: starting at seven am Eastern on Apple car Play and 412 00:20:35,840 --> 00:20:38,520 Speaker 2: the Android Auto with the Bloomberg Business app. You can 413 00:20:38,560 --> 00:20:41,719 Speaker 2: also listen live on Amazon Alexa from our flagship New 414 00:20:41,800 --> 00:20:46,600 Speaker 2: York station, Just say Alexa play Bloomberg eleven thirty joining. 415 00:20:46,320 --> 00:20:51,080 Speaker 3: Us now adjusting his schedules. Craig Moffitt Worldwide yesterday put 416 00:20:51,080 --> 00:20:55,800 Speaker 3: a cell rating on Apple guiding down twenty twenty three percent. 417 00:20:55,840 --> 00:20:58,960 Speaker 3: Who's counting. Let's start with a why, Craig Moffitt, Why 418 00:20:59,400 --> 00:21:00,760 Speaker 3: a cell on Apple? 419 00:21:02,600 --> 00:21:06,639 Speaker 9: How are you good to see you again? Look, this 420 00:21:06,760 --> 00:21:08,360 Speaker 9: is really a valuation call. 421 00:21:10,080 --> 00:21:14,880 Speaker 1: And look, the market overall is pretty frothy valuations. 422 00:21:14,920 --> 00:21:16,760 Speaker 9: But Apple, even relative to. 423 00:21:17,080 --> 00:21:21,480 Speaker 1: The MAG seven peer group, is now extremely stretched with 424 00:21:21,880 --> 00:21:25,159 Speaker 1: a PEG ratio of around three, where the rest of 425 00:21:25,200 --> 00:21:28,080 Speaker 1: the MAG seven trades with the PEG ratio of round two. 426 00:21:28,720 --> 00:21:36,160 Speaker 1: So there's this perceived safety in Apple, wonderful franchise, very 427 00:21:36,160 --> 00:21:40,000 Speaker 1: dedicated customers, But there is no safety when you're paying 428 00:21:40,080 --> 00:21:43,919 Speaker 1: thirty three times earnings for a company that's growing organically 429 00:21:43,960 --> 00:21:46,199 Speaker 1: in the very low single digits, and even with the 430 00:21:46,800 --> 00:21:51,879 Speaker 1: even with buybacks, earnings are still growing at sort of 431 00:21:51,880 --> 00:21:54,720 Speaker 1: half the rate of the rest of the MAG seven. 432 00:21:55,440 --> 00:21:57,760 Speaker 3: When I look at it, it's the idea of a 433 00:21:57,800 --> 00:22:00,760 Speaker 3: cell rating, and that means a fractured free cash flow. 434 00:22:01,119 --> 00:22:04,000 Speaker 3: Are you suggesting this will filter down in the mix 435 00:22:04,040 --> 00:22:07,960 Speaker 3: of cash from operations, capex and then finally free cash 436 00:22:08,040 --> 00:22:09,920 Speaker 3: flow where they're going to miss the mark? 437 00:22:10,760 --> 00:22:13,760 Speaker 1: No, No, I want to be clear, we're not saying 438 00:22:13,760 --> 00:22:16,320 Speaker 1: Apple is a broken company. I want to come back 439 00:22:16,359 --> 00:22:19,040 Speaker 1: to some very real risks that we should talk about. 440 00:22:19,480 --> 00:22:21,160 Speaker 9: But Apple is not a broken company. 441 00:22:21,280 --> 00:22:25,160 Speaker 1: It's a broken valuation, and there are, as I said, 442 00:22:25,200 --> 00:22:30,399 Speaker 1: some significant concerns that ought to be reflected in a 443 00:22:30,440 --> 00:22:33,239 Speaker 1: lower multiple, or at least a more sober multiple than 444 00:22:33,280 --> 00:22:35,560 Speaker 1: what you've got right now. You know, there was this 445 00:22:35,720 --> 00:22:40,320 Speaker 1: narrative over the past couple of months, particularly into the 446 00:22:40,400 --> 00:22:42,840 Speaker 1: last couple of weeks of last. 447 00:22:42,680 --> 00:22:43,760 Speaker 9: Year in twenty four. 448 00:22:45,080 --> 00:22:47,840 Speaker 1: Where everyone was talking about the fact that Apple was 449 00:22:47,960 --> 00:22:51,959 Speaker 1: quote unquote melting up in the face of no news. 450 00:22:52,119 --> 00:22:54,280 Speaker 1: In fact, there was actually quite a bit of news, 451 00:22:54,640 --> 00:22:57,800 Speaker 1: and it was bad or at least sobering and concerning news. 452 00:22:58,280 --> 00:23:02,560 Speaker 1: Obviously the risk of italiatory tariffs when we've got a 453 00:23:02,560 --> 00:23:09,240 Speaker 1: Trump administration, but more saliently, over the last couple of months, 454 00:23:09,280 --> 00:23:12,440 Speaker 1: you've had the judge in the Google anti trust case 455 00:23:13,040 --> 00:23:17,439 Speaker 1: say that the payments that Google makes to Apple for search, 456 00:23:17,520 --> 00:23:21,280 Speaker 1: which remember that's twenty five percent of Apple's operating income, 457 00:23:22,240 --> 00:23:26,320 Speaker 1: are patently illegal. Now we don't know how those will change, 458 00:23:26,359 --> 00:23:29,080 Speaker 1: but there's obviously a risk that they do that ought 459 00:23:29,160 --> 00:23:32,600 Speaker 1: to be reflected in the multiple. And then there's real 460 00:23:32,640 --> 00:23:36,679 Speaker 1: deterioration in China, and some obvious concerns that with China. 461 00:23:37,160 --> 00:23:40,840 Speaker 1: The Chinese government is obviously not going to allow Western 462 00:23:40,960 --> 00:23:45,800 Speaker 1: large language models to answer questions in China. So you're 463 00:23:45,800 --> 00:23:47,760 Speaker 1: going to have to have Chinese partners. That's got to 464 00:23:47,800 --> 00:23:50,679 Speaker 1: be contemplated with margins and all that sort of things. 465 00:23:50,760 --> 00:23:54,960 Speaker 1: So again, nothing says that Apple is broken, although one 466 00:23:55,000 --> 00:23:58,840 Speaker 1: more thing, there are real concerns about whether AI is 467 00:23:58,920 --> 00:24:00,760 Speaker 1: going to drive the kind of up grade cycle that 468 00:24:00,840 --> 00:24:02,439 Speaker 1: seems to be discounted in the stock. 469 00:24:03,000 --> 00:24:07,480 Speaker 9: Pretty skeptical, But Apple's not broken. It's the valuation that's broken. 470 00:24:07,880 --> 00:24:11,119 Speaker 7: So Craig, given that the valuation may not reflect some 471 00:24:11,200 --> 00:24:13,439 Speaker 7: of the risk here, I want to go to the 472 00:24:13,520 --> 00:24:15,640 Speaker 7: China risk here because I think one of my concerns, 473 00:24:15,680 --> 00:24:17,480 Speaker 7: I think the concerns from a lot of investors is 474 00:24:18,960 --> 00:24:21,080 Speaker 7: this is a market that was seen as a growth 475 00:24:21,200 --> 00:24:23,639 Speaker 7: growth driver for Apple, and maybe it's not going to 476 00:24:23,640 --> 00:24:27,280 Speaker 7: be going forward given the improved competition, maybe the sense 477 00:24:27,359 --> 00:24:29,880 Speaker 7: of nationalism in that country in terms of you know, 478 00:24:29,960 --> 00:24:32,520 Speaker 7: buying Chinese products. How do you view China as a 479 00:24:32,800 --> 00:24:34,879 Speaker 7: risk factor to the Apple story? 480 00:24:35,600 --> 00:24:37,040 Speaker 9: You know, that's absolutely right. 481 00:24:37,080 --> 00:24:41,639 Speaker 1: Remember, Greater China is the second most important market for Apple, 482 00:24:41,840 --> 00:24:45,199 Speaker 1: and you've had a couple of things happened since the 483 00:24:45,240 --> 00:24:49,760 Speaker 1: Big five G upgrade cycle back in twenty one ish First, 484 00:24:49,840 --> 00:24:56,920 Speaker 1: you had the real growth and empowerment I suppose of 485 00:24:57,600 --> 00:25:02,600 Speaker 1: Huawei in China. Where after the US banned exports to 486 00:25:03,680 --> 00:25:08,760 Speaker 1: China and or chip exports and the like, and tried 487 00:25:08,760 --> 00:25:12,880 Speaker 1: to limit Huawei and banned Huawei equipment in the United States, 488 00:25:13,040 --> 00:25:16,760 Speaker 1: Huawei had to turn internally and actually has done quite well, 489 00:25:16,800 --> 00:25:21,760 Speaker 1: developing quite credible products that are now driving a significant 490 00:25:21,800 --> 00:25:25,560 Speaker 1: amount of Chinese market share. You've also got companies like 491 00:25:25,640 --> 00:25:27,879 Speaker 1: Honor and what have you that have built a much 492 00:25:27,880 --> 00:25:31,760 Speaker 1: more competitive handset market in China than what we've seen 493 00:25:31,800 --> 00:25:34,720 Speaker 1: in the past. So it's simply not realistic to think 494 00:25:34,760 --> 00:25:37,000 Speaker 1: that Apple is going to have the same kind of 495 00:25:37,800 --> 00:25:40,480 Speaker 1: market share that it had in China. And then the 496 00:25:40,560 --> 00:25:43,560 Speaker 1: Chinese economy is soft, and so you've got relatively slow 497 00:25:43,600 --> 00:25:46,200 Speaker 1: growth in China anyway. And then, as I mentioned before, 498 00:25:46,240 --> 00:25:48,560 Speaker 1: you've got limitations on what China is going to or 499 00:25:48,640 --> 00:25:49,240 Speaker 1: what China. 500 00:25:49,080 --> 00:25:52,760 Speaker 9: Is going to allow Apple to do with respect to AI. 501 00:25:54,359 --> 00:25:57,280 Speaker 7: So, Craig, we've seen Tim Cook go to China on 502 00:25:57,440 --> 00:26:01,920 Speaker 7: several occasions, trying his best. Given the importance of China 503 00:26:02,000 --> 00:26:07,040 Speaker 7: to the Apple story, what's the risk to their supply chain? 504 00:26:07,119 --> 00:26:10,320 Speaker 7: Apple supply chain here when we have a Trump administration 505 00:26:10,400 --> 00:26:14,640 Speaker 7: coming in, which might suggest, you know, just higher tensions 506 00:26:14,680 --> 00:26:15,640 Speaker 7: between the two countries. 507 00:26:16,400 --> 00:26:18,760 Speaker 1: You're right, you know, these kinds of risks are really 508 00:26:18,800 --> 00:26:22,080 Speaker 1: hard to map out. Last time, under the Trump administration, 509 00:26:22,840 --> 00:26:26,440 Speaker 1: Apple was exempted. So remember almost all of Apple's key 510 00:26:27,280 --> 00:26:33,200 Speaker 1: components are imported and in large market measure from China. 511 00:26:33,320 --> 00:26:38,200 Speaker 1: Those imports were exempted, and I suspect it probably would 512 00:26:38,240 --> 00:26:41,080 Speaker 1: be again this time. But you also have the risk 513 00:26:41,119 --> 00:26:47,720 Speaker 1: of retaliatory tariffs that could be related too entirely separate products. 514 00:26:47,320 --> 00:26:49,560 Speaker 9: You know, automobiles or something where and in. 515 00:26:49,520 --> 00:26:53,040 Speaker 1: Other countries where you have where Apple as an ambassador 516 00:26:53,119 --> 00:26:58,760 Speaker 1: of the US and with a clear US identity, could 517 00:26:58,800 --> 00:27:00,440 Speaker 1: face real tariffs elsewhere in the world. 518 00:27:00,520 --> 00:27:02,880 Speaker 3: Right, Craig, We've got time for one more question. It's 519 00:27:02,920 --> 00:27:06,600 Speaker 3: so important Comcast. You've got to buy in Comcast. It's 520 00:27:06,640 --> 00:27:09,840 Speaker 3: back to a twenty seventeen pricing. I mean, it's not 521 00:27:09,880 --> 00:27:13,760 Speaker 3: doing a Warner Brothers discovery, but it's moldy. What would 522 00:27:13,800 --> 00:27:16,480 Speaker 3: you suggest to Brian Roberts that he needs to do 523 00:27:17,040 --> 00:27:20,600 Speaker 3: to make a permanent force out of his Comcast. 524 00:27:21,359 --> 00:27:27,200 Speaker 1: Well, you remember, Tom, you started that question by thinking 525 00:27:27,200 --> 00:27:30,320 Speaker 1: about the media side of Comcast. And while the media 526 00:27:30,359 --> 00:27:33,200 Speaker 1: side of Comcast is important, it is still the tail 527 00:27:33,320 --> 00:27:37,200 Speaker 1: and it shouldn't be wagging the dog. Comcast is primarily 528 00:27:37,640 --> 00:27:41,480 Speaker 1: a cable infrastructure company, and they have actually a lot 529 00:27:41,520 --> 00:27:46,680 Speaker 1: of advantages in cable infrastructure, not least that this convergence 530 00:27:46,720 --> 00:27:50,760 Speaker 1: world that we're heading into really favors the cable operators 531 00:27:50,800 --> 00:27:54,760 Speaker 1: because they can offer mobile everywhere that they offer broadband. 532 00:27:54,840 --> 00:27:57,800 Speaker 1: The telephone companies can't come close to doing that. So 533 00:27:58,200 --> 00:28:01,520 Speaker 1: I think the real story of Comcast is actually on 534 00:28:01,600 --> 00:28:03,400 Speaker 1: the cable side, not on the media side. 535 00:28:03,400 --> 00:28:05,880 Speaker 3: All right, one of our interns made up the notes 536 00:28:05,920 --> 00:28:08,000 Speaker 3: Craig for you on short notice, thank you so much 537 00:28:08,040 --> 00:28:10,760 Speaker 3: for joining And they thought we were talking to Nathanson, 538 00:28:10,920 --> 00:28:13,800 Speaker 3: so they said, ask him about the Yankees, Craig Moffas. 539 00:28:14,000 --> 00:28:17,520 Speaker 1: I'm a Jets fan, so if you want to talk misery, 540 00:28:17,600 --> 00:28:18,879 Speaker 1: talk about the Jets with me. 541 00:28:20,080 --> 00:28:22,199 Speaker 3: I mean it's painful to say the least. I mean 542 00:28:22,200 --> 00:28:26,639 Speaker 3: it's been clumsy. The Jets have been clumsy. Craig short 543 00:28:26,680 --> 00:28:29,000 Speaker 3: notice on the way to the airport, Thank you so 544 00:28:29,080 --> 00:28:32,479 Speaker 3: much for joining us today. His cell rating on Apple 545 00:28:32,560 --> 00:28:37,159 Speaker 3: that made a global news yesterday from Moffatt Nathansen as Well. 546 00:28:42,880 --> 00:28:46,800 Speaker 2: This is the Bloomberg Surveillance Podcast. Listen live each weekday 547 00:28:46,840 --> 00:28:49,600 Speaker 2: starting at seven am Eastern on Apple car Play and 548 00:28:49,680 --> 00:28:52,360 Speaker 2: the Android Auto with the Bloomberg Business app. You can 549 00:28:52,360 --> 00:28:55,920 Speaker 2: also watch us live every weekday on YouTube and always 550 00:28:56,000 --> 00:28:57,240 Speaker 2: on the Bloomberg terminal. 551 00:28:57,520 --> 00:29:01,240 Speaker 3: The Lissaber tell you our hugely anticipated We go to 552 00:29:01,280 --> 00:29:03,720 Speaker 3: Lisa Mateo. Now for the newspapers, what do you see? 553 00:29:03,840 --> 00:29:04,160 Speaker 4: All right? 554 00:29:04,200 --> 00:29:05,840 Speaker 11: So last night they kick off to the new High 555 00:29:05,880 --> 00:29:08,760 Speaker 11: Tech Golf League tg L. You've been hearing all about 556 00:29:08,800 --> 00:29:12,520 Speaker 11: it right in the sports. Oh you have to because 557 00:29:12,520 --> 00:29:13,480 Speaker 11: this is the future. 558 00:29:13,600 --> 00:29:13,959 Speaker 4: Okay. 559 00:29:14,000 --> 00:29:17,040 Speaker 11: So Tiger Woods, Roy McElroy, they envisioned it for years, right, 560 00:29:17,120 --> 00:29:21,760 Speaker 11: finally kicked off fifteen hole mac under two hours to complete. Okay, 561 00:29:21,800 --> 00:29:25,680 Speaker 11: So that's the thing. There is there a clock, there's 562 00:29:25,960 --> 00:29:27,560 Speaker 11: you know what, that's a good question if there is 563 00:29:27,600 --> 00:29:29,800 Speaker 11: a clock. But under two hours? 564 00:29:29,800 --> 00:29:32,000 Speaker 3: Are they quivering in Augusta wise? 565 00:29:32,360 --> 00:29:34,840 Speaker 7: No, they actually though in the in the traps and 566 00:29:34,880 --> 00:29:37,960 Speaker 7: the bunkers they used to sand from Augustine extra cool 567 00:29:38,360 --> 00:29:40,040 Speaker 7: that it's a made for TV thing. 568 00:29:40,080 --> 00:29:42,120 Speaker 4: It's to bring in the younger demos, the younger kids. 569 00:29:42,160 --> 00:29:45,040 Speaker 4: I did not see your thoughts. It's fine, it's fine. 570 00:29:45,080 --> 00:29:47,440 Speaker 7: It's just trying to make golf more fun, more accessible 571 00:29:47,480 --> 00:29:50,560 Speaker 7: to more people. Take it out of the stodgy country clubs. 572 00:29:50,560 --> 00:29:51,960 Speaker 7: That's making it a little bit more like a man 573 00:29:52,080 --> 00:29:54,640 Speaker 7: cave of that. A lot of guys, you know. 574 00:29:54,680 --> 00:29:55,520 Speaker 3: Is it top golf? 575 00:29:56,400 --> 00:30:01,280 Speaker 4: It's something like that, Lisa, have you done top Golf? 576 00:30:01,520 --> 00:30:01,800 Speaker 10: I have? 577 00:30:02,000 --> 00:30:03,800 Speaker 11: I love it. It's so much fun because you have 578 00:30:03,880 --> 00:30:05,160 Speaker 11: food and drinks and you. 579 00:30:05,200 --> 00:30:08,040 Speaker 3: Just go crazy, like you're doing the margarite in your head. 580 00:30:08,200 --> 00:30:08,400 Speaker 4: Yeah. 581 00:30:08,400 --> 00:30:10,160 Speaker 11: But in Top Golf, though, you're actually hitting it. So 582 00:30:10,520 --> 00:30:12,600 Speaker 11: this one is more like video screen, like a simulation 583 00:30:12,720 --> 00:30:15,760 Speaker 11: to for this one. So that's the thing behind it. 584 00:30:15,800 --> 00:30:19,960 Speaker 4: But you're like, no, it's not for me. 585 00:30:20,080 --> 00:30:23,120 Speaker 11: But it's DJ Khalid was there. 586 00:30:23,160 --> 00:30:23,840 Speaker 4: They had music. 587 00:30:23,920 --> 00:30:24,200 Speaker 9: DJ. 588 00:30:24,480 --> 00:30:27,480 Speaker 4: Again, it's a big party. 589 00:30:28,120 --> 00:30:31,960 Speaker 11: But you're right, next generation. So ultra processed foods, are 590 00:30:31,960 --> 00:30:34,360 Speaker 11: they really bad for us? Okay, this is a question 591 00:30:34,400 --> 00:30:36,080 Speaker 11: a lot of people are asking. There was a study 592 00:30:36,080 --> 00:30:37,680 Speaker 11: out the Wall Street Journal point to it, and it 593 00:30:37,720 --> 00:30:41,360 Speaker 11: said eating packaged foods doesn't automatically result in over eating 594 00:30:41,400 --> 00:30:44,440 Speaker 11: and waking as long as you stick to foods that 595 00:30:44,480 --> 00:30:47,480 Speaker 11: are low in calories program don't have these certain combinations 596 00:30:47,520 --> 00:30:50,560 Speaker 11: of fat salt, carbs, and sugar. So let me give 597 00:30:50,560 --> 00:30:52,720 Speaker 11: you an example what you can do, Tom. You can 598 00:30:52,760 --> 00:30:55,840 Speaker 11: avoid foods at clock in a two calories program or 599 00:30:55,880 --> 00:30:58,680 Speaker 11: more like frozen meatballs there you go stick to those 600 00:30:58,720 --> 00:31:02,280 Speaker 11: at around one calorie, like low fat flavored yogurt. 601 00:31:02,520 --> 00:31:05,160 Speaker 4: Okay, butch See actually has a smile on her face. 602 00:31:05,480 --> 00:31:07,920 Speaker 3: It's just laughing at us. You should see her breakfast, folks. 603 00:31:08,000 --> 00:31:10,120 Speaker 3: It's like twelve on. It's like, no, it's like two 604 00:31:10,160 --> 00:31:14,320 Speaker 3: hundred calories, isn't it about? Okay, you can cheat on this, 605 00:31:15,160 --> 00:31:17,960 Speaker 3: but you got to if we could small portions. 606 00:31:17,640 --> 00:31:20,600 Speaker 11: Smaller portions, yes, that is key, but moderation, like if 607 00:31:20,640 --> 00:31:21,959 Speaker 11: you do have these ultra protects. 608 00:31:22,000 --> 00:31:24,200 Speaker 4: The Cracker bowel does not believe in small portions. 609 00:31:24,280 --> 00:31:28,200 Speaker 3: No, they do. I'm reading David McCullough on Paris right now. 610 00:31:28,360 --> 00:31:32,160 Speaker 3: In eighteen thirty the Americans were complaining about the small 611 00:31:32,200 --> 00:31:35,280 Speaker 3: portions in Paris. Nothing's changed, right. 612 00:31:35,240 --> 00:31:37,200 Speaker 11: No, yeah, they do have tiny portions. 613 00:31:37,520 --> 00:31:41,240 Speaker 3: Well, so, well, look we watched like it's like goodbye Columbus. 614 00:31:41,480 --> 00:31:43,800 Speaker 3: They're at the dining room table and Jack Cloud's going 615 00:31:44,120 --> 00:31:44,720 Speaker 3: you eat like. 616 00:31:44,680 --> 00:31:46,720 Speaker 6: A bird, leasty, eat like a bird. 617 00:31:46,960 --> 00:31:47,320 Speaker 3: Next? 618 00:31:47,920 --> 00:31:50,200 Speaker 11: Okay, Tom, I have another social media platform to you 619 00:31:50,240 --> 00:31:50,600 Speaker 11: to join. 620 00:31:50,720 --> 00:31:53,360 Speaker 4: Okay, ready it is Blue Sky. Okay. 621 00:31:53,400 --> 00:31:55,880 Speaker 11: So it's not really new. It started like it was 622 00:31:55,920 --> 00:31:58,760 Speaker 11: an extension of an X an internal project, but it 623 00:31:58,840 --> 00:32:02,040 Speaker 11: launched about a year ago. But sources telling Business Insider 624 00:32:02,080 --> 00:32:04,760 Speaker 11: it's in the final stages raising. New funding led by 625 00:32:04,840 --> 00:32:08,200 Speaker 11: Bane Capital Ventures could value the company at around seven 626 00:32:08,280 --> 00:32:11,920 Speaker 11: hundred million dollars so could give X some competition. 627 00:32:12,040 --> 00:32:12,640 Speaker 4: Who knows. 628 00:32:12,680 --> 00:32:15,120 Speaker 11: But it's really been on the rise. It grew from 629 00:32:15,120 --> 00:32:18,600 Speaker 11: twenty five point nine million users in twenty twenty four, 630 00:32:18,640 --> 00:32:20,120 Speaker 11: and it started about a year ago, so went from 631 00:32:20,160 --> 00:32:21,560 Speaker 11: three million to twenty nine million. 632 00:32:21,920 --> 00:32:23,960 Speaker 7: I mean, I mean people are looking for alternatives to X. 633 00:32:24,000 --> 00:32:26,680 Speaker 7: But I mean, yes, we'll see it's still kind of 634 00:32:27,000 --> 00:32:30,120 Speaker 7: it's still out there and nobody really cares if it's 635 00:32:30,120 --> 00:32:31,040 Speaker 7: profitable or anymore. 636 00:32:33,400 --> 00:32:38,400 Speaker 3: Somewhere I said, X has actually picked up breaking news momentum. 637 00:32:38,800 --> 00:32:41,680 Speaker 3: The reality at one am last night is I'm watching 638 00:32:41,760 --> 00:32:46,360 Speaker 3: Los Angeles scanner on Twitter and I'm watching it with 639 00:32:46,520 --> 00:32:49,440 Speaker 3: all the fire people in that and it's some guy 640 00:32:49,440 --> 00:32:53,640 Speaker 3: in his house on Twitter telling you exactly what's going 641 00:32:53,680 --> 00:32:56,800 Speaker 3: on street by street. You become the bad mouth in Twitter. 642 00:32:56,840 --> 00:32:58,600 Speaker 3: I don't get I see everybody using it. 643 00:32:58,640 --> 00:33:01,720 Speaker 11: Next, okay, last one and that big casino complex and 644 00:33:01,800 --> 00:33:05,160 Speaker 11: Manhattan's huts and yards. They were pitching it twelve million dollars. 645 00:33:05,200 --> 00:33:08,840 Speaker 11: Well actually got shot down by Community Board four. So 646 00:33:08,920 --> 00:33:10,560 Speaker 11: that's a big black eye to it. We had this 647 00:33:10,640 --> 00:33:13,560 Speaker 11: eighty story tower, wanted to bring all this casino to 648 00:33:13,560 --> 00:33:15,600 Speaker 11: the Hudson Yards area. Those of members are saying, you 649 00:33:15,600 --> 00:33:17,520 Speaker 11: know what, it's just a nightmare. Is going to bring 650 00:33:17,560 --> 00:33:21,560 Speaker 11: traffic emission problems. But the vote still has to go 651 00:33:21,600 --> 00:33:23,040 Speaker 11: to the city council to sign off. 652 00:33:23,080 --> 00:33:25,760 Speaker 3: So so thank you for not doing congestion pricing today 653 00:33:25,840 --> 00:33:30,280 Speaker 3: you walk it was congestion free. Yes, very good, Lisa Monteo, 654 00:33:30,320 --> 00:33:33,080 Speaker 3: thank you so much the newspapers this morning. 655 00:33:33,200 --> 00:33:37,640 Speaker 2: This is the Bloomberg Surveillance podcast, available on Apple, Spotify 656 00:33:37,680 --> 00:33:40,760 Speaker 2: and anywhere else and you get your podcasts. Listen live 657 00:33:40,800 --> 00:33:44,360 Speaker 2: each weekday seven to ten am Eastern on Bloomberg dot Com, 658 00:33:44,480 --> 00:33:47,920 Speaker 2: the iHeartRadio app, tune In, and the Bloomberg Business app. 659 00:33:48,240 --> 00:33:51,280 Speaker 2: You can also watch us live every weekday on YouTube 660 00:33:51,440 --> 00:33:53,600 Speaker 2: and always on the Bloomberg terminal