1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordern. Join us each day 4 00:00:18,720 --> 00:00:22,239 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,680 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,280 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:37,960 Speaker 2: Terminal and the Bloomberg Business app. Nrian Rabini of NYU 10 00:00:38,080 --> 00:00:41,199 Speaker 2: and Hadson Bay Capital proposing a solution writing quote to 11 00:00:41,280 --> 00:00:44,800 Speaker 2: resolve their current tensions, Canada, Mexico and the United States 12 00:00:44,960 --> 00:00:49,720 Speaker 2: should start drafting plans for a North American economic union. 13 00:00:49,920 --> 00:00:52,640 Speaker 2: Noria Rabini joined us now for more. Welcome to the 14 00:00:52,640 --> 00:00:54,680 Speaker 2: program sir, Thanks for making time for us. That's quite 15 00:00:54,680 --> 00:00:57,120 Speaker 2: a statement. Just go through the way you're thinking about it. 16 00:00:57,160 --> 00:00:58,520 Speaker 2: How on earth would this work? 17 00:01:00,360 --> 00:01:00,560 Speaker 3: Well? 18 00:01:00,680 --> 00:01:03,880 Speaker 4: For now, we have only a free trade area between US, 19 00:01:03,960 --> 00:01:09,000 Speaker 4: Canada and Mexico, and there already tensions involved. There's nothing 20 00:01:09,200 --> 00:01:12,320 Speaker 4: not only to do with of course drugs, fan and 21 00:01:12,440 --> 00:01:16,000 Speaker 4: ila and migrants but the US is also concerned about 22 00:01:16,040 --> 00:01:21,160 Speaker 4: the trade imbalance between Mexico, US and Canada. They are 23 00:01:21,240 --> 00:01:24,800 Speaker 4: very large trade services with the United States. So you 24 00:01:24,800 --> 00:01:29,880 Speaker 4: can really negotiate the USMCA in a direction of restricting trade, 25 00:01:30,200 --> 00:01:33,840 Speaker 4: and US is now probably asking Mexico and Canada to 26 00:01:33,959 --> 00:01:37,520 Speaker 4: also restrict trade in automobiles. There may be twenty twenty 27 00:01:37,560 --> 00:01:40,040 Speaker 4: five percent tarries on that because there are lots of 28 00:01:40,120 --> 00:01:42,480 Speaker 4: job loss in US. Or you can do something that 29 00:01:42,600 --> 00:01:46,080 Speaker 4: is more bold, forming a full economic union. They would 30 00:01:46,120 --> 00:01:49,760 Speaker 4: imply free trade not only in goods, but also in services, 31 00:01:49,800 --> 00:01:54,240 Speaker 4: in the movement of capital, labor, data, technology, and information. 32 00:01:54,360 --> 00:01:56,720 Speaker 4: That's what the European country have done for the last 33 00:01:56,960 --> 00:02:00,840 Speaker 4: few decades, and from any economic point of view, America 34 00:02:01,080 --> 00:02:05,640 Speaker 4: is an optimal trading area that goes beyond goods. Now, 35 00:02:05,800 --> 00:02:09,000 Speaker 4: one step you can take along those lines before having 36 00:02:09,000 --> 00:02:12,360 Speaker 4: a full economic union could be, for example, to form 37 00:02:12,400 --> 00:02:15,680 Speaker 4: a custom union. What's the difference between a custom union 38 00:02:15,919 --> 00:02:18,760 Speaker 4: and a free trade area. In a free trade area, 39 00:02:18,919 --> 00:02:22,600 Speaker 4: there is no common external tariff against other countries. So 40 00:02:22,600 --> 00:02:25,040 Speaker 4: for example, there are lots of Chinese cars that are 41 00:02:25,080 --> 00:02:28,240 Speaker 4: now entering into Mexico, while US is a one hundred 42 00:02:28,240 --> 00:02:32,160 Speaker 4: percent tariff on against Chinese ev if you form a 43 00:02:32,200 --> 00:02:35,240 Speaker 4: custom unions, the first step for economic union, you have 44 00:02:35,360 --> 00:02:39,440 Speaker 4: to have the same tariff impost on Chinese cars whether 45 00:02:39,800 --> 00:02:43,200 Speaker 4: they go to Mexico or US or Canadata. And in 46 00:02:43,200 --> 00:02:47,160 Speaker 4: this way you create a full market, for example, for automobiles, 47 00:02:47,440 --> 00:02:50,440 Speaker 4: and you prevent the imposition of say twenty twenty five 48 00:02:50,480 --> 00:02:55,000 Speaker 4: percent tariffs on experts for Chinese cars or parts from 49 00:02:55,080 --> 00:02:57,680 Speaker 4: Mexico to the United States. So you can do a 50 00:02:57,720 --> 00:03:01,720 Speaker 4: reform of the trade agreement action of shrinking trade, or 51 00:03:01,760 --> 00:03:04,280 Speaker 4: you can do it in the direction of expanding trade. 52 00:03:04,400 --> 00:03:06,760 Speaker 4: And I argue that actually in the economic benefit of 53 00:03:06,800 --> 00:03:09,920 Speaker 4: all three counties to expand trade. To first the custom 54 00:03:10,040 --> 00:03:12,360 Speaker 4: union and then a full economic union. 55 00:03:12,200 --> 00:03:14,639 Speaker 2: You offer a different vision then first, before we get 56 00:03:14,680 --> 00:03:16,840 Speaker 2: to the much bigger one later, Can we just talk 57 00:03:16,880 --> 00:03:20,000 Speaker 2: about the much bigger one. Freedom of labor, free movement 58 00:03:20,040 --> 00:03:22,639 Speaker 2: of labor between the United States and Mexico just sounds 59 00:03:22,639 --> 00:03:25,320 Speaker 2: like a complete nonstarter, Noriel, do you actually think that 60 00:03:25,320 --> 00:03:27,840 Speaker 2: could be a stepping stone further out down the road 61 00:03:27,960 --> 00:03:28,560 Speaker 2: in the future. 62 00:03:30,280 --> 00:03:32,280 Speaker 4: Well, in the case of the European Union, you had 63 00:03:32,320 --> 00:03:34,800 Speaker 4: the same problem. The country with the were much poorer 64 00:03:35,200 --> 00:03:38,240 Speaker 4: in central Eastern Europe. They you joined the U, there 65 00:03:38,320 --> 00:03:42,280 Speaker 4: was a transition period of many decades until they reached 66 00:03:42,320 --> 00:03:45,080 Speaker 4: a certain level of per capita income, a certain level 67 00:03:45,080 --> 00:03:48,200 Speaker 4: of governor, at a certain level of reform. Of course, 68 00:03:48,240 --> 00:03:51,200 Speaker 4: free trade in labor within US and Canada would not 69 00:03:51,280 --> 00:03:54,840 Speaker 4: be a problem, same per capita income, same culture, language, 70 00:03:55,120 --> 00:03:58,040 Speaker 4: and actually there'll be probably more people going from US 71 00:03:58,080 --> 00:04:00,840 Speaker 4: to Canada. They yeah, we around because of global climate 72 00:04:00,920 --> 00:04:03,200 Speaker 4: change and shipland in Canada. 73 00:04:03,360 --> 00:04:04,040 Speaker 3: With Mexico. 74 00:04:04,080 --> 00:04:06,280 Speaker 4: Of course, at the current level of per capita income, 75 00:04:06,480 --> 00:04:09,880 Speaker 4: you cannot have free trade in labor. But as I said, 76 00:04:10,200 --> 00:04:12,160 Speaker 4: like in the case of Europe, you can have Sundard 77 00:04:12,560 --> 00:04:15,720 Speaker 4: criteria that suggests that maybe after ten or twenty years, 78 00:04:15,880 --> 00:04:18,919 Speaker 4: when Mexican per capita income is much higher, there's better 79 00:04:19,000 --> 00:04:21,280 Speaker 4: governance than you free up that type of trade. So 80 00:04:21,320 --> 00:04:24,080 Speaker 4: I say that in economic union, the part that is 81 00:04:24,160 --> 00:04:27,760 Speaker 4: controversial is only probably migration of labor. It will be 82 00:04:27,760 --> 00:04:29,720 Speaker 4: in the interest of the United States who have free 83 00:04:29,760 --> 00:04:34,280 Speaker 4: trade in goods, in services where it has comparative advantage, 84 00:04:34,400 --> 00:04:37,640 Speaker 4: in the movement of capital, portfolio and FDI, and of 85 00:04:37,640 --> 00:04:40,960 Speaker 4: course data information technology, where the US as a major 86 00:04:41,240 --> 00:04:45,039 Speaker 4: comparative advantage. Real to Mexico and to Canada. The only 87 00:04:45,080 --> 00:04:48,400 Speaker 4: controversial part, as I said, is labor movement, but you 88 00:04:48,440 --> 00:04:49,679 Speaker 4: can restrict it over time. 89 00:04:50,480 --> 00:04:52,400 Speaker 5: Noel, do you get the sense that anyone in the 90 00:04:52,400 --> 00:04:56,120 Speaker 5: current administration is sympathetic to this type of proposal at 91 00:04:56,120 --> 00:04:58,440 Speaker 5: a time where it seems like people are increasingly going 92 00:04:58,480 --> 00:05:02,279 Speaker 5: for economic isolation rather than reducing the walls entirely. 93 00:05:04,440 --> 00:05:07,599 Speaker 4: I will start conversation within the administration on this matter, 94 00:05:08,120 --> 00:05:12,200 Speaker 4: but I would say that certainly a step towards reforming 95 00:05:12,240 --> 00:05:15,720 Speaker 4: the USMCA in the direction of a custom union makes 96 00:05:15,760 --> 00:05:19,400 Speaker 4: sense because right now, of course, the automakers, that the 97 00:05:19,480 --> 00:05:22,960 Speaker 4: producers are very worried about the impact on their own 98 00:05:23,000 --> 00:05:26,600 Speaker 4: production costs and profit margins of restricting and imposing a 99 00:05:26,640 --> 00:05:30,320 Speaker 4: lot of tariffs on say auto trade. The unions and 100 00:05:30,360 --> 00:05:33,400 Speaker 4: the workers are in favor of it, but the problem 101 00:05:33,480 --> 00:05:36,280 Speaker 4: is that you're imposing these twenty five percent tariff or 102 00:05:36,360 --> 00:05:39,600 Speaker 4: on both automotive trade. The cost of cars in North 103 00:05:39,640 --> 00:05:42,880 Speaker 4: America is going to increase by ten twenty percent. That's 104 00:05:42,920 --> 00:05:46,000 Speaker 4: going to hurt first of all, consumers, but it's going 105 00:05:46,040 --> 00:05:49,120 Speaker 4: to also hurt the workers. So if you care about 106 00:05:49,240 --> 00:05:53,080 Speaker 4: US auto workers, there are two options wanted to impose 107 00:05:53,120 --> 00:05:56,680 Speaker 4: the tariffs and restricting trade in automotive, but that's going 108 00:05:56,680 --> 00:05:59,480 Speaker 4: to be bad for everybody. Another one is instead having 109 00:05:59,480 --> 00:06:02,640 Speaker 4: a casto union, where if you essentially have an external 110 00:06:02,680 --> 00:06:07,360 Speaker 4: tariff that is common against Chinese autos, then Chinese autos 111 00:06:07,360 --> 00:06:10,240 Speaker 4: that are not entering the United States today will not 112 00:06:10,400 --> 00:06:14,400 Speaker 4: enter Mexico either, and therefore the market for US automaker 113 00:06:14,480 --> 00:06:16,080 Speaker 4: is going to be much bigger because you have one 114 00:06:16,120 --> 00:06:18,920 Speaker 4: hundred and twenty million Mexican they need auto and that 115 00:06:19,080 --> 00:06:21,760 Speaker 4: by now mostly Chinese cars. So you can have a 116 00:06:21,760 --> 00:06:25,279 Speaker 4: win win solution that makes everybody better off, including the 117 00:06:25,320 --> 00:06:27,520 Speaker 4: auto workers if you go in the direction of a 118 00:06:27,600 --> 00:06:30,680 Speaker 4: custom union and eventually in economic union, so you have 119 00:06:30,720 --> 00:06:33,200 Speaker 4: to go forward other than going backward. And I think 120 00:06:33,279 --> 00:06:37,200 Speaker 4: that those arguments can be made in Washington, in Mexico City, 121 00:06:37,480 --> 00:06:39,120 Speaker 4: and of course in Canada as well. 122 00:06:39,839 --> 00:06:43,520 Speaker 1: Noreel is this proposal potentially a way that the United 123 00:06:43,520 --> 00:06:45,920 Speaker 1: States could have more heft when it comes to driving 124 00:06:45,920 --> 00:06:47,480 Speaker 1: a wedge between Beijing. 125 00:06:50,160 --> 00:06:53,440 Speaker 4: Well, certainly, one of the concerns that the United States 126 00:06:53,480 --> 00:06:56,560 Speaker 4: has is not just fentanyl that is coming to the 127 00:06:56,680 --> 00:07:01,640 Speaker 4: US via China, but more important that the Chinese have 128 00:07:01,680 --> 00:07:06,760 Speaker 4: avoided tariffs by essentially exporting goods to Mexico and from 129 00:07:06,839 --> 00:07:10,320 Speaker 4: Mexico to the United States as if there were Mexican goods. 130 00:07:10,600 --> 00:07:14,760 Speaker 4: The Mexican production of many goods as a lot of 131 00:07:14,880 --> 00:07:18,480 Speaker 4: content of parts that is Chinese. And there is also 132 00:07:18,520 --> 00:07:21,679 Speaker 4: a concern about the fact that the Chinese are taking 133 00:07:21,680 --> 00:07:26,200 Speaker 4: over the auto market of Mexico as well. Exporting chip 134 00:07:26,240 --> 00:07:30,120 Speaker 4: cars isn't otherwise to Mexico. So if you care about 135 00:07:30,120 --> 00:07:34,840 Speaker 4: the risking the relationship with essentially China, whether it's in 136 00:07:34,920 --> 00:07:38,119 Speaker 4: auto or other critical parts of the economy, it makes 137 00:07:38,160 --> 00:07:41,960 Speaker 4: sense to have initially customed union and then having also 138 00:07:41,960 --> 00:07:45,240 Speaker 4: a full economic union where decisions about how much you 139 00:07:45,360 --> 00:07:49,720 Speaker 4: trade and you investment with China from North America are 140 00:07:49,760 --> 00:07:53,040 Speaker 4: done not by the US alone side alone, and then 141 00:07:53,120 --> 00:07:55,520 Speaker 4: Mexico can do whatever they want as they do right now, 142 00:07:55,640 --> 00:07:59,080 Speaker 4: but everything the context of an economic union, and initially 143 00:08:00,520 --> 00:08:02,480 Speaker 4: so it makes sense for the US, it makes sense 144 00:08:02,480 --> 00:08:03,440 Speaker 4: for North America. 145 00:08:03,560 --> 00:08:05,920 Speaker 2: Noiel provocative as always, It's going to catch up with this, sir, 146 00:08:05,960 --> 00:08:07,640 Speaker 2: and I should say thanks for making sign for us. 147 00:08:07,640 --> 00:08:09,000 Speaker 2: I know you're on a bit of a world tour, 148 00:08:09,080 --> 00:08:10,520 Speaker 2: so looking forward to catching up with you. When you're 149 00:08:10,560 --> 00:08:12,640 Speaker 2: back in New York, Noria Rabini there of n Yu 150 00:08:12,720 --> 00:08:24,480 Speaker 2: Stern and Hudson Bay. We'll begin this hour with stocks 151 00:08:24,520 --> 00:08:26,880 Speaker 2: lower struggling to snap a four week losing street seem 152 00:08:26,920 --> 00:08:29,640 Speaker 2: a shower of principal ascent management writing. Whether the rally 153 00:08:29,680 --> 00:08:33,679 Speaker 2: can reassert itself and deliver positive equity returns going forward 154 00:08:33,840 --> 00:08:37,640 Speaker 2: will likely depend on whether Earning's growth can deliver. Seema 155 00:08:37,720 --> 00:08:39,760 Speaker 2: joins us now for more, Sema, welcome to the program. 156 00:08:39,840 --> 00:08:44,280 Speaker 2: Can it deliver relative to expectations? So let's talk about expectations. 157 00:08:44,480 --> 00:08:47,880 Speaker 2: Have they pulled back sufficiently over the last several weeks. 158 00:08:48,800 --> 00:08:51,520 Speaker 6: Hi, John, I don't know if it necessarily has. I mean, 159 00:08:51,559 --> 00:08:56,000 Speaker 6: we've already seen a couple of downgrades to economic growth forecast. Actually, 160 00:08:56,000 --> 00:08:58,480 Speaker 6: from learning's perspective, I don't think it's moved down enough, 161 00:08:58,559 --> 00:09:01,720 Speaker 6: particularly when you start to think about the second of 162 00:09:01,760 --> 00:09:05,360 Speaker 6: April and the amount that could happen to global stocks, 163 00:09:05,400 --> 00:09:08,000 Speaker 6: global earnings. So I think there's a little bit further 164 00:09:08,040 --> 00:09:09,959 Speaker 6: to go. You know, we need to see a number 165 00:09:09,960 --> 00:09:13,240 Speaker 6: of other I guess boosts coming in the second half 166 00:09:13,280 --> 00:09:14,880 Speaker 6: of the year, but I think for the next couple 167 00:09:14,920 --> 00:09:16,480 Speaker 6: of months it's going to be a really rocky road. 168 00:09:16,640 --> 00:09:18,360 Speaker 2: Same as some of the retailers have come out and 169 00:09:18,400 --> 00:09:20,440 Speaker 2: said that the next year could be difficult. They've loved 170 00:09:20,440 --> 00:09:24,000 Speaker 2: red expectations. Delta air Lines the Airlines Group have done 171 00:09:24,120 --> 00:09:26,320 Speaker 2: a similar thing over the last several weeks as well. 172 00:09:26,480 --> 00:09:27,960 Speaker 2: Which parts of the market do you think are more 173 00:09:28,040 --> 00:09:29,920 Speaker 2: vulnerable going into earning season? 174 00:09:32,160 --> 00:09:34,280 Speaker 6: So I think anything, of course, any which has got 175 00:09:34,360 --> 00:09:37,120 Speaker 6: any kind of international revenue exposure, anything which is linked 176 00:09:37,160 --> 00:09:39,520 Speaker 6: to consumers. The things that we're really concerned about with 177 00:09:39,679 --> 00:09:42,640 Speaker 6: consumer is just what we're seeing with regards to price increases, 178 00:09:43,200 --> 00:09:45,920 Speaker 6: the pressures that people are having on household income. So 179 00:09:46,000 --> 00:09:48,520 Speaker 6: actually it's spread across so many sectors because there's so 180 00:09:49,000 --> 00:09:52,280 Speaker 6: much significant exposure. There are parts of the market which 181 00:09:52,280 --> 00:09:56,640 Speaker 6: we think a little bit less vulnerable, places like financials 182 00:09:56,640 --> 00:09:58,320 Speaker 6: which have had a bit of a pullback. It could 183 00:09:58,320 --> 00:10:01,800 Speaker 6: see some return, but so much really depends on what 184 00:10:01,840 --> 00:10:04,439 Speaker 6: can we expect to come through from a stimulus perspective, 185 00:10:05,040 --> 00:10:07,040 Speaker 6: not just from the FED, but in terms of you know, 186 00:10:07,080 --> 00:10:09,080 Speaker 6: what happens to tabs in the second half of the year, 187 00:10:09,080 --> 00:10:11,160 Speaker 6: Are something can be lifted, Are we going to expect 188 00:10:11,160 --> 00:10:14,000 Speaker 6: to see deregulation if that comes through then there are 189 00:10:14,080 --> 00:10:16,680 Speaker 6: parts of the market that stand to gain over the 190 00:10:16,679 --> 00:10:19,120 Speaker 6: coming months. But as I said, I think the jury 191 00:10:19,160 --> 00:10:21,760 Speaker 6: is out until we have some further clarity of where 192 00:10:21,760 --> 00:10:24,360 Speaker 6: this administration is going with a number of their different policies. 193 00:10:24,400 --> 00:10:26,360 Speaker 5: And there also needs to be some clarity some of 194 00:10:26,400 --> 00:10:29,640 Speaker 5: those inflationary pressures that you're referring to, both with respect 195 00:10:29,679 --> 00:10:33,080 Speaker 5: to households and what that does to their spending capacity, 196 00:10:33,080 --> 00:10:35,679 Speaker 5: as well as two companies and their ability to pass 197 00:10:35,679 --> 00:10:38,320 Speaker 5: it along. Two said consumers, Do you have a sense 198 00:10:38,400 --> 00:10:41,079 Speaker 5: of whether so far some of these price pressures are 199 00:10:41,240 --> 00:10:44,360 Speaker 5: actually inflationary or whether they have the seeds of being 200 00:10:44,400 --> 00:10:47,680 Speaker 5: disinflationary down the line in tandem with weaker growth. 201 00:10:48,920 --> 00:10:50,680 Speaker 6: So actually, I don't think there is any clarity tool. 202 00:10:50,679 --> 00:10:53,360 Speaker 6: I think we're hearing really contradictory stories. You know, about 203 00:10:53,360 --> 00:10:55,640 Speaker 6: a year ago, we were talking to a number of 204 00:10:55,960 --> 00:10:58,880 Speaker 6: our larger clients who had told us that typically you 205 00:10:58,880 --> 00:11:02,320 Speaker 6: can pass on increases twice. You know, consumers can handle 206 00:11:02,320 --> 00:11:04,400 Speaker 6: it twice. The third time the third time is a 207 00:11:04,440 --> 00:11:07,160 Speaker 6: complete nogo, and we're almost looking at the third time now. 208 00:11:07,480 --> 00:11:09,800 Speaker 6: On the other hand, we are hearing some small businesses 209 00:11:09,960 --> 00:11:13,400 Speaker 6: who are saying that there's so much uncertainty and they 210 00:11:13,400 --> 00:11:15,800 Speaker 6: cannot be left out of pockets, so they're already starting 211 00:11:15,840 --> 00:11:20,120 Speaker 6: to increase prices ahead of what could be reciprocation on 212 00:11:20,120 --> 00:11:22,360 Speaker 6: tariffs on April the second. So actually it's a very, 213 00:11:22,440 --> 00:11:25,600 Speaker 6: very very story, which of course it doesn't help businesses, companies, 214 00:11:25,600 --> 00:11:26,800 Speaker 6: investors really plan ahead. 215 00:11:27,280 --> 00:11:29,400 Speaker 5: At the end of another week where my mind feels 216 00:11:29,400 --> 00:11:32,040 Speaker 5: somewhat fried, I wonder if people are just getting sick 217 00:11:32,160 --> 00:11:34,520 Speaker 5: of all of the uncertainty in the United States and 218 00:11:34,559 --> 00:11:36,960 Speaker 5: are looking for the certainty of the budget that was 219 00:11:37,080 --> 00:11:40,880 Speaker 5: just passed in Germany, the certainty of other regions in 220 00:11:40,920 --> 00:11:44,400 Speaker 5: the world that might be engaging in fiscal stimulus. Do 221 00:11:44,480 --> 00:11:46,400 Speaker 5: you jump on that train or do you think that 222 00:11:46,400 --> 00:11:49,079 Speaker 5: that sort of haven from uncertainty or just. 223 00:11:49,240 --> 00:11:50,720 Speaker 7: Another story, another narrative. 224 00:11:50,720 --> 00:11:54,240 Speaker 5: Do you think that that's basically played out as people realize, Okay, 225 00:11:54,280 --> 00:11:56,079 Speaker 5: it's going to be more complicated. 226 00:11:56,960 --> 00:11:58,760 Speaker 6: So it's funny. So I've been in Madrid all of 227 00:11:58,800 --> 00:12:01,080 Speaker 6: this week speaking to clients, and it was interesting from 228 00:12:01,120 --> 00:12:03,240 Speaker 6: their perspective. They're a little bit more skeptical than I'm 229 00:12:03,240 --> 00:12:06,440 Speaker 6: finding the US audience to be. They're looking at this 230 00:12:06,480 --> 00:12:08,400 Speaker 6: and they're saying, look, this is really great news for Germany, 231 00:12:08,440 --> 00:12:10,960 Speaker 6: without a doubt, but in terms of how it feeds 232 00:12:11,000 --> 00:12:14,800 Speaker 6: through to Europe, they are still unsure of really what 233 00:12:15,000 --> 00:12:17,160 Speaker 6: the positive repercussions could be. They don't really think there's 234 00:12:17,160 --> 00:12:19,240 Speaker 6: going to be a major fiscal stimulus from their countries, 235 00:12:19,520 --> 00:12:21,720 Speaker 6: and even if there was, they're worried about what happened 236 00:12:21,720 --> 00:12:24,760 Speaker 6: to debt markets, and on top of that, from their perspective, 237 00:12:24,800 --> 00:12:27,760 Speaker 6: the real game changer that they're looking for is deregulation 238 00:12:27,840 --> 00:12:30,480 Speaker 6: in Europe, which unfortunately is not something that they are 239 00:12:30,559 --> 00:12:33,559 Speaker 6: particularly optimistic about. So I think there is some potential, 240 00:12:33,600 --> 00:12:36,040 Speaker 6: certainly that there's good news at least in one part 241 00:12:36,040 --> 00:12:39,199 Speaker 6: of the world rather than the other. But how far 242 00:12:39,280 --> 00:12:41,479 Speaker 6: this can go in the near term, I think is questionable, 243 00:12:41,640 --> 00:12:43,240 Speaker 6: and certainly we think there could be a near term 244 00:12:43,240 --> 00:12:45,920 Speaker 6: pullback for Europe in equities as you start to see 245 00:12:45,960 --> 00:12:48,920 Speaker 6: some reality set in around what's happening with tariffs, and 246 00:12:49,000 --> 00:12:51,439 Speaker 6: really you know how quickly this fiscal stimus can actually 247 00:12:51,480 --> 00:12:54,280 Speaker 6: feed through to the German economy, let alone the European economy. 248 00:12:54,360 --> 00:12:56,160 Speaker 5: So see, why are you challenging this idea that the 249 00:12:56,240 --> 00:12:59,440 Speaker 5: wall of exceptionalism is shifting over to Europe and China 250 00:12:59,520 --> 00:13:02,000 Speaker 5: and elsehere we're in away from the United States, that 251 00:13:02,080 --> 00:13:05,040 Speaker 5: that's maybe overly simplistic and it's just getting more complicated 252 00:13:05,080 --> 00:13:07,840 Speaker 5: with a less clear path to which area and which 253 00:13:07,880 --> 00:13:09,160 Speaker 5: stocks are going to outperform. 254 00:13:09,240 --> 00:13:10,600 Speaker 7: Is that kind of how you see things? 255 00:13:11,559 --> 00:13:13,200 Speaker 6: So I think that the near term is a little 256 00:13:13,200 --> 00:13:15,240 Speaker 6: bit cloudy than many people who have been thinking. I 257 00:13:15,240 --> 00:13:17,080 Speaker 6: think the near term, you know, there's been so much 258 00:13:17,280 --> 00:13:20,600 Speaker 6: positivity around the fiscal stimulus news, but there's still, as 259 00:13:20,600 --> 00:13:22,640 Speaker 6: you said, you know a lot of things with regards 260 00:13:22,640 --> 00:13:24,959 Speaker 6: to the tariffs, how quickly the fiscal stimulus can be 261 00:13:25,000 --> 00:13:27,560 Speaker 6: passed through that in the near term some of that 262 00:13:28,200 --> 00:13:31,240 Speaker 6: optimism around international equities could take a bit of a setback. 263 00:13:31,559 --> 00:13:34,320 Speaker 6: The other thing that we're thinking is that exceptional sorry 264 00:13:34,320 --> 00:13:37,160 Speaker 6: exceptionalism should necessarily be in question. We do think that 265 00:13:37,160 --> 00:13:39,760 Speaker 6: the US is still going to see superior growth going forward, 266 00:13:40,320 --> 00:13:43,079 Speaker 6: but is it going to does that necessarily stop European 267 00:13:43,160 --> 00:13:46,760 Speaker 6: equities Chinese equities from doing well? Even a move to 268 00:13:46,840 --> 00:13:50,160 Speaker 6: benchmark positions for so many investors would be a significant 269 00:13:50,160 --> 00:13:52,160 Speaker 6: tail wind for equities. So it's just that the world 270 00:13:52,240 --> 00:13:54,720 Speaker 6: is a bigger place now. There are other opportunities for 271 00:13:54,760 --> 00:13:57,000 Speaker 6: investors that and if you haven't had a chance in 272 00:13:57,040 --> 00:13:58,880 Speaker 6: the last couple of weeks to get onto that ride, 273 00:13:59,040 --> 00:14:01,280 Speaker 6: you probably will see aune to within the next few months. 274 00:14:01,559 --> 00:14:03,280 Speaker 1: When it comes to the uncertainty in the United States 275 00:14:03,320 --> 00:14:05,800 Speaker 1: around teriffs, is April second then. 276 00:14:05,679 --> 00:14:06,760 Speaker 7: Going to be a clearing event? 277 00:14:09,520 --> 00:14:11,880 Speaker 6: Well, you know, one hand, yes, we hope that there 278 00:14:11,880 --> 00:14:14,120 Speaker 6: will be some kind of certainty coming through. That is 279 00:14:14,240 --> 00:14:17,320 Speaker 6: one thing which is overhanging, particularly for global investors or 280 00:14:17,400 --> 00:14:20,080 Speaker 6: investors looking at international equities. So I think there'd be 281 00:14:20,160 --> 00:14:23,880 Speaker 6: some clarity. Does it really clear up everything that we 282 00:14:24,440 --> 00:14:26,880 Speaker 6: that we are waiting to hear? I guess I'm fairly 283 00:14:27,440 --> 00:14:29,360 Speaker 6: pessimistic on that, but at least we're getting to a 284 00:14:29,440 --> 00:14:32,040 Speaker 6: process that at some point within the next few months 285 00:14:32,040 --> 00:14:35,920 Speaker 6: we know some kind of direction where this administration is going, 286 00:14:35,960 --> 00:14:38,120 Speaker 6: and then businesses can plan. So that's why for the 287 00:14:38,200 --> 00:14:40,800 Speaker 6: second half of the year we have slightly more optimism 288 00:14:40,840 --> 00:14:43,600 Speaker 6: because we think some of the uncertainty will clear. 289 00:14:43,440 --> 00:14:47,560 Speaker 2: Up the life of a European based strategist. Here Lisa Sprinkler, Madrid, 290 00:14:47,600 --> 00:14:51,040 Speaker 2: a little bit of London, quick trip to Rome, doesn't it. 291 00:14:51,360 --> 00:14:53,160 Speaker 7: I think they we're both really tired. 292 00:14:54,920 --> 00:14:57,680 Speaker 2: Spending its head over there. It's all added up. 293 00:14:57,760 --> 00:14:59,600 Speaker 7: Yeah, but as long as you don't fire to Heathrow. 294 00:14:59,440 --> 00:15:00,840 Speaker 2: Before it did, makes sense at all. 295 00:15:01,000 --> 00:15:01,200 Speaker 3: Yeah. 296 00:15:01,240 --> 00:15:03,440 Speaker 5: Well, but I will say it's interesting that in Spain 297 00:15:03,520 --> 00:15:06,560 Speaker 5: they're not particularly interested in what Germany's doing as being 298 00:15:06,640 --> 00:15:09,080 Speaker 5: the Holy Grail, considering that it doesn't necessarily open up 299 00:15:09,120 --> 00:15:10,880 Speaker 5: the purse strings for them, and frankly it might make 300 00:15:10,920 --> 00:15:13,560 Speaker 5: them more in a difficult spot because of what spreads 301 00:15:13,600 --> 00:15:15,200 Speaker 5: are doing on the periphery. 302 00:15:15,320 --> 00:15:17,720 Speaker 2: Sam, I appreciate your time, as always, sim Michan, they're 303 00:15:17,840 --> 00:15:29,640 Speaker 2: a principal asset man. We begin this hour with stocks lower, 304 00:15:29,720 --> 00:15:33,000 Speaker 2: Kate more of city wealth writing sentiment has weakened, but 305 00:15:33,120 --> 00:15:37,000 Speaker 2: not fully collapsed, an absent full capitulation, and with persistently 306 00:15:37,080 --> 00:15:40,240 Speaker 2: high and certainty around Tariff's growth and policy, we believe 307 00:15:40,240 --> 00:15:42,280 Speaker 2: it it's too soon to step in. Kate joined us 308 00:15:42,320 --> 00:15:44,040 Speaker 2: now for more. Kate morning, good to see you. Yeah, 309 00:15:44,080 --> 00:15:46,240 Speaker 2: thanks John, congratulations on the new seat as well. 310 00:15:46,440 --> 00:15:46,680 Speaker 7: Thank you. 311 00:15:46,920 --> 00:15:48,200 Speaker 2: We've seen you since you moved over. 312 00:15:48,320 --> 00:15:48,760 Speaker 7: That's yeah. 313 00:15:48,800 --> 00:15:50,760 Speaker 8: I had a nice break and I've been getting ramped 314 00:15:50,840 --> 00:15:52,800 Speaker 8: up in city. You know, it sort of pains me 315 00:15:52,880 --> 00:15:54,560 Speaker 8: to have to write what I just wrote and what 316 00:15:54,600 --> 00:15:55,920 Speaker 8: you read, you know, me. 317 00:15:56,200 --> 00:15:56,960 Speaker 7: I like risk. 318 00:15:57,200 --> 00:15:59,240 Speaker 8: I've always liked to look at opportunities. I like to 319 00:15:59,240 --> 00:16:01,040 Speaker 8: see when they're just locations and say, this is a 320 00:16:01,080 --> 00:16:03,360 Speaker 8: nice time to step in and right now to the 321 00:16:03,360 --> 00:16:06,920 Speaker 8: conversation you guys were just having around uncertainty, not just 322 00:16:06,960 --> 00:16:09,400 Speaker 8: in terms of the macro forecast, but also in earnings. 323 00:16:09,560 --> 00:16:13,040 Speaker 8: It's almost impossible for me to say we've seen the bottom. 324 00:16:13,160 --> 00:16:15,400 Speaker 8: We can break out of this trading range, and it's 325 00:16:15,440 --> 00:16:16,640 Speaker 8: time for us to add. 326 00:16:16,640 --> 00:16:19,320 Speaker 2: There's always a price. Have we reset price low enough? 327 00:16:19,320 --> 00:16:20,760 Speaker 2: How much more do we need to do that? Have 328 00:16:20,840 --> 00:16:24,560 Speaker 2: we reset expectations sufficiently? What would you look for that 329 00:16:24,560 --> 00:16:26,640 Speaker 2: would change your mind that a risk reward would become 330 00:16:26,880 --> 00:16:27,520 Speaker 2: more compelling. 331 00:16:27,920 --> 00:16:29,480 Speaker 8: Well, one of the things that I keep getting my 332 00:16:29,640 --> 00:16:32,760 Speaker 8: head stuck on is everyone's focus on pas right on 333 00:16:32,880 --> 00:16:35,120 Speaker 8: multiples and valuation, and they keep on saying over and 334 00:16:35,160 --> 00:16:37,560 Speaker 8: over again, you know we've derated a little bit. It's 335 00:16:37,560 --> 00:16:39,200 Speaker 8: now looking a little bit more attractive, And I say, 336 00:16:39,240 --> 00:16:41,760 Speaker 8: that's great. We have no faith and confidence in the 337 00:16:41,760 --> 00:16:44,600 Speaker 8: denominator and against that backdrop, if you don't know what 338 00:16:44,600 --> 00:16:46,359 Speaker 8: you're measuring yourself against. 339 00:16:46,320 --> 00:16:48,160 Speaker 7: Like are we cheap? I don't think so. 340 00:16:48,880 --> 00:16:51,160 Speaker 8: Look, there are super high quality companies in the US. 341 00:16:51,200 --> 00:16:53,360 Speaker 8: I know we've had some rotation away from those companies 342 00:16:53,360 --> 00:16:55,960 Speaker 8: over the last couple of weeks of trading, but you 343 00:16:55,960 --> 00:16:57,800 Speaker 8: know that doesn't mean we need to step in and 344 00:16:57,880 --> 00:16:59,640 Speaker 8: kind of back up the truck and add back to 345 00:16:59,680 --> 00:17:01,640 Speaker 8: those companies right now. 346 00:17:01,760 --> 00:17:03,560 Speaker 7: And I hate, as I said, sitting. 347 00:17:03,360 --> 00:17:05,680 Speaker 8: On my hands a little bit, because like everyone else 348 00:17:05,680 --> 00:17:07,399 Speaker 8: in this business, I have a bias to action. 349 00:17:08,160 --> 00:17:10,359 Speaker 5: How inconsistent are some of the projections that we're getting 350 00:17:10,400 --> 00:17:11,480 Speaker 5: right now at of Wall Street. 351 00:17:11,640 --> 00:17:15,800 Speaker 7: Gosh, well, on one page you've got I know, it's 352 00:17:15,840 --> 00:17:17,480 Speaker 7: a big question. You want to just start there. 353 00:17:17,640 --> 00:17:19,560 Speaker 8: Yeah, no, this is I mean, it's a terrible time 354 00:17:19,640 --> 00:17:21,800 Speaker 8: to have to put out forecasts. I'm fortunate enough to 355 00:17:21,800 --> 00:17:23,159 Speaker 8: not have to put a target on the S and 356 00:17:23,240 --> 00:17:25,720 Speaker 8: P or say here's my technical buying level, or here's 357 00:17:25,720 --> 00:17:29,040 Speaker 8: my earnings expectation at the moment, because it is going 358 00:17:29,080 --> 00:17:31,560 Speaker 8: to be a losing game at this moment. We could 359 00:17:31,640 --> 00:17:34,360 Speaker 8: get to April second and have some clarity, I would 360 00:17:34,400 --> 00:17:37,240 Speaker 8: put a much higher probability that we don't have clarity 361 00:17:37,280 --> 00:17:39,320 Speaker 8: after April second, and so people are going to have 362 00:17:39,400 --> 00:17:41,760 Speaker 8: to make these constant revisions, and especially as. 363 00:17:41,680 --> 00:17:44,199 Speaker 7: We were talking about four corporates don't know what's going 364 00:17:44,280 --> 00:17:44,680 Speaker 7: to happen. 365 00:17:45,200 --> 00:17:47,600 Speaker 8: One of the things I'm worried about and Slash watching 366 00:17:47,640 --> 00:17:50,280 Speaker 8: as we go into this next earning season is not 367 00:17:50,359 --> 00:17:52,919 Speaker 8: just whether or not companies take down their guidance, but 368 00:17:52,960 --> 00:17:56,359 Speaker 8: whether or not they pull guidance all together. If they say, 369 00:17:56,400 --> 00:17:59,720 Speaker 8: we don't have enough information to even reaffirm or adjust 370 00:18:00,080 --> 00:18:03,119 Speaker 8: or even take down what we've given you before and 371 00:18:03,200 --> 00:18:05,480 Speaker 8: we're going to step back, that tells us that kind 372 00:18:05,480 --> 00:18:07,199 Speaker 8: of all bets are off and kind of continuing to 373 00:18:07,200 --> 00:18:09,879 Speaker 8: sit on the sidelines makes make some sense now to 374 00:18:09,920 --> 00:18:12,080 Speaker 8: be fair for like city wealth clients who have you know, 375 00:18:12,200 --> 00:18:13,320 Speaker 8: multi assid portfolios. 376 00:18:13,320 --> 00:18:14,800 Speaker 7: We're not saying sell, but. 377 00:18:15,119 --> 00:18:16,280 Speaker 8: You know, there are a lot of folks that have 378 00:18:16,400 --> 00:18:19,560 Speaker 8: big cash balances and we want to be convicted when 379 00:18:19,560 --> 00:18:20,960 Speaker 8: we say put that cash to work. 380 00:18:21,040 --> 00:18:22,120 Speaker 2: That was what I was just going to ask. 381 00:18:22,240 --> 00:18:24,800 Speaker 5: Why sitting on your hands actually mean in financial terms? 382 00:18:24,800 --> 00:18:26,600 Speaker 5: This is just means sitting on cash? Does it mean 383 00:18:26,640 --> 00:18:27,359 Speaker 5: sitting on gold? 384 00:18:27,560 --> 00:18:30,560 Speaker 8: Going too big ass allocation decisions right now? Let's wait 385 00:18:30,600 --> 00:18:33,320 Speaker 8: for more information and whether that's you know, tweaking our 386 00:18:33,359 --> 00:18:36,760 Speaker 8: equity allocations or looking for more opportunities across the fixed 387 00:18:36,800 --> 00:18:39,200 Speaker 8: income or alternative space, like, we don't need to do 388 00:18:39,240 --> 00:18:42,639 Speaker 8: that right now. Let's wait for hopefully what will be 389 00:18:42,680 --> 00:18:43,640 Speaker 8: a little bit more clarity. 390 00:18:43,760 --> 00:18:45,720 Speaker 1: Do you think you're going to have the conviction after 391 00:18:45,760 --> 00:18:47,800 Speaker 1: April second? May make some of those decisions. 392 00:18:47,880 --> 00:18:50,080 Speaker 8: I think April second is an arbitrary date. I mean 393 00:18:50,480 --> 00:18:53,160 Speaker 8: it is a point which we will have some information 394 00:18:53,280 --> 00:18:54,280 Speaker 8: on tariffs. 395 00:18:53,840 --> 00:18:57,040 Speaker 7: But we won't have a significant. 396 00:18:56,920 --> 00:19:00,000 Speaker 8: Outlook for the for the entire policy program in the US. 397 00:19:00,440 --> 00:19:02,760 Speaker 8: And until we have that, it's pretty hard to say, 398 00:19:04,000 --> 00:19:06,280 Speaker 8: you know, what the growth forecast should look like. 399 00:19:06,960 --> 00:19:08,200 Speaker 7: This is what I would also say. 400 00:19:08,200 --> 00:19:10,480 Speaker 8: We have a pattern of behavior from this administration over 401 00:19:10,480 --> 00:19:13,880 Speaker 8: the last couple weeks or a couple months that suggests there's, 402 00:19:13,960 --> 00:19:16,240 Speaker 8: you know, a constant revisiting of their own targets and 403 00:19:16,240 --> 00:19:19,080 Speaker 8: what pain they're willing to take, even as they stay 404 00:19:19,119 --> 00:19:21,960 Speaker 8: focused on what they believe their big goals are. And 405 00:19:22,480 --> 00:19:25,520 Speaker 8: the communication has not always been consistent to the corporate sector, 406 00:19:25,600 --> 00:19:27,960 Speaker 8: anti the investment community, and I don't know that that 407 00:19:28,119 --> 00:19:29,840 Speaker 8: changes just because we get to April third. 408 00:19:30,160 --> 00:19:32,960 Speaker 1: One thing is consistent. The President this morning just minutes 409 00:19:32,960 --> 00:19:35,480 Speaker 1: ago saying April second is Liberation Day in America. 410 00:19:35,560 --> 00:19:36,399 Speaker 7: But to your point. 411 00:19:36,440 --> 00:19:39,240 Speaker 1: To a lot of people's point, they're not expecting April 412 00:19:39,240 --> 00:19:41,440 Speaker 1: second to be the end all the bal If uncertainty 413 00:19:41,520 --> 00:19:43,160 Speaker 1: is a feature, not a bug. 414 00:19:42,880 --> 00:19:44,359 Speaker 7: How do you do this for four years? 415 00:19:45,600 --> 00:19:47,520 Speaker 8: I think you're going to have to stay really focused 416 00:19:47,640 --> 00:19:48,720 Speaker 8: on the areas where. 417 00:19:48,480 --> 00:19:49,560 Speaker 7: You do have certainty. 418 00:19:49,720 --> 00:19:49,840 Speaker 3: You know. 419 00:19:49,880 --> 00:19:51,200 Speaker 8: I always have a bit of a laugh when everyone 420 00:19:51,200 --> 00:19:53,320 Speaker 8: says we want to own quality companies. No kidding, there's 421 00:19:53,320 --> 00:19:54,919 Speaker 8: no point in the cycle where you don't want to 422 00:19:54,920 --> 00:19:57,399 Speaker 8: own a quality company. And like any fund manager or 423 00:19:57,400 --> 00:19:59,359 Speaker 8: investor says, like, I don't care about quality. I mean, 424 00:19:59,400 --> 00:20:02,560 Speaker 8: I think you should probably head for the door. But 425 00:20:02,960 --> 00:20:05,320 Speaker 8: what we're looking for, I think in an environment where 426 00:20:05,320 --> 00:20:08,399 Speaker 8: there is a lot of uncertainty is earning, sustainability and 427 00:20:08,480 --> 00:20:13,080 Speaker 8: earnings you know, yeah, stability. Basically in general, we want 428 00:20:13,119 --> 00:20:16,000 Speaker 8: companies that can earn through all parts of the economic cycle, 429 00:20:16,200 --> 00:20:19,920 Speaker 8: that have strong products and business models, and like really 430 00:20:20,119 --> 00:20:23,560 Speaker 8: like outstanding management teams that we can have faith in. 431 00:20:24,280 --> 00:20:25,800 Speaker 8: When it comes to fixed income, we're going to have 432 00:20:25,840 --> 00:20:27,639 Speaker 8: to see what happens to the inflation and growth side. 433 00:20:27,680 --> 00:20:29,960 Speaker 8: So I can't say for sure what that kind of 434 00:20:30,200 --> 00:20:31,879 Speaker 8: uncertainty will mean for that allocation. 435 00:20:32,040 --> 00:20:34,960 Speaker 2: The new policy is not confusing the administration. They seem 436 00:20:34,960 --> 00:20:36,760 Speaker 2: to change every day, and they can change again very soon, 437 00:20:36,840 --> 00:20:38,359 Speaker 2: and they will do on a for a second and 438 00:20:38,440 --> 00:20:40,720 Speaker 2: maybe again multiple times after that as well. That's had 439 00:20:40,800 --> 00:20:43,159 Speaker 2: enough understanding. How the rest of the world responds to 440 00:20:43,200 --> 00:20:46,440 Speaker 2: it is equally as complex. How much has Europe's response 441 00:20:46,480 --> 00:20:50,320 Speaker 2: to this complicated? How we allocate assets in the United States? 442 00:20:50,520 --> 00:20:52,919 Speaker 8: OK, I know people have gotten really excited about, you know, 443 00:20:53,240 --> 00:20:55,919 Speaker 8: closing their underweights. I'm not going to say, going explicitly 444 00:20:56,080 --> 00:21:00,320 Speaker 8: long Europe closing their underweights to Europe, and they've said, look, 445 00:21:00,359 --> 00:21:03,080 Speaker 8: there's some of these pockets a fiscal stimulus, something we 446 00:21:03,119 --> 00:21:05,680 Speaker 8: haven't gotten in a long time, and they've gotten really excited. 447 00:21:06,920 --> 00:21:08,879 Speaker 8: I don't think that we can say we're going to 448 00:21:08,920 --> 00:21:12,240 Speaker 8: make a wholesale regional equity change based on a few 449 00:21:12,280 --> 00:21:16,080 Speaker 8: policy announcements. And unfortunately, and I hate saying this, but 450 00:21:16,080 --> 00:21:18,160 Speaker 8: I'm going to say it anyway, When the US needze 451 00:21:18,200 --> 00:21:18,760 Speaker 8: is the rest of the. 452 00:21:18,680 --> 00:21:20,520 Speaker 7: World catches the cold. If there's a. 453 00:21:20,520 --> 00:21:23,520 Speaker 8: Significant slowdown in demand and activity on both consumers and 454 00:21:23,560 --> 00:21:26,119 Speaker 8: businesses in the US, you know, it's really hard for 455 00:21:26,160 --> 00:21:28,920 Speaker 8: me to imagine that all these global multinationals domiciled and 456 00:21:28,960 --> 00:21:31,480 Speaker 8: all these other markets won't feel it, and that consumption 457 00:21:31,880 --> 00:21:33,360 Speaker 8: patterns won't change. 458 00:21:33,040 --> 00:21:35,600 Speaker 2: So you don't buy into the erosion of US exceptionalism. 459 00:21:36,160 --> 00:21:38,800 Speaker 8: I think the US has some really exceptional parts of 460 00:21:38,840 --> 00:21:42,520 Speaker 8: our economy and our corporate sector, but we are at. 461 00:21:42,440 --> 00:21:43,720 Speaker 7: A more challenging part of the cycle. 462 00:21:43,760 --> 00:21:45,920 Speaker 8: The other thing I would say is, you know, even 463 00:21:45,960 --> 00:21:48,359 Speaker 8: going into this policy uncertainty, you guys know this very well, 464 00:21:48,720 --> 00:21:51,040 Speaker 8: some of the macro data was slowing a little bit 465 00:21:51,200 --> 00:21:54,200 Speaker 8: before any of this uncertainty was introduced. You know, there 466 00:21:54,200 --> 00:21:57,280 Speaker 8: were some pockets of retail and consumer. We were talking 467 00:21:57,280 --> 00:21:59,399 Speaker 8: about that a year ago. Remember, you know, as we 468 00:21:59,400 --> 00:22:02,560 Speaker 8: were going through first quarter earnings for twenty twenty four, 469 00:22:03,040 --> 00:22:05,320 Speaker 8: everyone was saying, you know, is the consumer cracking. It 470 00:22:05,359 --> 00:22:07,680 Speaker 8: didn't fully crack, but as we got into the beginning 471 00:22:07,720 --> 00:22:08,720 Speaker 8: part of this year, some of. 472 00:22:08,640 --> 00:22:11,040 Speaker 7: Those fractures look more pronounced. 473 00:22:11,160 --> 00:22:14,320 Speaker 8: So that happened before the policy uncertainty, and I think 474 00:22:14,320 --> 00:22:15,880 Speaker 8: we have to keep a very close. 475 00:22:15,560 --> 00:22:16,000 Speaker 7: Eye on that. 476 00:22:16,200 --> 00:22:18,040 Speaker 2: This space to a wait and see moment. There's so 477 00:22:18,080 --> 00:22:20,199 Speaker 2: many people are in right now, not just businesses but 478 00:22:20,640 --> 00:22:21,400 Speaker 2: investors too. 479 00:22:21,640 --> 00:22:23,439 Speaker 5: I just want to know what's going to end that 480 00:22:23,800 --> 00:22:24,760 Speaker 5: right if it's not April. 481 00:22:24,800 --> 00:22:25,159 Speaker 7: Second. 482 00:22:25,520 --> 00:22:29,359 Speaker 5: If it's not necessarily guidance that companies can't give, what's 483 00:22:29,400 --> 00:22:32,560 Speaker 5: going to give anyone a sense of conviction at a 484 00:22:32,600 --> 00:22:34,720 Speaker 5: time of endless uncertainty. 485 00:22:35,040 --> 00:22:37,480 Speaker 8: Yeah, I wish I knew right now, and if I 486 00:22:37,480 --> 00:22:40,320 Speaker 8: had the roadmap and my crystal ball was crystal clear, 487 00:22:41,040 --> 00:22:42,520 Speaker 8: that would make me sleep a little bit better at 488 00:22:42,600 --> 00:22:44,320 Speaker 8: night at this moment. But I will say here, we 489 00:22:44,359 --> 00:22:46,120 Speaker 8: are on a Friday morning, and we know a lot 490 00:22:46,160 --> 00:22:48,880 Speaker 8: of investors, both fast money and real money, don't really 491 00:22:48,920 --> 00:22:51,480 Speaker 8: want to go into the close today or into a 492 00:22:51,520 --> 00:22:55,080 Speaker 8: weekend super long risk, you know, because. 493 00:22:54,720 --> 00:22:56,000 Speaker 7: Of the uncertainty factor. 494 00:22:56,400 --> 00:22:58,920 Speaker 8: I want to see a change in that overall behavior 495 00:22:59,240 --> 00:23:02,040 Speaker 8: once we start to really neutralize some of the big 496 00:23:02,080 --> 00:23:04,679 Speaker 8: overweights and sometimes underweights that people have had in their 497 00:23:04,680 --> 00:23:07,800 Speaker 8: portfolios over the last couple of years, and people feel 498 00:23:07,800 --> 00:23:11,000 Speaker 8: confident that what they're owning and what they're adding to 499 00:23:11,000 --> 00:23:15,320 Speaker 8: you can perform in a sustained way over multiple quarters. Like, 500 00:23:15,359 --> 00:23:17,000 Speaker 8: I'll sleep a lot better. I just don't think we're 501 00:23:17,040 --> 00:23:17,440 Speaker 8: there yet. 502 00:23:17,600 --> 00:23:18,560 Speaker 2: Okay, it's good to see you. 503 00:23:18,720 --> 00:23:19,879 Speaker 7: Yeah, thanks for going to catch up. 504 00:23:19,880 --> 00:23:21,840 Speaker 2: It's been too long. Yes, hopefully we can do this 505 00:23:21,840 --> 00:23:23,440 Speaker 2: more often. K more of city. 506 00:23:23,520 --> 00:23:25,560 Speaker 1: OK, thank you. 507 00:23:33,840 --> 00:23:37,160 Speaker 2: Cisco announcing plans this week to extend their partnership, creating 508 00:23:37,200 --> 00:23:41,040 Speaker 2: their most advanced AI architecture package that will provide secure 509 00:23:41,200 --> 00:23:44,760 Speaker 2: enterprise AI networking. I'm very placed to say the Cisco 510 00:23:44,840 --> 00:23:47,919 Speaker 2: Chief Product Officer and executive vice president G two Patau 511 00:23:48,119 --> 00:23:50,000 Speaker 2: joined us now for more. G too, It's good to see. 512 00:23:49,800 --> 00:23:50,959 Speaker 3: You, sir. It's great to see you. 513 00:23:51,000 --> 00:23:52,399 Speaker 2: Thank you for having me, Thank you for being here. 514 00:23:52,440 --> 00:23:53,639 Speaker 2: If I wanted to do this for a while with you, 515 00:23:53,720 --> 00:23:55,840 Speaker 2: we all have. Let's just take a giant step back 516 00:23:55,840 --> 00:23:58,040 Speaker 2: before we get into this partnership. You know what I 517 00:23:58,080 --> 00:24:01,000 Speaker 2: worry about. I worry the AI will do to services 518 00:24:01,040 --> 00:24:04,679 Speaker 2: what manufacturing was done so by globalization. What is the 519 00:24:04,760 --> 00:24:07,360 Speaker 2: risk of that happening over the next several decades. 520 00:24:07,680 --> 00:24:11,760 Speaker 9: Look at any replatforming that happens. You'll always have some 521 00:24:12,040 --> 00:24:14,120 Speaker 9: level of displacement of jobs, and we need to make 522 00:24:14,119 --> 00:24:16,480 Speaker 9: sure that we make it as painless for society to 523 00:24:16,840 --> 00:24:19,920 Speaker 9: make that transition happen. But I worry less about AI 524 00:24:20,040 --> 00:24:22,760 Speaker 9: taking my job. I worry more about someone who uses 525 00:24:22,760 --> 00:24:23,840 Speaker 9: AI really well. 526 00:24:23,640 --> 00:24:24,399 Speaker 3: Taking my job. 527 00:24:25,320 --> 00:24:27,560 Speaker 9: But if you take a step back, it's actually really 528 00:24:27,600 --> 00:24:31,200 Speaker 9: exciting to see what the possibilities are with AI because 529 00:24:31,600 --> 00:24:34,800 Speaker 9: what people, even despite all the hype, what people grossly 530 00:24:34,880 --> 00:24:38,320 Speaker 9: underestimate is the original insights that AI is going to 531 00:24:38,320 --> 00:24:41,399 Speaker 9: be able to go derive that don't exist in the 532 00:24:41,440 --> 00:24:44,040 Speaker 9: human corpus of knowledge, that allow us to solve problems 533 00:24:44,400 --> 00:24:46,200 Speaker 9: that we have not been able to solve until now. 534 00:24:46,640 --> 00:24:48,560 Speaker 9: And so, you know, whether it be in healthcare or 535 00:24:48,640 --> 00:24:52,679 Speaker 9: financial services, or transportation or whatever industry you pick, you 536 00:24:52,680 --> 00:24:55,280 Speaker 9: will actually have a reimagination of the ways in which 537 00:24:55,280 --> 00:24:57,840 Speaker 9: we can solve problems that have not existed up until now. 538 00:24:57,920 --> 00:25:00,679 Speaker 9: And that's exciting, frankly, because you'll have this, you know, 539 00:25:01,000 --> 00:25:03,679 Speaker 9: a population of eight billion people that will feel like 540 00:25:04,359 --> 00:25:06,320 Speaker 9: it's got the thru but capacity of eighty billion. 541 00:25:06,520 --> 00:25:08,600 Speaker 2: Are we seeing that happen right now? Is that a 542 00:25:08,680 --> 00:25:10,919 Speaker 2: dream for the future or something that's being realized in 543 00:25:10,960 --> 00:25:11,600 Speaker 2: this very moment. 544 00:25:11,760 --> 00:25:13,080 Speaker 3: You're going to start seeing it happen. 545 00:25:13,119 --> 00:25:16,520 Speaker 9: In twenty twenty five, for example, there'll be you know, 546 00:25:17,920 --> 00:25:21,400 Speaker 9: a meaningful amount of code that will actually start getting 547 00:25:21,400 --> 00:25:24,439 Speaker 9: autonomously written, and so you'll actually start to see so 548 00:25:24,520 --> 00:25:27,480 Speaker 9: many more the capacity of engineers will actually. 549 00:25:27,720 --> 00:25:30,320 Speaker 3: Ten x during the course of twenty twenty five. 550 00:25:30,680 --> 00:25:32,359 Speaker 2: It's exciting to see this, as you know, is the 551 00:25:32,400 --> 00:25:34,760 Speaker 2: societal issue that I'd be slightly concerned about. So there 552 00:25:34,760 --> 00:25:36,680 Speaker 2: are a bunch of graduates who are graduating over the 553 00:25:36,760 --> 00:25:38,920 Speaker 2: next couple of years or so, and they went to 554 00:25:39,000 --> 00:25:40,679 Speaker 2: learn to code because they were told this is what 555 00:25:40,720 --> 00:25:42,560 Speaker 2: you need to go and learn to do, and they're 556 00:25:42,600 --> 00:25:45,040 Speaker 2: coming out into a workforce where maybe they feel like 557 00:25:45,040 --> 00:25:47,560 Speaker 2: they're no longer needed. What's the advice you'd give to 558 00:25:47,600 --> 00:25:48,960 Speaker 2: them as they graduate. 559 00:25:49,359 --> 00:25:52,920 Speaker 9: Here's the thing that I feel like people, you might 560 00:25:53,000 --> 00:25:56,119 Speaker 9: overestimate the capabilities on that front, because AI is still 561 00:25:56,200 --> 00:25:58,600 Speaker 9: not going to have the human instinct and the judgment 562 00:25:58,720 --> 00:25:59,600 Speaker 9: that you're going to need to have. 563 00:25:59,640 --> 00:26:01,840 Speaker 3: You still going to need to do oversight. There's a 564 00:26:01,920 --> 00:26:02,720 Speaker 3: human in the loop. 565 00:26:02,760 --> 00:26:05,040 Speaker 9: But now that developer is going to have a companion 566 00:26:05,160 --> 00:26:07,120 Speaker 9: that can actually do the stuff that they didn't really 567 00:26:07,160 --> 00:26:09,240 Speaker 9: care to do or they weren't as good as at doing. 568 00:26:09,320 --> 00:26:12,359 Speaker 9: So this is a net positive in my mind, and 569 00:26:12,400 --> 00:26:14,400 Speaker 9: you're going to see a lot of progress in society 570 00:26:14,440 --> 00:26:16,919 Speaker 9: because of it, rather than a regression that happens. 571 00:26:17,040 --> 00:26:19,200 Speaker 5: Not to build on negativity, because I actually am a 572 00:26:19,320 --> 00:26:22,399 Speaker 5: very big believer on the positivity and I'm excited for it, 573 00:26:22,920 --> 00:26:24,560 Speaker 5: but there is this question of who's going to lose 574 00:26:24,560 --> 00:26:27,240 Speaker 5: their jobs in the meantime, and John alluded to this, 575 00:26:27,240 --> 00:26:29,160 Speaker 5: this idea that it's more of a white collar issue 576 00:26:29,160 --> 00:26:32,280 Speaker 5: than a blue collar issue. And I'm thinking of things 577 00:26:32,320 --> 00:26:34,000 Speaker 5: that we've heard about, like at banks where there have 578 00:26:34,000 --> 00:26:36,520 Speaker 5: been fat fingers that cause transfers or whatever else, and 579 00:26:36,560 --> 00:26:39,399 Speaker 5: that some of those efforts are being shifted to AI. 580 00:26:40,040 --> 00:26:42,679 Speaker 5: How significant do you think that transition is going to be. 581 00:26:42,960 --> 00:26:46,160 Speaker 9: You will always have some degree of jobs that will 582 00:26:46,160 --> 00:26:48,879 Speaker 9: get displaced, and then there'll be new jobs that actually 583 00:26:48,960 --> 00:26:49,520 Speaker 9: get created. 584 00:26:50,080 --> 00:26:51,280 Speaker 3: And the thing that. 585 00:26:51,200 --> 00:26:53,760 Speaker 9: We have to keep in mind is there's a lot 586 00:26:53,800 --> 00:26:56,520 Speaker 9: of jobs that right now people don't have enough labor 587 00:26:56,560 --> 00:27:00,800 Speaker 9: to get done that we are either we just don't 588 00:27:00,800 --> 00:27:03,400 Speaker 9: have the resources to do that actually don't happen right now. 589 00:27:03,720 --> 00:27:05,720 Speaker 9: And so what AI will allow us to do is 590 00:27:05,920 --> 00:27:08,639 Speaker 9: not just go do things that humans don't do as well, 591 00:27:09,000 --> 00:27:11,119 Speaker 9: not just do things that replace humans, but actually do 592 00:27:11,160 --> 00:27:13,080 Speaker 9: things that humans don't have the time to get done. 593 00:27:13,280 --> 00:27:15,520 Speaker 5: Which industries do you think are being the most aggressive 594 00:27:15,520 --> 00:27:18,880 Speaker 5: about adapting to different AI tools and bringing them into 595 00:27:18,880 --> 00:27:19,240 Speaker 5: their entry. 596 00:27:19,240 --> 00:27:20,800 Speaker 9: I think it's costs the board you're seeing it right now, 597 00:27:20,880 --> 00:27:24,320 Speaker 9: In fact, i'd say, you know, two years ago when 598 00:27:24,359 --> 00:27:27,200 Speaker 9: chat GPT came out, almost every company in every industry 599 00:27:27,240 --> 00:27:29,520 Speaker 9: when I'm noticing what's our AI strategy going to look like? 600 00:27:29,960 --> 00:27:31,199 Speaker 3: And we've now had a couple of. 601 00:27:31,240 --> 00:27:33,760 Speaker 9: Years to go bake that, and in twenty twenty five, 602 00:27:33,800 --> 00:27:36,800 Speaker 9: you're going to see this really exciting move from just 603 00:27:37,080 --> 00:27:41,440 Speaker 9: chat pots to agents where you'll actually have workflows get 604 00:27:41,480 --> 00:27:45,280 Speaker 9: automated in every industry, in every sector, in every segment 605 00:27:45,280 --> 00:27:47,480 Speaker 9: of the market, and every geography. So I feel like, 606 00:27:47,920 --> 00:27:49,159 Speaker 9: you know, there's only going to be two kinds of 607 00:27:49,160 --> 00:27:50,960 Speaker 9: companies in the world, those that are going to be 608 00:27:51,040 --> 00:27:52,920 Speaker 9: really dexterous for the use of AI and others that 609 00:27:52,960 --> 00:27:54,320 Speaker 9: are going to really struggle for elements. 610 00:27:54,440 --> 00:27:57,520 Speaker 2: Before we talk about facilitating that for Corporate America. G two, 611 00:27:57,560 --> 00:27:59,840 Speaker 2: can we talk about how things are changing inside Cisco? 612 00:28:00,200 --> 00:28:03,720 Speaker 2: What's different about how Cisco's operating with these advancements that 613 00:28:03,760 --> 00:28:04,600 Speaker 2: you're talking about. 614 00:28:04,800 --> 00:28:07,760 Speaker 9: We are lucky in the sense that we've actually got 615 00:28:07,760 --> 00:28:11,080 Speaker 9: a front row seat on what's happening, and you know, 616 00:28:11,200 --> 00:28:14,080 Speaker 9: everything from the way in which we're building out infrastructure 617 00:28:14,119 --> 00:28:15,960 Speaker 9: to the way in which we are getting our security 618 00:28:16,000 --> 00:28:18,600 Speaker 9: and safety parameters in the right way, and then making 619 00:28:18,600 --> 00:28:21,920 Speaker 9: sure that the workflows get automated. So you know, how 620 00:28:21,960 --> 00:28:24,760 Speaker 9: are we using AI and engineering? How are we using 621 00:28:24,760 --> 00:28:28,400 Speaker 9: AI in our contact center so that when customers call 622 00:28:28,480 --> 00:28:30,919 Speaker 9: because they've got a problem, we're using AI to make 623 00:28:30,920 --> 00:28:32,800 Speaker 9: sure that we can help them solve the problems faster. 624 00:28:32,880 --> 00:28:34,600 Speaker 9: What are we doing in legal? What are we doing 625 00:28:34,640 --> 00:28:36,880 Speaker 9: in marketing? What are we doing in sales? Each one 626 00:28:36,880 --> 00:28:39,360 Speaker 9: of these areas is getting rethought and reimagined. It's actually 627 00:28:39,400 --> 00:28:40,320 Speaker 9: exciting to see. 628 00:28:40,240 --> 00:28:43,000 Speaker 2: The whole world's got to do this. Yes, every company's 629 00:28:43,040 --> 00:28:43,880 Speaker 2: got to do the same thing. 630 00:28:44,360 --> 00:28:46,320 Speaker 3: Every company, EVERYDA introduces. 631 00:28:45,760 --> 00:28:48,400 Speaker 2: This partnership with in Vidio. Talk to us about that 632 00:28:48,480 --> 00:28:50,720 Speaker 2: and what's going to change over the next several years 633 00:28:50,760 --> 00:28:51,840 Speaker 2: with that partnership in mind. 634 00:28:52,400 --> 00:28:53,080 Speaker 3: So we're excited. 635 00:28:53,680 --> 00:28:55,920 Speaker 9: Jensen, the CEO of n Vidia, put it best. He said, 636 00:28:56,000 --> 00:29:00,360 Speaker 9: Cisco and Nvideo are putting together the blueprint for securing AI. 637 00:29:01,040 --> 00:29:03,880 Speaker 9: And John, I go talk to a lot of customers 638 00:29:03,920 --> 00:29:05,880 Speaker 9: all the time, and when you go, when you go, 639 00:29:05,920 --> 00:29:09,360 Speaker 9: ask customers how enthusiastic they are about AI. Virtually every 640 00:29:09,400 --> 00:29:12,160 Speaker 9: ceo we had a study we recently did, ninety seven 641 00:29:12,200 --> 00:29:14,200 Speaker 9: percent of the CEO said they were excited about AI, 642 00:29:14,240 --> 00:29:17,720 Speaker 9: but only one point seven percent felt prepared right, and 643 00:29:17,760 --> 00:29:20,719 Speaker 9: so there's this kind of dissonance between the preparedness and 644 00:29:20,760 --> 00:29:22,840 Speaker 9: the level of enthusiasm that's there. And then you ask 645 00:29:22,920 --> 00:29:25,960 Speaker 9: in the next level question, why do you not feel prepared? 646 00:29:26,800 --> 00:29:28,920 Speaker 9: There's two reasons that come up. The first one is 647 00:29:29,000 --> 00:29:31,280 Speaker 9: they don't feel like they've got the right infrastructure in 648 00:29:31,320 --> 00:29:34,000 Speaker 9: place to make sure that they'll be able to harness 649 00:29:34,040 --> 00:29:35,880 Speaker 9: the full potential of AI. And the second one is 650 00:29:35,920 --> 00:29:38,800 Speaker 9: safety and security actually holds them back because they feel 651 00:29:38,800 --> 00:29:41,680 Speaker 9: like it also is going to have a negative effect 652 00:29:41,720 --> 00:29:43,520 Speaker 9: on adoption because if you don't trust the system, you're 653 00:29:43,560 --> 00:29:46,520 Speaker 9: not going to use it right, and so that's in it. 654 00:29:46,600 --> 00:29:50,000 Speaker 9: Those are two areas where Cisco helps customers out and 655 00:29:50,200 --> 00:29:52,600 Speaker 9: what we've done with n videos, we just announced a 656 00:29:52,640 --> 00:29:57,000 Speaker 9: partnership for this thing called the Cisco the Secure AI Factory. Now, 657 00:29:57,040 --> 00:30:00,240 Speaker 9: what is an AI factory. An AI factory essentially is 658 00:30:00,280 --> 00:30:04,000 Speaker 9: a data center that's meticulously built for AI workloads. 659 00:30:04,680 --> 00:30:05,480 Speaker 3: And what it. 660 00:30:05,480 --> 00:30:09,280 Speaker 9: Allows you to do is make sure that you can 661 00:30:08,800 --> 00:30:12,720 Speaker 9: you can create these data centers in the enterprise that 662 00:30:12,800 --> 00:30:16,080 Speaker 9: can allow organizations to fully harness the potential of AI. 663 00:30:16,560 --> 00:30:20,120 Speaker 9: And so we're jointly partnering over there WLBR networking, our security, 664 00:30:20,880 --> 00:30:23,440 Speaker 9: their technologies looks. Cisco is one of the greatest networking 665 00:30:23,440 --> 00:30:26,960 Speaker 9: companies in the world, and Nvidia is a pioneer on 666 00:30:27,280 --> 00:30:29,440 Speaker 9: the chips and actually create it to some degree. The 667 00:30:29,440 --> 00:30:33,000 Speaker 9: movement in AI and the combination of the two companies together, 668 00:30:33,600 --> 00:30:35,240 Speaker 9: and I think you're going to see more and more 669 00:30:35,280 --> 00:30:37,760 Speaker 9: of this where companies are going to partner with each 670 00:30:37,800 --> 00:30:42,240 Speaker 9: other in this ecosystem to really go serve needs of 671 00:30:42,280 --> 00:30:44,600 Speaker 9: customers and work backwards, even if there might be a 672 00:30:44,600 --> 00:30:45,640 Speaker 9: slight competitive elopment. 673 00:30:45,840 --> 00:30:48,120 Speaker 5: This is fascinating to me because what it signifies is 674 00:30:48,160 --> 00:30:51,000 Speaker 5: there's a growing number of companies that don't want to 675 00:30:51,040 --> 00:30:54,080 Speaker 5: rely on the hyperscalers, that don't want to rely on 676 00:30:54,120 --> 00:30:57,920 Speaker 5: the cloud systems to provide the artificial intelligence for their businesses. 677 00:30:58,360 --> 00:31:01,040 Speaker 5: And it raises a question about them that everyone has 678 00:31:01,080 --> 00:31:03,160 Speaker 5: bought into in the market, which is that they will 679 00:31:03,200 --> 00:31:06,480 Speaker 5: be the big beneficiaries. How much is that changing with 680 00:31:06,600 --> 00:31:10,760 Speaker 5: companies not wanting to necessarily develop their artificial intelligence in 681 00:31:10,800 --> 00:31:13,560 Speaker 5: the cloud for security reasons and want to have it 682 00:31:13,640 --> 00:31:17,120 Speaker 5: in secure locations that keeps their data encapsulated. 683 00:31:17,240 --> 00:31:18,240 Speaker 3: I think you're going to have both. 684 00:31:18,280 --> 00:31:20,920 Speaker 9: I think there's going to be probably the fastest growth 685 00:31:20,920 --> 00:31:24,880 Speaker 9: that hyperscalers experience that they've ever experienced with AI, and 686 00:31:24,920 --> 00:31:27,520 Speaker 9: they'll be the fastest growth that enterprises have because there 687 00:31:27,560 --> 00:31:30,840 Speaker 9: will be some data centers that they'll want to repatriate 688 00:31:30,960 --> 00:31:33,120 Speaker 9: back within the enterprise so that they can make sure 689 00:31:33,160 --> 00:31:35,680 Speaker 9: that especially in areas like inferns, you'll actually see a 690 00:31:35,720 --> 00:31:36,320 Speaker 9: lot more of that. 691 00:31:36,960 --> 00:31:38,080 Speaker 3: There's two big areas. 692 00:31:38,080 --> 00:31:40,880 Speaker 9: There's training infrastructure that's needed to train the models, and 693 00:31:40,920 --> 00:31:43,480 Speaker 9: then there's inferencing, which is what happens when you use 694 00:31:43,520 --> 00:31:45,760 Speaker 9: the models. And on the inferencing side, you're seeing a 695 00:31:45,760 --> 00:31:49,000 Speaker 9: fair amount of repatriation of data centers back in enterprise, 696 00:31:49,040 --> 00:31:50,200 Speaker 9: and I think you're going to see a little bit 697 00:31:50,240 --> 00:31:52,120 Speaker 9: of both. And we want to make sure that whether 698 00:31:52,160 --> 00:31:55,960 Speaker 9: you're a hyperscaler, you're a service provider, you're an enterprise, 699 00:31:56,400 --> 00:31:58,200 Speaker 9: Cisco wants to serve each one of them in a 700 00:31:58,200 --> 00:32:00,600 Speaker 9: way that they can actually have infrastructure be plug and 701 00:32:00,600 --> 00:32:03,320 Speaker 9: play and it's massively simplified. 702 00:32:03,320 --> 00:32:04,400 Speaker 3: It's still too complicated. 703 00:32:04,680 --> 00:32:07,640 Speaker 1: What's the role of government in this. There's tremendous competition 704 00:32:07,720 --> 00:32:10,360 Speaker 1: around the world. Obviously, I'm thinking of Washington, and Beijing. 705 00:32:10,400 --> 00:32:12,240 Speaker 1: Do you like what you're hearing out of the administration. 706 00:32:13,200 --> 00:32:16,200 Speaker 9: I'm actually very optimistic about the kind of things that 707 00:32:16,920 --> 00:32:19,560 Speaker 9: you're seeing across the board, with the enthusiasm on THEI. 708 00:32:19,600 --> 00:32:22,240 Speaker 9: If we weren't talking about AI, I would be concerned. 709 00:32:22,840 --> 00:32:24,880 Speaker 9: But right now the governments are talking about it. They're 710 00:32:24,880 --> 00:32:27,640 Speaker 9: talking about how automation happens within the government, how automation 711 00:32:27,720 --> 00:32:29,800 Speaker 9: is happening in the private sector, how are they're going 712 00:32:29,840 --> 00:32:31,800 Speaker 9: to make sure that they can accelerate the innovation on 713 00:32:31,880 --> 00:32:32,440 Speaker 9: those areas. 714 00:32:32,440 --> 00:32:33,600 Speaker 3: So I think it's not positive. 715 00:32:33,760 --> 00:32:36,240 Speaker 2: Are we going to be replaced? So we care about? 716 00:32:36,320 --> 00:32:39,240 Speaker 9: No, John, You'll still be here in five years from now. 717 00:32:39,280 --> 00:32:41,080 Speaker 9: I'm still going to come and talk to you at 718 00:32:41,200 --> 00:32:43,960 Speaker 9: the show, and it's not going to be an AI humanoid. 719 00:32:43,960 --> 00:32:44,840 Speaker 3: It's going to be John. 720 00:32:45,040 --> 00:32:47,160 Speaker 2: That's all I wanted to know. That's all I care about. 721 00:32:47,160 --> 00:32:48,720 Speaker 7: How do you know I haven't already been replaced? 722 00:32:48,760 --> 00:32:49,160 Speaker 6: That would be. 723 00:32:51,440 --> 00:32:51,680 Speaker 3: Sorry. 724 00:32:51,760 --> 00:32:53,680 Speaker 2: Kerry had a guest recently. It was remote, and I 725 00:32:53,720 --> 00:32:55,760 Speaker 2: word it might be AI. Just didn't have a clique. 726 00:32:55,840 --> 00:32:57,960 Speaker 2: You never know, you never know, you never know. 727 00:32:58,560 --> 00:33:02,560 Speaker 9: Wonder an optimist. Someday this is ben War converting me. 728 00:33:02,720 --> 00:33:04,400 Speaker 2: I'm looking forward to being on this journey with you. 729 00:33:04,480 --> 00:33:06,080 Speaker 2: G T one of the best. Appreciate it, thanks for 730 00:33:06,120 --> 00:33:08,520 Speaker 2: being Thank you. G. Two p's out there the Cisco 731 00:33:08,600 --> 00:33:12,400 Speaker 2: Chief Product Officer and Executive vice president. This is the 732 00:33:12,440 --> 00:33:16,680 Speaker 2: Bloomberg Surveillance Podcast, bringing you the best in markets, economics, 733 00:33:16,720 --> 00:33:19,640 Speaker 2: and geopolitics. You can watch the show live on Bloomberg 734 00:33:19,680 --> 00:33:22,840 Speaker 2: TV weekday mornings from six am to nine am Eastern. 735 00:33:23,160 --> 00:33:26,520 Speaker 2: Subscribe to the podcast on Apple, Spotify or anywhere else 736 00:33:26,520 --> 00:33:29,200 Speaker 2: you listen, and as always on the Bloomberg Terminal and 737 00:33:29,240 --> 00:33:30,400 Speaker 2: the Bloomberg Business out