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Speaker 2: DA Davidson and in charge of all of institutional research,
Speaker 2: Gil Laura, joins us this morning. It's on Tech and
Speaker 2: on Nvidian and you know all the rest of it. Gil,
Speaker 2: you follow thirty companies. You got a very measured out look.
Speaker 2: Fourteen buy sixteen holds off the Bloomberg this morning, What
Speaker 2: is the character of your enthusiasm on Nvidia given fourteen
Speaker 2: buy sixteen, hold zero cells.
Speaker 3: They're doing very well and they're set up to do
Speaker 3: well this year. But this may be as good as
Speaker 3: it gets for video. Their big customers have increased spend
Speaker 3: the most into the fourth quarter of last year. They're
Speaker 3: probably going to start moderating the growth and spend this year,
Speaker 3: so this may be as good as it gets for Nvidia.
Speaker 2: Off the screen, you got a neutral on in video,
Speaker 2: neutral on Salesforce, Nutrol on Zoom. I'm loving this neutral
Speaker 2: on five to nine Away we go what's a neutral?
Speaker 2: Should I hold the stack? Do I want to find
Speaker 2: something else to do? What does neutral mean? Gilherty?
Speaker 3: There's better things to do, so if we're to look,
Speaker 3: last night was a great view of what the AI
Speaker 3: trade is, right and video was the AI trade a
Speaker 3: couple of years ago, and last year Salesforce is not
Speaker 3: quite ready for AI. Snowflake was a fantastic report. Infrastructure
Speaker 3: software is incredibly important for companies to be able to
Speaker 3: run AI application. They need to get their data ready
Speaker 3: and Snowflake is leading the way in terms of doing that.
Speaker 3: They have the main analytical database, the leading product, and
Speaker 3: so companies are using them to put all the data
Speaker 3: in one place so they can even start building AI applications.
Speaker 3: That's why Snowflake did well. That's why we like infrastructure
Speaker 3: software companies like Snowflake, Data Dog, Dina, trace Jyfrog. We
Speaker 3: like half the companies. We just prefer them over the
Speaker 3: other half.
Speaker 2: All these names, Detroit, Lions, blue Light, all these names.
Speaker 2: Is it like two thousand reducts? It sounds like a
Speaker 2: Super Bowl list from two.
Speaker 4: Thousand exactly right?
Speaker 5: Hey, Gil, we just had President Trump put out a
Speaker 5: tweet saying that these tariffs are going into place, including China.
Speaker 4: Here, how does the.
Speaker 5: Tech world view a world of increasing tariffs, Well.
Speaker 3: It depends on if you're selling hard goods or if
Speaker 3: you're selling software. If you're selling hardware, let's say in Nvidia,
Speaker 3: this makes your life a little bit more complicated. Higher
Speaker 3: tariff borders between the US and China, between China and Taiwan,
Speaker 3: between Taiwan and where they source their materials, all those
Speaker 3: types of tariffs will add up to make the product
Speaker 3: more expensive. For the software companies, in the internet companies,
Speaker 3: it'll be more subtle. Let's not forget part of the
Speaker 3: reason we're talking about putting tariffs on Europe is that
Speaker 3: the Europeans have made a habit of charging our big
Speaker 3: technology companies billions of dollars at a time as quote
Speaker 3: unquote penalties for whatever behavior they choose to penalize. So
Speaker 3: as we escalate with Europe, those companies may suffer more.
Speaker 3: As we escalate with China, Apple may get in the
Speaker 3: crosshairs again. So it could have an impact, But it
Speaker 3: really depends on how much follow through there is in
Speaker 3: terms of tariffs and how combative our adversaries are going
Speaker 3: to be. Once we do raise tariffs.
Speaker 5: So if you're a Microsoft, how much attention are you
Speaker 5: paying to what's happening in Washington, DC with tariffs?
Speaker 3: A lot of attention again, especially as it has to
Speaker 3: do with Europe. Again, the Europeans have fined Microsoft many times,
Speaker 3: have extracted their penalties and fees out of Microsoft, and
Speaker 3: they'll go right back to that. Well if they decide
Speaker 3: that's a good way to retaliate against tariffs that we
Speaker 3: put on European cars. Perhaps, So for all of these companies,
Speaker 3: they're paying a lot of attention because on many of
Speaker 3: these frontiers they are right in the crosshairs of retaliation.
Speaker 5: So in the eleven o'clock hour, Gil Caroline Heide to
Speaker 5: Bloomberg Television is going to be interviewing mister Jasse from Amazon.
Speaker 5: What do you need to hear from mister Jesse in
Speaker 5: the days and weeks to come Amazon, because I know
Speaker 5: that's one of the names you have a buyer reading on.
Speaker 2: Yeah.
Speaker 3: So the progress they're making across the board is very impressive.
Speaker 3: It's our favorite megacap pig because they're leading the way
Speaker 3: in terms of facilitating enterprise AI because AWS is the
Speaker 3: biggest hyperscaler. They're also going to have the biggest AI
Speaker 3: business there. On the consumer side, the introd Alexa plus
Speaker 3: yesterday have rufus on the shopping app so they're helping
Speaker 3: consumers shop through better and better AI tools. And then
Speaker 3: on the retail business they're doing well as the US
Speaker 3: consumer holds up, the European consumer can possibly pick up.
Speaker 3: And all these things feed into each other. The advertising
Speaker 3: business is getting better with AI with more volume, so
Speaker 3: that flywheel is working pretty well for Amazon right now.
Speaker 2: How is their box business? See, people like you, Gil,
Speaker 2: you never talk about you get a cardboard box? You know?
Speaker 2: Did you like the new phone ones? Paul? They little
Speaker 2: little thing you need?
Speaker 4: All right?
Speaker 2: You know? What do you what do you think? I mean?
Speaker 2: Is a box business going to put the US Post Office,
Speaker 2: FedEx and everybody else out of business?
Speaker 3: The UPS and FedEx a few years ago when Amazon
Speaker 3: came to them before it started doing its own delivery
Speaker 3: and asked them for price concessions, and they said no.
Speaker 3: And boy do they regret it, because now Amazon's already
Speaker 3: surpassed UPS and will will soon make those two companies
Speaker 3: smaller and smaller. They're they're making US postal service smaller.
Speaker 3: I know the Amazon trucks at my house at least
Speaker 3: two or three times a day.
Speaker 2: I mean, it's great here. But you know, one of
Speaker 2: the things you know, with Gil Lauria and d Davidson, folks,
Speaker 2: we can do this because a really holistic view on
Speaker 2: securities research. We were talking earlier to Carolina. She swears
Speaker 2: they still got one day delivery in the United Kingdom.
Speaker 2: Grant's tenzy waens. I mean at the distance from Carolina
Speaker 2: Hie to John Faraow's house now England is like forty
Speaker 2: two miles. But is one day delivery gone? That was
Speaker 2: an experiment Giloria of years ago. Have they just given
Speaker 2: that up quietly so they can profit? No, it's quite
Speaker 2: the contrary. Delivery times they are still getting shorter, and
Speaker 2: they are absolutely relentless about it. They are constantly adding
Speaker 2: more fulfillment centers, last mile operations. They're still talking about
Speaker 2: using drones. They are going to be relentless about shortening
Speaker 2: delivery times and while keeping the delivery costs lower. They're
Speaker 2: investing billions of dollars in it, and they're not going
Speaker 2: to stop until we get everything we want the same
Speaker 2: day we go to surveillance. How many boxes are at
Speaker 2: the front door, correspond at Lisa Matteo, do you, Lisa,
Speaker 2: I don't buy it. I don't see one day delivery
Speaker 2: anymore at Amazon, do you.
Speaker 4: I get a sad Yeah. Absolutely, that's where I live.
Speaker 5: It could be just yeah, no, I mean you make
Speaker 5: a phone call when you're doing your morning, you know,
Speaker 5: run around during your morning towards by the time you
Speaker 5: get back home and right there.
Speaker 2: Okay, so that's Mayor Adam's fault. We'll talk to him about.
Speaker 5: What's upper eastside things cans about four day delivery. It's
Speaker 5: a whole third avenue taking over.
Speaker 4: As John Tucker always reports to.
Speaker 5: Us, Apple, Gil, you have a buy rating on Apple
Speaker 5: if I'm an, If I'm Apple, I.
Speaker 4: Still have to worry about China.
Speaker 5: I get twenty percent of my revenue in China'm despite
Speaker 5: what I'm trying to do when friendshuring and on shurn,
Speaker 5: my supply chain is completely tied to China. Here, How
Speaker 5: can I buy Apple stock if I've got that China
Speaker 5: is still hanging over me.
Speaker 3: Yeah, China is the big risk. It's it's the most
Speaker 3: competitive market, it's the most dynamic market. And again it's
Speaker 3: it gets ensnared in the UI. China dispute, trade dispute.
Speaker 3: So it is a risk. It's down to fifteen percent,
Speaker 3: it may go down to even less of Apple's revenue
Speaker 3: going forward. And at the same time, Apple is investing
Speaker 3: in the next break market, which is India, and they're
Speaker 3: hoping to get over the next twenty thirty years the
Speaker 3: same type of growth they've gone out of China over
Speaker 3: the last twenty years, because China is not going to
Speaker 3: be supportive of the growth story on the product side.
Speaker 3: And then to your point, it's also a challenge in
Speaker 3: terms of the supply chain. Apple has diversified away from
Speaker 3: China largely, but again with a higher tariffs. Any goods
Speaker 3: in service, any goods that get shipped anywhere in the world,
Speaker 3: are going to be at risk of having higher costs.
Speaker 5: All right, So stepping back, GIL, looking across all your
Speaker 5: coverage and again cover you know thirty some odd names
Speaker 5: in broad tech. Have we seen peak AI.
Speaker 2: That's come up a couple of times today.
Speaker 3: Yeah, it's important, not at all, not at all. We're
Speaker 3: just getting started. AI is going to make all of
Speaker 3: us more productive. It's going to be a contributor to
Speaker 3: GDP growth. It's just not going to happen overnight. There's
Speaker 3: going to be different waves of benefit. Again, the last
Speaker 3: wave was Microsoft and Nvidia. Now the wave is infrastructure software. Again,
Speaker 3: I highlighted Snowflake, but there's others. And then in two
Speaker 3: or three years there's going to be a wave of
Speaker 3: applications that take off and drive a lot of activity there,
Speaker 3: including through the Apple ecosystem, which will make the iPhone
Speaker 3: more valuable. Eventually, it'll be becomes so big that it'll
Speaker 3: make all of us more productive. We'll all have personal
Speaker 3: assistance that can help us at work, can help with
Speaker 3: our personal lives. This future is coming, it's just not
Speaker 3: going to happen overnight. And unfortunately we had some companies
Speaker 3: raise expectations as if it's imminent, when in fact it'll
Speaker 3: take a few more years before we see it in
Speaker 3: everyday life all the time.
Speaker 2: Yeah, that's absolutely brilliant. I mean, that's a very nice summary, Gilory.
Speaker 2: That's why we're having you on here. But I don't
Speaker 2: where's the proof of concept. I mean, give me one
Speaker 2: infrastructure thing in the New York Tri state area. I mean,
Speaker 2: is AI helping them land airplanes at EWR, is AI
Speaker 2: helping with the building of the many tunnels under the
Speaker 2: Hudson River, the Sweeney Tunnels. We're calling though mean where
Speaker 2: Giloria is the first proof of concept of AI doing that.
Speaker 3: Software code. Software engineers were, if you look two three
Speaker 3: years ago, were in such short supply that the main
Speaker 3: reason we didn't have advances in softwares we didn't have
Speaker 3: enough software engineers. What's happening now is Generator of AI
Speaker 3: is actually perfectly suited for software because it's a language
Speaker 3: that easy to understand and easy to translate to. And
Speaker 3: so we're having an explosion of software code development. It's
Speaker 3: going to take a couple of years before we see
Speaker 3: the results of it, but it's already starting to happen.
Speaker 3: And those are the infrastructure software companies that we're talking
Speaker 3: about again, names like get lab and JFrog are helping
Speaker 3: develop more code. Snowflake is helping store these new applications.
Speaker 3: That's already happening. That's why those companies are doing better
Speaker 3: than other software companies right now. But it's going to
Speaker 3: take time before we see it in our everyday life.
Speaker 3: For now, we just have chatbots and Alexa plus ordering
Speaker 3: April towels when you ask it to don't.
Speaker 2: Be a stranger. This is really informative. Thank you so much,
Speaker 2: gil Loria, with a nice mix of uys and neutrals.
Speaker 2: We like to see that. On the sell side.
Speaker 1: You're listening to the Bloomberg Surveillance podcast got us Live
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Speaker 2: This is a joy in an important day to speak
Speaker 2: to Wendy Schiller's professor at Brown University, but far more nationally,
Speaker 2: and forget about the Republican Democrat thing. Just here is
Speaker 2: our civics second paragraph. This happens to be from the
Speaker 2: Washington Post, Professor Schiller. The brief administrative order, which did
Speaker 2: not address the underlying legal issues, will allow time for
Speaker 2: a full Supreme Court review. Professor Schiller, what should our
Speaker 2: listeners either pro Trump, anti Trump, anti Democrat pro this
Speaker 2: da What should we expect from Justice Roberts in the
Speaker 2: Supreme Court?
Speaker 6: Well, I mean, I think, Tom, I go all way
Speaker 6: back to John Marshall. I mean, I really do think
Speaker 6: about Marvey v. Madison. I think about crucial decisions that
Speaker 6: the Court has made in history that shift the balance
Speaker 6: of power across branches. And that's certainly what MARVV Medicine did,
Speaker 6: elevating this I courts power and reducing president's power. Thomas
Speaker 6: Jefferson was not happy about that. I think in this case,
Speaker 6: this isn't just a one off. This isn't there's a
Speaker 6: whole series of cases that will, in fact, you know,
Speaker 6: affirm or restrain or expand the president's discretionary power over
Speaker 6: the money that Congress appropriates across the board. It's not
Speaker 6: just about aid, it's not just about DEI, It's not
Speaker 6: about just a single thing. So this is a real
Speaker 6: moment for Roberts, who's had a number of these really
Speaker 6: important moments. The immunity decision obviously, but even going back
Speaker 6: to Obamacare, you know, affirming the you know, Obamacare is
Speaker 6: a program, but then also limiting the federal government's power
Speaker 6: to be coercive in how it distributes money. And that's
Speaker 6: this balancing act that Roberts is facing.
Speaker 2: I think right now, let's take a given justice. I'm
Speaker 2: going to go with Wizard White, Byron White, hugely respected
Speaker 2: with the our Supreme Court history, legitimate college you have
Speaker 2: to lead at Colorado, legitimate baseball draftee with the Pittsburgh Pirates.
Speaker 2: He got to the Supreme Court, and he surprised those
Speaker 2: people that thought Wizard White would do this, do this,
Speaker 2: do this. Are we going to get the same surprise
Speaker 2: from the more conservative members of the court or do
Speaker 2: you suggest they'll go lockstep with a president.
Speaker 6: I think they're probably literally starting to think about middle ground.
Speaker 6: I don't know that they'll go completely lock step, but
Speaker 6: there's a lot of room in this structure Articles one, two,
Speaker 6: and even three of the Constitution to have the president
Speaker 6: exert power. The difference today from any other Roman history
Speaker 6: is the size and scope of the federal government. That's
Speaker 6: the big new factor in the sense of this constitutional arrangement.
Speaker 6: You know, they were writing Constitution for a president that
Speaker 6: was overseeing a very tiny federal government, and that stayed
Speaker 6: tiny for on more than one hundred years. So now
Speaker 6: we've got something that affects everybody's daily life. You know,
Speaker 6: what does that mean? How much responsibility does the president
Speaker 6: have in power and how much does Congress have a
Speaker 6: say in it? And this is going to be crucial
Speaker 6: going forward because of the scope of the federal government.
Speaker 6: It really does affect everybody's life. And that's where the
Speaker 6: Court now has so much more at stake, not just
Speaker 6: for the separation powers, but for its own survival. If
Speaker 6: you give the president, you know, free reign over everything,
Speaker 6: what's to say he's not going to want changes in
Speaker 6: the Court or ignore the Court. So the Court's survival
Speaker 6: in terms of influential here is also on the line.
Speaker 4: Professor.
Speaker 5: We had President Trump's first cabinet meeting yesterday, Tellwes, and
Speaker 5: we had mister Musk there. What did you take away
Speaker 5: from that cabinet meeting?
Speaker 6: Well, I mean it's something you could not even imagine,
Speaker 6: even like in a movie, you know, like you wouldn't
Speaker 6: even you know, Wag the you know, Wag the Dog,
Speaker 6: that movie about sort of a fake war. And we thought, oh,
Speaker 6: these things can't ever happen. I never, in my days
Speaker 6: teaching every thought this would be the first photo of
Speaker 6: a major cabinet meeting. I thought Trump was doing Trump.
Speaker 6: He was sort of giving Elon Musk a little bit
Speaker 6: you know, of shade at some point, but then also
Speaker 6: reaffirming Musk's authority. He clearly wants to walk away with
Speaker 6: a definitive, visible cut in the size of the federal workforce,
Speaker 6: and whoever can get there first will be Trump's favorite,
Speaker 6: and so right now it's Musk. But if it starts
Speaker 6: to cause some backlash and problems, He'll just instruct all
Speaker 6: of his cabinet members to do that and literally say
Speaker 6: do it or you're fired. I mean, this is the
Speaker 6: way he will run the cabinet. So it was a
Speaker 6: bit surreal, but you could see that Trump was power
Speaker 6: playing even within his own cabinet, which every president does.
Speaker 5: By the way.
Speaker 4: It's interesting.
Speaker 5: I mean, I think you know, you looked around the
Speaker 5: table when you saw mister Musk, and I figure, if
Speaker 5: you're a cabinet person, this is kind of the.
Speaker 4: Peak of your political career. You've become.
Speaker 5: You know, you have your heading up a big department
Speaker 5: within US government, but I guess you kind of have
Speaker 5: to report to mister Musk. Is that kind of the
Speaker 5: vibe taken from yesterday?
Speaker 6: Well, I mean, certainly it's the public visible vibe, but
Speaker 6: of course underneath, you know, behind the scenes, you're gonna
Speaker 6: see cabinet members now they're confirmed, and the FBI is
Speaker 6: an awfully powerful place, the Treasury is an awfully powerful place.
Speaker 6: I think these people will assert themselves behind the scenes constantly.
Speaker 6: With Trump trying to sort of minimize Musk's capacity to
Speaker 6: tell them what to do. But we have real things happening. Sadly,
Speaker 6: somebody died. I think at least one person has died
Speaker 6: of measles in Texas. That's something that RFK has to
Speaker 6: deal with as a cabinet member. You know, there are
Speaker 6: things that will happen that will affect people that will
Speaker 6: be negative. What does Trump do then? Does he blame
Speaker 6: Musk or does he blame Kennedy? You know, and they're
Speaker 6: all trying to like basically avoid blame for the backlash
Speaker 6: and the bad things that will happen from making such drastic,
Speaker 6: you know, visible cuts so quickly.
Speaker 2: One final question, what do you glean is a relationship
Speaker 2: between the leadership of the GOP Senate and the GOP House.
Speaker 6: I knew you were going to ask me this. I
Speaker 6: did some homer before I came on. Ye, so are
Speaker 6: we the Senate Republican majority leaders are saying, Yeah, that
Speaker 6: House resolution that barely passed, that was lauded as a
Speaker 6: political victory twenty four hours ago, Yeah, we're not taking that.
Speaker 6: We're not interested in that one. That's not going to
Speaker 6: do it for us. We want lots of changes, in
Speaker 6: particular Medicaid. This is where senators represent entire states. They
Speaker 6: deal with governors much more frequently, and they understand that
Speaker 6: all the people in the state are affected. Medicaid effects states.
Speaker 6: So this is where you see the institutional design of
Speaker 6: the House and Senate really coming through a particularly on Medicaid.
Speaker 6: On this Budgy resolution, they said the tax cuts weren't
Speaker 6: permanent enough. I'm not sure what that means. George W.
Speaker 6: Bush wanted permanent tax cuts. It's hard to do. So
Speaker 6: the Senate is already planting its flag and telling the
Speaker 6: House that there's a lot of work to be done.
Speaker 2: Professor, you get an a thank you so much, Wendy
Speaker 2: Schuler Brown University. I really appreciate her input.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 4: Join us right now.
Speaker 2: Huge response in Julia Pollocks on she's a ZipRecruiter? Really
Speaker 2: is a chief US Economists A starkly different take on
Speaker 2: the labor economy. Julia, we had not ZIP recruiter. He's
Speaker 2: from a small internet firm City Group. Andrew Hollenhorst was
Speaker 2: just on saying there seemed to be a little bit
Speaker 2: of cracks in the employment armor. Do you agree.
Speaker 7: I think it's too soon to tell. So on the
Speaker 7: one hand, you have consumer confidence falling, there's so many
Speaker 7: new things happening. We know that uncertainty can be a
Speaker 7: drag on investments and hiring as companies wait for clarity,
Speaker 7: so it's possible that that is happening. We also know
Speaker 7: that some specific companies are concerned about tariffs and the
Speaker 7: effect on their businesses. But we also know that there
Speaker 7: are many many employers who are basically euphoric. They expect
Speaker 7: far fewer investigations from the government, They expect looser, more
Speaker 7: favorable regulation, a better business environment. So it's really mixed
Speaker 7: bag at the moment, and we don't know how it's
Speaker 7: going to work out. And the aggregate figures, I expect
Speaker 7: this job support will still be a pretty strong one.
Speaker 5: So what drives just stepping back here from a corporation,
Speaker 5: what drives my hiring strategy on a kind of a
Speaker 5: six to twelve month basis, do.
Speaker 7: You look at the market, you see the products and
Speaker 7: services that you are producing, You see how much you
Speaker 7: are able to make for them. If you see an
Speaker 7: opportunity to expand into a new product line or a
Speaker 7: new service and make money, you know, if the profit
Speaker 7: is going to be positive, the revenue will exceed the costs,
Speaker 7: then you go for it. You know, there are lots
Speaker 7: of reasons that people hold back and try to hire
Speaker 7: fewer people. One, the tax code encourages it. You hire
Speaker 7: a person, you pay payroll tax, you get a machine,
Speaker 7: you get a full tax right off. So we have
Speaker 7: a couple of things that we need to do in
Speaker 7: this country to you know, make sure that's what's not inevitable.
Speaker 7: It doesn't happen because we force it to. So, you know,
Speaker 7: people are worried that robust will take over jobs. Well,
Speaker 7: our policies kind of encourage that. There are also states
Speaker 7: with very very tough label laws where employers are terrified
Speaker 7: of hiring someone because they're worried they won't be able
Speaker 7: to terminate them without being sued. So there are lots
Speaker 7: of things that make employers hold back.
Speaker 2: Julie, and we're going to do the economic data here
Speaker 2: in a moment, Julia Pollock with us a zip recruiter.
Speaker 2: Let's go back to first principles. What do you see
Speaker 2: distinctive Zip recruiter? Fossils like us look at it and go, oh,
Speaker 2: it's Internet. It's people you know on a laptop at
Speaker 2: Starbucks trying to find their jobs so they can work
Speaker 2: from home four days a week. That's a stereotype, Julia Pollock.
Speaker 2: What do you see at zip recruiter? What's unique your
Speaker 2: website effort?
Speaker 7: So the difficulty in the labor market is that this
Speaker 7: is the most heterogeneous market on the planet. No jobs
Speaker 7: are the same and no workers are the same, and
Speaker 7: so there's a tremendously difficult matching problem. And that's where
Speaker 7: zippercruiter comes in. We help connect the right employers with
Speaker 7: the right jobs at the right moment. And that is
Speaker 7: not a trivial problem.
Speaker 5: It's not just about wages here, Julia. I mean, it
Speaker 5: seems like wage growth is pretty darn solid. Yes, inflation's
Speaker 5: a big, big issue for all consumers out there, but
Speaker 5: wage growth has been pretty darn good. Is that seemed
Speaker 5: solid to you?
Speaker 7: You? Wage growth has exceeded inflation now for about two
Speaker 7: years and I think workers are trying to are starting
Speaker 7: to feel that after twenty five months of negative real
Speaker 7: wage growth in twenty twenty one twenty two made them
Speaker 7: feel pretty gloomy. Many are feeling less financial strain now.
Speaker 7: In our job seeker confidence surveys, we've seen the financial
Speaker 7: index go up a lot in the last few months.
Speaker 2: Right, Let make you the economic data. We do this
Speaker 2: for Julia Pollock and ZIP recruiter. We say good morning
Speaker 2: to all of you futures. We're up thirty thirty five.
Speaker 2: We're watching right now. Seems to be a lift this morning.
Speaker 2: GDB comes in level two point three percent on a
Speaker 2: second look, but far more consumption and tick up four
Speaker 2: point two percent. Critically, the GDP Price Index. Julia, let
Speaker 2: me give you this exactly. It was a two. It's
Speaker 2: a wow statistic two point two percent prior the second
Speaker 2: look GDP is not two point two percent. It's such
Speaker 2: a lift. I wonder if it's a typo. We'll have
Speaker 2: to watch that four point two percent. On a simplistic basis,
Speaker 2: you take a two three and a four to two,
Speaker 2: add them together, and you got a six point five
Speaker 2: percent nominal GDP. That's an amateur take but that gives
Speaker 2: you the shock of this GDP price index statistic from
Speaker 2: the survey was two point two percent, and it's a
Speaker 2: true jump condition to four point two percent. Durable goods
Speaker 2: right now, I'm going to say with a lift as
Speaker 2: well an x aircraft. What Julia Pollack looks at is
Speaker 2: again sprightly zero point three is larger zero point eight
Speaker 2: and on claims we finally get the weakness here. Two
Speaker 2: twenty one comes in at two forty two, so it's
Speaker 2: market moving equities don't do much. But I'm going to
Speaker 2: go down here. We've been talking all morning. The Sweeney
Speaker 2: yield actually churns at a four point zero nine up percent.
Speaker 2: The ten year real yield comes in ever so slightly
Speaker 2: one point ninety one percent. Julia Pollock did the nominal
Speaker 2: GDP amateur take. But just to be safe here, do
Speaker 2: we still see a run rate of animal spirits in
Speaker 2: the nation of five percent plus?
Speaker 7: Well, this is sort of interesting, isn't it. I mean,
Speaker 7: GDP is coming in lower than previously estimated and inflation higher,
Speaker 7: and that's consistent with the change which is in the
Speaker 7: Fed's projections recently. And I think that is consistent with
Speaker 7: the shift and sentiment recently as well. The economy is
Speaker 7: still growing at a robust rate. I mean, people didn't
Speaker 7: expect two percent GDP growth now given our demographic shifts,
Speaker 7: So that's still fairly strong, but it's not as strong
Speaker 7: as we once thought. Employment growth also, we saw those
Speaker 7: huge revisions, the big benchmark revisions was not as strong
Speaker 7: in twenty twenty three and twenty twenty four as we
Speaker 7: initially thought. And inflation is proving more stubborn.
Speaker 2: What's a character of inflation you see at ZIP recruiter.
Speaker 7: So this is not wage driven inflation. For the most part,
Speaker 7: productivity growth is strong and employers do have pretty substantial
Speaker 7: wage setting power, even though yes, there are industries with
Speaker 7: labor shortages where where employers are sort of boxed in.
Speaker 7: The issue here really is housing. That's the biggest source
Speaker 7: of inflation in the United States, and then of course
Speaker 7: energy goes up and down with geopolitical swings. So housing
Speaker 7: is the big one though, and the FED has proven
Speaker 7: somewhat ineffective at dealing with it because when the FED
Speaker 7: raises interest rates, we see inventories shrink, and so prices
Speaker 7: remain high and price growth rough and strong.
Speaker 2: Julia, thank you so much, particularly during this economic data,
Speaker 2: really really appreciated.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each weekday
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Speaker 2: This is a joy in an important day to speak
Speaker 2: to Wendy Schiller, professor at Brown University, but far more nationally,
Speaker 2: and forget about the Republican Democrat thing, Jess. Here is
Speaker 2: our civics second paragraph. This happens to be from the
Speaker 2: Washington Post, Professor Schiller. The brief administrative order, which did
Speaker 2: not address the underlying legal issues, will allow time for
Speaker 2: a full Supreme Court review. Professor Schiller, what should our
Speaker 2: listeners either pro Trump, anti Trump, anti Democrat pro this
Speaker 2: d D. What should we expect from Justice Roberts in
Speaker 2: the Supreme Court?
Speaker 6: Well, I mean, I think, Tom, I go all the
Speaker 6: way back to John Marshall. I mean, I really do
Speaker 6: think about Marve v. Madison. I think about crucial decisions
Speaker 6: that the Court has made in history that shift the
Speaker 6: balance of power across branches. And that's certainly what Marvey v.
Speaker 6: Madison did, elevating this report's power and reducing president's power.
Speaker 6: Thoma Jefferson was not happy about that. I think in
Speaker 6: this case, this isn't just a one off. This isn't
Speaker 6: there's a whole series of cases that will, in fact,
Speaker 6: you know, affirm or restrain or expand the president's discretionary
Speaker 6: power over the money that Congress appropriates across the board.
Speaker 6: It's not just about AID, it's not just about DEI,
Speaker 6: It's not about just a single thing. So this is
Speaker 6: a real moment for Roberts, who's had a number of
Speaker 6: these really important moments. The immunity decision obviously, but even
Speaker 6: going back to Obamacare, you know, affirming the you know,
Speaker 6: Obamacare is a program, but then also limiting the federal
Speaker 6: government's power to be coercive in how it distributes money.
Speaker 6: And that's this balancing act that Roberts is facing.
Speaker 2: I think right now, let's take a given justice. I'm
Speaker 2: going to go with Wizard White. Byron White, hugely respected
Speaker 2: within our Supreme Court history, legitimate college athlete at Colorado,
Speaker 2: legitimate baseball draftee with the Pittsburgh Pirates. He got to
Speaker 2: the Supreme Court and he surprised those people that thought
Speaker 2: Wiz or Wight would do this, do this, do this.
Speaker 2: Are we going to get the same surprise from the
Speaker 2: more conservative members of the court or do you suggest
Speaker 2: they'll go lockstep with a president.
Speaker 6: I think they're probably literally starting to think about middle ground.
Speaker 6: I don't know that they'll go completely lock step, but
Speaker 6: there's a lot of room in this structure Articles one, two,
Speaker 6: and even three of the Constitution to have the president
Speaker 6: exert power. The difference today from any other Roman history
Speaker 6: is the size and scope of the federal government. That's
Speaker 6: the big new factor in the sense of this constitutional arrangement.
Speaker 6: You know, they were writing Constitution for a president that
Speaker 6: was overseeing a very tiny federal government, and that stayed
Speaker 6: tiny for more than one hundred years. So now we've
Speaker 6: got something that affects everybody's daily life. You know, what
Speaker 6: does that mean? How much responsibility does the president have
Speaker 6: in power and how much does Congress have a say
Speaker 6: in it? And this is going to be crucial going
Speaker 6: forward because of the scope of the federal government. It
Speaker 6: really does affect everybody's life. And that's where the Court
Speaker 6: now has so much more at stake, not just for
Speaker 6: the separation powers, but for its own survival. If you
Speaker 6: give the president and then you know, free reign over everything,
Speaker 6: what's to say he's not gonna want changes in the
Speaker 6: court or ignore the court. So the Court's survival in
Speaker 6: terms of influential here is also on the line.
Speaker 4: Professor.
Speaker 5: We had President Trump's first cabinet meeting yesterday, Tellwies, and
Speaker 5: we had mister Musk there. What did you take away
Speaker 5: from that cabinet meeting?
Speaker 6: Well, I mean it's something you could not even imagined,
Speaker 6: even like in a movie, you know, like you wouldn't
Speaker 6: even you know, Wag the you know, Wag the Dog,
Speaker 6: that movie about sort of a fake war, and thought, Oho,
Speaker 6: these things can't ever happen. I never, in my days teaching,
Speaker 6: ever thought this would be the first photo of a
Speaker 6: major cabinet meeting. I thought Trump was doing Trump. He
Speaker 6: was sort of giving Elon Musk a little bit you know,
Speaker 6: of shade at some point, but then also reaffirming Musk's authority.
Speaker 6: He clearly wants to walk away with a definitive, visible
Speaker 6: cut in the size of the federal workforce, and whoever
Speaker 6: can get there first will be Trump's favorite. And so
Speaker 6: right now it's Musk. But if it starts to cause
Speaker 6: some backline problems, he'll just instruct all of his cabinet
Speaker 6: members to do that and literally say do it or
Speaker 6: you're fired. I mean, this is the way he will
Speaker 6: run the cabinet. So it was a bit surreal, but
Speaker 6: you could see that Trump was power playing even within
Speaker 6: his own cabinet, which every president does. By the way.
Speaker 4: It's interesting.
Speaker 5: I mean, I think you know, you looked around the
Speaker 5: table when you saw mister Musk, and I figure, if
Speaker 5: you're a cabinet person, this is kind.
Speaker 4: Of the peak of your political career. You've become.
Speaker 5: You know, you have, you're heading up a big department
Speaker 5: with a US government, But I guess you kind of
Speaker 5: have to report to mister Musk. Is that kind of
Speaker 5: the vibe taken from yesterday?
Speaker 6: Well, I mean, certainly it's the public visible vibe, but
Speaker 6: of course underneath, you know, behind the scenes, you're gonna
Speaker 6: see cabinet members now they're confirmed, and the FBI is
Speaker 6: an awfully powerful place, the Treasury is an awfully powerful place.
Speaker 6: I think these people will assert themselves behind the scenes constantly,
Speaker 6: with Trump trying to sort of minimize Musk's capacity to
Speaker 6: tell them what to do. But we have real things happening. Sadly,
Speaker 6: somebody died. I think at least one person has died
Speaker 6: of measles in Texas. That's something that RFK has to
Speaker 6: deal with as a cabinet member. You know, there are
Speaker 6: things that will happen that will affect people that will
Speaker 6: be negative. What does Trump do then? Does he blame
Speaker 6: Musk or does he blame Kennedy? You know, and they're
Speaker 6: all trying to like basically avoid blame for the backlash
Speaker 6: and the bad things that will happen from making such drastic,
Speaker 6: you know, visible cuts so quickly.
Speaker 2: One final question, what do you glean is a relationship
Speaker 2: between the leadership of the GOP Senate and the GOP House.
Speaker 6: I knew you were going to ask me this. I
Speaker 6: did some homer before I came on. Yeah. So already
Speaker 6: the Senate Republican majority leaders are saying, yeah, that House
Speaker 6: resolution that barely passed, that was lauded as a political
Speaker 6: victory twenty four hours ago, Yeah, we're not taking that.
Speaker 6: We're not interested in that one. That's not going to
Speaker 6: do it for us. We want lots of changes, in
Speaker 6: particular Medicaid. This is where senators represent entire states. They
Speaker 6: deal with governors much more frequently, and they understand that
Speaker 6: all the people in the state are affected. Medicaid effects states.
Speaker 6: So this is where you see the institutional design in
Speaker 6: the House and Senate really coming through, particularly on Medicaid.
Speaker 6: On this Budgy resolution, they said the tax cuts weren't
Speaker 6: permanent enough. I'm not sure what that means. George W.
Speaker 6: Bush wanted permanent tax cuts. It's hard to do. So
Speaker 6: the Senate is already planting its flag and telling the
Speaker 6: House that there's a lot of work to be done.
Speaker 2: Professor, you get an a thank you so much, Wendy
Speaker 2: Shler Brown University. I really appreciate her input.
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