WEBVTT - Tech Earnings Wrap Up the Week; PCE Data 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.160 us live on YouTube. 0:00:27.280 --> 0:00:29.080 You know, a lot of tech earnings this weekend. Next 0:00:29.200 --> 0:00:31.840 remember Monday, all the way back to Monday. The world 0:00:31.880 --> 0:00:34.479 was rocked by this deep Seek thing. It seems like 0:00:34.720 --> 0:00:35.600 a lifetime ago. 0:00:35.560 --> 0:00:38.040 A lifetime ago in an incredibly busy day for our 0:00:38.080 --> 0:00:39.360 next guest, who I think was on. 0:00:39.400 --> 0:00:43.600 Every hour exactly of the day, exactly, multiple times exactly, 0:00:43.720 --> 0:00:46.120 Mandy sing singing around. Also he covers a technology space 0:00:46.159 --> 0:00:48.479 for Bloomberger Intelligence. MANDI but a lot of earnings. 0:00:48.960 --> 0:00:49.560 Let's go back. 0:00:50.320 --> 0:00:51.919 One of the names that we didn't get to talk 0:00:51.960 --> 0:00:53.360 about it I don't think at the time was Meta. 0:00:53.479 --> 0:00:56.320 They put out some pretty solid numbers. This stop is 0:00:56.360 --> 0:00:59.240 performing really well. What's the story at Meta? 0:00:59.640 --> 0:01:02.360 I mean, look, this is a company that dominates the 0:01:02.400 --> 0:01:05.800 social media ad space, growing top line at over twenty 0:01:05.840 --> 0:01:09.800 percent and putting a lot of dollars in capex, and 0:01:09.840 --> 0:01:13.800 the street seems to appreciate it. Despite the deep seek News, 0:01:13.800 --> 0:01:17.440 which was a surprising part. I mean, they're actually taking 0:01:17.480 --> 0:01:22.000 their opex guide up as well, and Capex they raised 0:01:22.080 --> 0:01:24.959 prior to their deep seek News. And for me, the 0:01:25.040 --> 0:01:28.959 real comparison here is with Microsoft. Microsoft if you read 0:01:29.000 --> 0:01:32.360 the tea leaves hinted that this is the ear of peak. 0:01:32.440 --> 0:01:36.600 Capex that they acknowledged the deep Seak development, and they 0:01:36.680 --> 0:01:40.520 said they probably are thinking of, you know, taking down costs, 0:01:40.520 --> 0:01:43.640 although they didn't guide to it, whereas Meta was like, 0:01:43.920 --> 0:01:46.840 this is going to drive more demand for AI on 0:01:46.880 --> 0:01:50.720 the inferencing side, and so we are doubling down. I mean, 0:01:50.720 --> 0:01:54.480 they actually raised their opex guide, which did surprise a 0:01:54.520 --> 0:01:56.600 lot of people relative to consensus. 0:01:56.720 --> 0:01:59.600 Top of the earnings report. Mark Zuckerberg, CEO of Meta Founder, 0:01:59.640 --> 0:02:03.600 of course, we continue to make good progress on AI, glasses, 0:02:03.720 --> 0:02:06.200 and the future of social media. I'm excited to see 0:02:06.200 --> 0:02:08.760 these efforts scale further in twenty twenty five. Are you 0:02:09.120 --> 0:02:14.400 likewise excited about glasses and AI? In the context of Meta. 0:02:14.000 --> 0:02:16.560 The one line that stood out for me was this 0:02:16.600 --> 0:02:19.600 is a make or break here for reality labs. Okay, 0:02:19.800 --> 0:02:20.799 what it tells. 0:02:20.480 --> 0:02:22.399 You They pour a lot of money to Reality Lab. 0:02:22.320 --> 0:02:24.880 And they're still going to lose twenty billion, another twenty 0:02:24.919 --> 0:02:27.720 billion dollars this year. So imagine how high the stock 0:02:27.760 --> 0:02:30.080 would be if you put a you know, even a 0:02:30.200 --> 0:02:33.359 fifteen times multiple on that twenty billion that they are losing, 0:02:33.680 --> 0:02:36.440 mean the stock would be easily ten percent higher. But 0:02:36.560 --> 0:02:38.920 the fact that he said this is make or break here, 0:02:39.160 --> 0:02:41.320 which means this is not going to be a recurring 0:02:41.360 --> 0:02:45.839 loss either this year this thing takes off, or they're 0:02:45.840 --> 0:02:48.839 going to stop investing twenty billion dollars. And I think 0:02:48.880 --> 0:02:51.000 so that's a positive for the market. 0:02:51.040 --> 0:02:55.280 Google they report earnings, I think Tuesday. What do you 0:02:55.280 --> 0:02:56.079 expect hear from them? 0:02:56.639 --> 0:02:59.600 I mean the ad trends seem to be solid. That's 0:02:59.639 --> 0:03:04.040 what Meta alluded to. Probably I think both Meta and 0:03:04.120 --> 0:03:08.280 Google benefited from the TikTok uncertainty. Clearly the ad dollars 0:03:08.360 --> 0:03:11.520 are moving away from TikTok as a platform, and I 0:03:11.600 --> 0:03:16.400 think YouTube should show an acceleration and growth. So search 0:03:16.560 --> 0:03:20.359 is where, you know, everyone is kind of cynical about 0:03:20.760 --> 0:03:23.679 Google maintaining their ninety percent search. 0:03:23.560 --> 0:03:25.320 So how do you think that plays out? I mean, 0:03:25.520 --> 0:03:28.000 is ai chat GPT? 0:03:29.560 --> 0:03:30.040 What is it? 0:03:30.080 --> 0:03:31.560 When I go on my Google thing, it comes up. 0:03:31.520 --> 0:03:33.720 As Gemini Gemini. 0:03:34.520 --> 0:03:36.400 Is that a thing? Look? 0:03:36.480 --> 0:03:39.840 I mean in the end, you know, the search market 0:03:39.920 --> 0:03:43.560 is expanding because of generative AI. We will be searching 0:03:43.640 --> 0:03:46.920 for more things because the prompts are all over the place, 0:03:47.000 --> 0:03:49.400 so instead of going to Google dot com, they are 0:03:49.400 --> 0:03:53.960 prompts everywhere where we can do searches. Now, Google's problem 0:03:54.040 --> 0:03:56.640 is they have the ninety percent plus share, so I 0:03:56.680 --> 0:04:00.320 think volume wise, there will be an impact on Google Search. 0:04:00.520 --> 0:04:03.640 But what really is the big mode for Google is 0:04:03.680 --> 0:04:06.640 the fact that they monetize you know, just twenty to 0:04:06.720 --> 0:04:10.000 thirty percent of their queries. The rest are all free, 0:04:10.200 --> 0:04:13.320 and they somehow have a way to combine all their 0:04:13.320 --> 0:04:16.880 family of apps data where there's Gmail Maps, all the 0:04:16.960 --> 0:04:19.880 other apps, and show you the most relevant ad which 0:04:19.920 --> 0:04:23.000 is why you know their ad pricing is way above 0:04:23.000 --> 0:04:25.599 everyone else. To my mind, that is a mode that's 0:04:25.640 --> 0:04:29.000 hard to break. All these you know LLLM offerings are 0:04:29.040 --> 0:04:32.520 subscription based. Nobody is really penetrating the you know or 0:04:32.600 --> 0:04:35.080 hurting them on the ad site. Maybe Meta Meta said 0:04:35.400 --> 0:04:39.080 they will get into search via their WhatsApp platform, so 0:04:39.240 --> 0:04:42.640 Meta could be a competitor in search ad dollars, But 0:04:42.880 --> 0:04:45.280 everyone else so far is kind of going with the 0:04:45.320 --> 0:04:48.080 subscription offering. When it comes to LM searches. 0:04:48.040 --> 0:04:51.599 The extraordinary ubiquity of Google Search is not new to 0:04:51.640 --> 0:04:55.160 anybody who has a phone or a computer, but situated 0:04:55.240 --> 0:04:56.800 for us in this moment where we have a new 0:04:56.839 --> 0:05:01.279 administration two weeks in looming law charge is this Department 0:05:01.320 --> 0:05:05.680 of Justice case against Google, speculation about Chrome being spun off. 0:05:05.800 --> 0:05:08.080 What happens to all of that? How do you see that? 0:05:08.160 --> 0:05:10.320 How does the company see that in the context of 0:05:10.360 --> 0:05:11.200 this new administration. 0:05:11.279 --> 0:05:14.039 So you're right, if there is one big risk out there, 0:05:14.160 --> 0:05:18.000 it's that Department of Justice creates a case to divest Chrome. 0:05:18.200 --> 0:05:21.400 And if that happens, I mean we're talking about an 0:05:21.640 --> 0:05:26.159 easy ten to fifteen percent hit on search adrabic because 0:05:26.320 --> 0:05:29.440 in the end, you know, on the desktop, they are 0:05:29.480 --> 0:05:32.200 getting a lot of data through the Chrome browser even 0:05:32.240 --> 0:05:34.840 though they're not charging for it. I mean, that's why 0:05:34.880 --> 0:05:37.800 the search is so effective. So it will hurt them. Now, 0:05:38.320 --> 0:05:41.680 our base case is, you know, the Department of Justice 0:05:41.880 --> 0:05:45.680 will see the competition now for search, and there's no 0:05:45.800 --> 0:05:48.280 way you can say Google is a monopoly. I mean, 0:05:48.320 --> 0:05:50.640 look at all the competition we were just talking about 0:05:50.640 --> 0:05:54.520 from LLLM players and so from that perspective, it's hard 0:05:54.560 --> 0:05:57.120 to argue even though they may have had a monopoly 0:05:57.200 --> 0:05:59.520 in search, but it's hard to argue they have it 0:05:59.640 --> 0:06:03.000 now going forward given all the competition. So there will 0:06:03.040 --> 0:06:06.800 be some remedies, probably the one that Google has suggested 0:06:06.839 --> 0:06:09.039 from their side. Now, I don't know if the judge 0:06:09.040 --> 0:06:11.360 you will accept or not. Is you know, the exclusive 0:06:11.440 --> 0:06:14.080 arrangements they have with Apple to be the default platform, 0:06:14.120 --> 0:06:16.919 and the payments they make to Apple and samsum. Maybe 0:06:16.960 --> 0:06:20.200 that goes away, but actually that could help Google because 0:06:20.240 --> 0:06:22.760 when it becomes a bidding mechanism, no one else is 0:06:22.760 --> 0:06:25.320 going to bid twenty billion dollars to be that default search, 0:06:25.560 --> 0:06:28.479 and so Google will still be the default search and 0:06:28.560 --> 0:06:31.719 the twenty billion could be all gross smart Interesting. 0:06:31.920 --> 0:06:34.640 All right, we've all had roughly four or five days 0:06:34.640 --> 0:06:38.279 to digest this deep seak data that broke last weekend. 0:06:38.480 --> 0:06:42.239 My amateur take is maybe at a headwind for chip 0:06:42.320 --> 0:06:46.360 makers who sell all this stuff, but maybe a net 0:06:46.360 --> 0:06:47.480 positive for everybody else. 0:06:48.360 --> 0:06:49.480 How do you view it? 0:06:50.480 --> 0:06:52.280 Somebody asked me the Cocktor party tonight, That's what I'm 0:06:52.279 --> 0:06:52.640 going with. 0:06:52.760 --> 0:06:56.720 Yes, I think that's a good take. The semiconductor guys 0:06:57.040 --> 0:06:59.719 should be worried, especially on their training side. If you 0:06:59.760 --> 0:07:03.000 were betting on scaling laws and data centers getting bigger 0:07:03.080 --> 0:07:06.719 and bigger, you needed more power. You have to rethink 0:07:06.960 --> 0:07:10.640 what happens now with deep seek talking about efficiency and 0:07:10.760 --> 0:07:14.080 gains of almost thirty times compared to you know, what 0:07:14.160 --> 0:07:18.520 the pricing was with the prior kind of set of llms. 0:07:19.000 --> 0:07:21.480 But look, I think the biggest beneficiaries here are the 0:07:21.520 --> 0:07:26.040 software companies. There is no doubt that cheaper LLMS helps 0:07:26.080 --> 0:07:29.520 their margin. And that's why all the software companies, the 0:07:29.560 --> 0:07:33.040 cloud guys that want to integrate this LLM technology as 0:07:33.040 --> 0:07:36.520 an agent, they are the biggest beneficiaries. And we saw 0:07:36.600 --> 0:07:40.360 a nice bit up this week on the cloud software names. 0:07:40.400 --> 0:07:42.520 All right, you know this was a big week for tech. 0:07:42.560 --> 0:07:45.160 I mean it is a different things, yeah, I. 0:07:45.120 --> 0:07:47.560 Mean it changed kind of a little bit of the 0:07:47.640 --> 0:07:50.080 narrative of this AI thing and intent. It's just not 0:07:50.400 --> 0:07:53.400 straighten up into the right. There's you get to manage 0:07:53.400 --> 0:07:57.040 some changes here. Mandepcheing, thank you so much for joining us. Mendepcheing, 0:07:57.480 --> 0:08:00.640 Senior analyst Technology Bloomberg Intelligence, actually coming into the office 0:08:00.680 --> 0:08:03.920 on a Friday, unlike his Unlike his bid management team, 0:08:04.200 --> 0:08:05.480 which meils it in regularly. 0:08:10.680 --> 0:08:14.280 You're listening to the Bloomberg Surveillance Podcast. Catch US Live 0:08:14.360 --> 0:08:17.480 weekday afternoons from seven to ten am Eastern Listen on 0:08:17.600 --> 0:08:21.240 Applecarplay and Android Otto with the Bloomberg Business app, or 0:08:21.400 --> 0:08:22.880 watch US Live on YouTube. 0:08:23.240 --> 0:08:25.000 Let's go back to the economy, folks. We have some 0:08:25.040 --> 0:08:27.400 economic data out today. We had a lot of economic 0:08:27.480 --> 0:08:30.360 data coming out really this week, and today's really focusing 0:08:31.000 --> 0:08:36.480 on inflation that seems to be in Czech Simona Mokutam. 0:08:36.600 --> 0:08:39.120 She is a chief economist at State Street. Simona, thanks 0:08:39.120 --> 0:08:41.160 so much for joining us here. What did you take 0:08:41.200 --> 0:08:43.720 away from today's inflation data. 0:08:45.960 --> 0:08:49.360 Well, first of all, the reaction was a little bit 0:08:49.360 --> 0:08:53.200 of relief because there is so much reason for anxiety 0:08:53.280 --> 0:08:56.960 and concern and you know, so much uncertain deal around 0:08:57.040 --> 0:09:00.320 what's coming through in terms of policy. So it's nice 0:09:00.320 --> 0:09:05.040 to see that certain things are reliable and progressing along 0:09:05.120 --> 0:09:09.280 the lines of what had been expected. Even more so, 0:09:09.800 --> 0:09:12.600 it's not that you know, we had steady core PC 0:09:13.080 --> 0:09:15.880 in December, but I think what I'm looking forward to 0:09:15.960 --> 0:09:18.120 see is the resumption. 0:09:17.720 --> 0:09:19.280 Of improvement in January. 0:09:19.320 --> 0:09:21.880 And you know, what's what's nice to be able to 0:09:21.920 --> 0:09:24.200 say is that even if you were to get a 0:09:24.320 --> 0:09:28.240 really you know, significant month or month increase, hey the 0:09:28.320 --> 0:09:32.280 worst since you know, March of last year, you would 0:09:32.360 --> 0:09:35.200 still on a year on year basis yet to tenth improvements. 0:09:35.280 --> 0:09:37.720 So we have not been there in a while. In fact, 0:09:37.720 --> 0:09:39.640 the last time we had that improvement in year on 0:09:39.760 --> 0:09:43.720 year data for CORPC was June. So that is a 0:09:43.760 --> 0:09:46.000 good start to the year at least in that regard. 0:09:46.679 --> 0:09:48.320 I want to pick up on something that our colleague 0:09:48.360 --> 0:09:50.240 Averag Jersey brought up, and that is the read that 0:09:50.280 --> 0:09:52.360 we got this morning on personal spending. I should not 0:09:52.400 --> 0:09:54.839 it came in ato point seven percent survey was point 0:09:54.840 --> 0:09:57.400 five And there's also revision to the last set of 0:09:57.480 --> 0:10:00.440 data we got that was revised upward as well. What 0:10:00.520 --> 0:10:03.280 does that strength that resilience and personal spending tell you 0:10:03.360 --> 0:10:06.240 about the strength of the consumer? Yes, and also just 0:10:06.240 --> 0:10:09.240 sort of what how it complicates the Fed's job you're 0:10:09.240 --> 0:10:09.760 going forward? 0:10:11.559 --> 0:10:13.480 Yeah, I think this also takes me back to the 0:10:13.559 --> 0:10:15.880 GDP data we got a couple of days ago, and 0:10:15.920 --> 0:10:20.440 there was a lot of peculiarities, peculiar behavior in some 0:10:20.480 --> 0:10:23.840 of the components. One thing that really was striking was 0:10:23.880 --> 0:10:27.880 this extraordinary strength in consumer spending. That frankly, it's a 0:10:27.920 --> 0:10:30.760 little hard to reconcile when you look at the behavior 0:10:30.840 --> 0:10:34.440 of a real disposal income which is not quite as strong. 0:10:34.920 --> 0:10:37.080 And you've seen that this morning as well. You know 0:10:37.200 --> 0:10:40.360 the price of that. You know, surging consumption is a 0:10:40.440 --> 0:10:42.720 decline in a savings rate. So then you have to 0:10:42.720 --> 0:10:46.480 ask yourself. You have the strength, but is it truly sustainable? 0:10:46.840 --> 0:10:48.920 And I would say not at the pace that we've 0:10:48.920 --> 0:10:52.480 seen over the last in Q four, So there has 0:10:52.559 --> 0:10:55.880 something has to give. Maybe we are under counting, maybe 0:10:55.960 --> 0:10:59.679 we're under measuring income. That has happened of course in 0:10:59.720 --> 0:11:02.880 the PS, but as things spend, there is too much 0:11:02.880 --> 0:11:06.520 of a divergence between income and spending to be convinced 0:11:06.520 --> 0:11:08.360 that the spending is free continues. 0:11:09.200 --> 0:11:11.600 So some one of the inflation data today again kind 0:11:11.600 --> 0:11:14.360 of in line with the expectations. Yes, if I would 0:11:14.360 --> 0:11:15.720 probably like to see it come down a little bit. 0:11:15.760 --> 0:11:18.640 But there are concerns out there that maybe some of 0:11:18.679 --> 0:11:23.760 President Trump's policies, namely terriffs and immigration reform, will have 0:11:24.320 --> 0:11:29.440 an inflationary impact, a negative inflationary impact, higher inflation. Do 0:11:29.480 --> 0:11:30.280 you subscribe to that? 0:11:32.160 --> 0:11:35.560 I think directionally there is no question about it. You 0:11:35.640 --> 0:11:40.840 are talking you know, a price shock via terris and 0:11:40.960 --> 0:11:44.960 potentially a negative supply shop to the labor market that 0:11:45.120 --> 0:11:48.599 could raise wages down the line. Between these two, I 0:11:48.600 --> 0:11:52.800 would think that terriries have more of an immediate inflationary 0:11:52.920 --> 0:11:56.640 impact just by their nature the ability to impose them 0:11:56.679 --> 0:12:00.120 on you know, a short notice. 0:11:59.679 --> 0:12:01.120 But we have to also. 0:12:00.920 --> 0:12:04.880 Remind ourselves that by for you know, if by comparison 0:12:04.920 --> 0:12:07.880 to other economies, the US is a large, diversified, but 0:12:08.000 --> 0:12:11.920 actually fairly closed the economy, just about fourteen percent of GDP, 0:12:12.640 --> 0:12:15.400 and we don't know what numbers we are talking about 0:12:15.440 --> 0:12:18.880 in terms of terrifts, so something that's you know, reasonably 0:12:18.960 --> 0:12:22.800 small number, it will not be a true make or 0:12:22.880 --> 0:12:27.679 break for the inflation pattern. And also it's important to 0:12:27.720 --> 0:12:30.880 see what happens to services. Right, we are talking terarriffs 0:12:30.920 --> 0:12:33.559 on goods, but that's actually a small part of the economy. 0:12:34.600 --> 0:12:38.320 What matters even more is what happens to shelter rent inflation, 0:12:38.480 --> 0:12:41.079 and there the trend has been favorable. 0:12:40.559 --> 0:12:41.560 Over the last few months. 0:12:41.600 --> 0:12:45.079 I expect that to continue, so of course concern about 0:12:45.080 --> 0:12:48.640 what may happen, but also a little bit of reassurance 0:12:48.679 --> 0:12:52.640 that you have some upsetting positive developments in the service space. 0:12:53.440 --> 0:12:55.560 You know, we have so much uncertainty, hear, when it 0:12:55.559 --> 0:12:57.600 comes to to trade policy, we're waiting to see what's 0:12:57.640 --> 0:12:59.680 put in place. In fact, if anything will be put 0:12:59.679 --> 0:13:02.960 in place. Is we do have more awareness now of 0:13:03.000 --> 0:13:07.280 the administration's immigration policies, and we've seen the uptick in 0:13:07.320 --> 0:13:10.319 the way that all of these agencies have gone after 0:13:10.440 --> 0:13:14.320 immigrants are in this country without documents. Do you have 0:13:14.360 --> 0:13:16.400 a better sense now that we have seen that telegraph 0:13:16.480 --> 0:13:18.720 through executive orders, as we've seen some action in terms 0:13:18.760 --> 0:13:22.480 of policy action, that you can kind of think more 0:13:22.520 --> 0:13:24.800 clearly about the effect I could have on the economy. 0:13:27.080 --> 0:13:30.280 Frankly, not a whole lot more clarity than we you know, 0:13:31.400 --> 0:13:33.559 we had a month or two ago. I think what 0:13:33.600 --> 0:13:36.880 we are seeing is what we sort of expected to see. 0:13:36.960 --> 0:13:40.440 There will be action on immigration, there will be deportations, 0:13:40.920 --> 0:13:43.800 but again, as with everything else, the devils in the dtail. 0:13:43.880 --> 0:13:46.679 So what exactly would be the cumulative number we are 0:13:46.720 --> 0:13:50.880 talking about here? And so because I don't know, I 0:13:51.679 --> 0:13:54.000 try to also focus on what I do know, which 0:13:54.040 --> 0:13:57.640 is the reality that the US labor market today is 0:13:57.760 --> 0:14:00.360 much closer to balance than it was two years ago, 0:14:00.440 --> 0:14:04.720 if these policies were hitting, then I would have expected 0:14:04.760 --> 0:14:08.320 more of an immediate inflationary effect. Today you're looking at, 0:14:08.800 --> 0:14:13.760 you know, very low quits rate, very low average weekly hours. 0:14:13.840 --> 0:14:17.240 So there is a sense that labor resources are not 0:14:17.280 --> 0:14:21.440 necessarily so intensely utilized. There is no frauth in the 0:14:21.520 --> 0:14:24.960 labor market, and that buys you sometime. At the same time, 0:14:25.040 --> 0:14:27.960 you know, what is the speed of deportations. I don't know, 0:14:28.720 --> 0:14:31.040 but it will take some time, I think, to truly 0:14:31.080 --> 0:14:33.560 make a dent in terms of the numbers that we 0:14:33.600 --> 0:14:36.320 are talking about. If you look at southern border encounters 0:14:36.360 --> 0:14:39.400 since twenty twenty one, you know, eight point eight million, 0:14:39.680 --> 0:14:41.560 it's going to take a long time to really make 0:14:41.600 --> 0:14:44.760 a dent in that. So because of that, I still 0:14:44.800 --> 0:14:47.800 subscribe to the view that short term I'm more worried 0:14:47.840 --> 0:14:52.360 about cherrys from an inflation standpoint than immigration. Actually, medium 0:14:52.440 --> 0:14:54.920 term there's a different conversation, And I speak to you 0:14:54.920 --> 0:14:57.520 as an immigrant. We do need them, we do not need. 0:14:57.360 --> 0:15:01.440 Those skills, so it does matter very much watch what happens. 0:15:01.480 --> 0:15:04.880 But on a three to four months, even six months basis, 0:15:04.920 --> 0:15:07.920 I think you're already going to see the wage. 0:15:07.640 --> 0:15:11.280 Effect Simona, thank you so much for joining Usimona Mokuta, 0:15:11.760 --> 0:15:13.920 chief Economs at State Street. Next time we're going to 0:15:13.960 --> 0:15:17.480 ask her about what it's like to live in Radio Romania, that's. 0:15:17.360 --> 0:15:18.240 Where she's from. 0:15:18.280 --> 0:15:22.160 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:15:22.200 --> 0:15:25.240 starting at seven am Eastern on Apple, Cocklay and Android 0:15:25.240 --> 0:15:28.280 Auto with the Bloomberg Business App. You can also listen 0:15:28.360 --> 0:15:31.600 live on Amazon Alexa from our flagship New York station, 0:15:32.160 --> 0:15:34.840 Just say Alexa Play Bloomberg eleven thirty. 0:15:35.200 --> 0:15:37.160 You're busy time down in Washington, DC for the Trump 0:15:37.200 --> 0:15:40.280 administration as the transition continues. I want to get the 0:15:40.360 --> 0:15:43.520 latest on that. Jen Flinton joins US head of US 0:15:43.600 --> 0:15:46.760 Government Affairs for Invesco. Jen, let's talk about It's been 0:15:46.800 --> 0:15:49.280 a busy week for some of the President Trent's nominees, 0:15:49.400 --> 0:15:53.120 sitting in front of various Senate committees trying to get 0:15:53.120 --> 0:15:55.480 a proof here. What have been the highlights this week 0:15:55.520 --> 0:15:57.240 for you? It looks like we actually carried some of 0:15:57.280 --> 0:16:00.680 the RFK junior hearing as well well as that for 0:16:00.800 --> 0:16:03.000 Tulsei Gabbard. What are you making so far? 0:16:04.000 --> 0:16:07.640 Yeah, that's right. So RFKJ Robert F. 0:16:07.720 --> 0:16:13.440 Kennedy Junior is now having accomplished both the Senate Help 0:16:13.480 --> 0:16:15.520 Committee and the Finance Committee. 0:16:16.080 --> 0:16:17.600 It's going to take a committee. 0:16:17.200 --> 0:16:21.320 Vote next week, most likely to advance him to the 0:16:21.360 --> 0:16:25.040 Senate floor. Cash Patel as well for the FBI director, 0:16:25.520 --> 0:16:28.120 and then of course Tulci Gabbard for the head of 0:16:28.200 --> 0:16:33.119 d and I these hearings were the most controversial hearings 0:16:33.160 --> 0:16:36.560 that we saw, and I think there's a question right now, 0:16:36.720 --> 0:16:41.960 especially with Chelsea Gabbard's nomination, whether she can get out 0:16:42.000 --> 0:16:44.760 of committee. And we still don't know, because this is 0:16:44.800 --> 0:16:47.920 the Intelligence Committee, whether this will be a public vote 0:16:48.040 --> 0:16:50.280 or whether this will be a private, behind the scenes 0:16:50.360 --> 0:16:51.920 vote of the committee. 0:16:52.240 --> 0:16:54.200 Well, all of this is unfolding. I imagine there is 0:16:54.240 --> 0:16:57.080 work underway on what I think the President and many 0:16:57.120 --> 0:16:59.080 of his economic advisors have said will be kind of 0:16:59.120 --> 0:17:02.480 the primary focus for them in the year ahead, and 0:17:02.520 --> 0:17:06.320 that is on getting this Trump era tax cutpill extended. 0:17:06.800 --> 0:17:09.159 Where are we in that process and when do we 0:17:09.200 --> 0:17:10.920 begin to get some indication of sort of what will 0:17:10.960 --> 0:17:12.320 be in that what won't I know. There was that 0:17:12.400 --> 0:17:15.159 meeting in South Florida where a lot of members of 0:17:15.160 --> 0:17:18.080 Congress whose districts are affected by that cap on state 0:17:18.160 --> 0:17:20.080 local tax deduction for instance, went down and tried to 0:17:20.080 --> 0:17:23.120 lobby the president. Where are we in that process? When 0:17:23.119 --> 0:17:24.480 do we get clarity on where it's headed? 0:17:25.440 --> 0:17:26.040 Yeah, that's right. 0:17:26.080 --> 0:17:30.280 So the House Republican Conference met in Doral, Florida, and 0:17:30.440 --> 0:17:34.399 President Trump did talk to the group and sort of 0:17:34.440 --> 0:17:37.000 outline all of the big things that he wants to do. 0:17:37.480 --> 0:17:39.480 What they haven't yet decided. 0:17:39.040 --> 0:17:43.639 On is how to go forward on the reconciliation instructions. 0:17:43.960 --> 0:17:46.600 And that's a really key I know it's a process issue, 0:17:46.600 --> 0:17:50.640 but it's a really key part of this process. They 0:17:50.760 --> 0:17:56.040 have to pass a budget resolution with reconciliation instructions, a 0:17:56.200 --> 0:17:58.800 joint resolution out of both the House and the Senate. 0:17:59.200 --> 0:18:02.040 And right now the House and the Senate are divided 0:18:02.600 --> 0:18:06.000 on the actual package, how big it should be, whether 0:18:06.040 --> 0:18:10.000 there should be one or two, because it's possible under 0:18:10.040 --> 0:18:13.399 the rules to do two reconciliation packages this year and 0:18:13.560 --> 0:18:17.800 just a sort of step back. Reconciliation means that a 0:18:17.920 --> 0:18:22.600 simple majority in the Senate can pass a major bill 0:18:22.960 --> 0:18:27.000 out of the Senate, which is a big deal when 0:18:27.160 --> 0:18:31.439 typically bills take sixty votes to get out of the Senate, 0:18:31.920 --> 0:18:35.399 and there are rules around what can be included in reconciliation, 0:18:35.520 --> 0:18:38.320 and it really has to do with having some sort 0:18:38.320 --> 0:18:42.320 of revenue impact or debt impact. But they can do 0:18:42.400 --> 0:18:44.960 big things, and as we saw in the past, that's 0:18:45.000 --> 0:18:47.560 how TCGA passed. 0:18:47.240 --> 0:18:49.480 Out of the first Trump administration. 0:18:49.840 --> 0:18:53.280 And so they really expect to move forward on tax reform. 0:18:52.960 --> 0:18:54.000 Before the end of the year. 0:18:54.560 --> 0:18:58.040 The question is do they do one or two And 0:18:58.119 --> 0:19:00.720 that really has to be decided for I think in 0:19:00.760 --> 0:19:03.560 the House and we'll see that movement next week in 0:19:03.600 --> 0:19:04.640 the Budget Committee. 0:19:05.000 --> 0:19:07.600 Jen how do they plan on paying for whatever package 0:19:07.880 --> 0:19:11.280 they do agree upon or does it even matter that 0:19:11.280 --> 0:19:12.639 they tell us how they're going to pay for it. 0:19:13.720 --> 0:19:16.960 Well, they have to decide on and that is going 0:19:17.000 --> 0:19:19.920 to be sort of up to Senate Finance in ways 0:19:19.920 --> 0:19:24.000 and means what the baseline is. And if the baseline 0:19:24.080 --> 0:19:29.840 is current policy, then technically for the context of scoring 0:19:29.920 --> 0:19:33.440 this bill, then they don't have to necessarily pay for 0:19:34.000 --> 0:19:39.520 the extension of the current provisions of the twenty seventeen 0:19:39.840 --> 0:19:43.760 tax bill the TCCHA, right, But there are other things 0:19:43.840 --> 0:19:48.240 that Trump wants to do that President Trump really detailed 0:19:48.320 --> 0:19:52.760 during the campaign and reiterated this week in Florida with 0:19:53.080 --> 0:19:57.040 extending some sort of no tax on tips and no 0:19:57.160 --> 0:20:02.200 tax on Social Security benefits and no tax on overtime 0:20:02.320 --> 0:20:05.520 in common. Right, and so there are there's a real 0:20:05.600 --> 0:20:08.199 expansion here that they're going to have to deal with. 0:20:08.320 --> 0:20:09.359 It's going to cost money. 0:20:09.480 --> 0:20:09.680 Yep. 0:20:09.800 --> 0:20:11.560 All right, Jen, thank you so much for joining us. 0:20:11.600 --> 0:20:15.680 Jen Flinton, head of US Government Affairs for Invesco, busy 0:20:15.680 --> 0:20:17.920 times down in Washington, DC for the Trump administration. 0:20:23.800 --> 0:20:27.679 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:20:27.720 --> 0:20:30.719 starting at seven am Eastern on Apple, Corplay and Android 0:20:30.760 --> 0:20:33.800 Auto with the Bloomberg Business app. You can also watch 0:20:33.840 --> 0:20:36.800 us live every weekday on YouTube and always on the 0:20:36.800 --> 0:20:37.840 Bloomberg terminal. 0:20:37.880 --> 0:20:39.800 All right, folks, your daily look at the front pages 0:20:39.840 --> 0:20:42.360 around the world. Lisa Matteo newspapers. 0:20:42.480 --> 0:20:43.400 What do you go for us today? 0:20:43.440 --> 0:20:43.680 Okay? 0:20:43.720 --> 0:20:44.919 Super Bowl around the corner, right. 0:20:44.960 --> 0:20:47.639 You know, fans love their wings and their beer, but 0:20:47.800 --> 0:20:50.359 guacamole is a big part of it. You gotta have 0:20:50.440 --> 0:20:53.520 the quawk with the chips, okay, but now you might 0:20:53.560 --> 0:20:55.440 have to pay more for it. And the reason they're 0:20:55.480 --> 0:20:57.600 saying is because you know, we've been talking about President 0:20:57.640 --> 0:21:00.720 Trump starting to possibly set off those first wave of 0:21:00.720 --> 0:21:04.280 towers tomorrow, Canada and Mexico in the spotlight. So Mexico, yes, 0:21:04.320 --> 0:21:09.240 supplies upwards of ninety percent of the avocados, all right, 0:21:09.400 --> 0:21:11.639 so the prices could go up. There was a drown 0:21:11.680 --> 0:21:15.040