WEBVTT - Nvidia Ripples Through Markets 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:22.000 on Apple CarPlay or Android Auto with the Bloomberg Business App. 0:00:22.360 --> 0:00:25.680 Listen on demand wherever you get your podcasts, or watch 0:00:25.760 --> 0:00:27.000 us live on YouTube. 0:00:27.240 --> 0:00:31.960 DA Davidson and in charge of all of institutional research, 0:00:32.040 --> 0:00:35.040 Gil Laura, joins us this morning. It's on Tech and 0:00:35.080 --> 0:00:39.360 on Nvidian and you know all the rest of it. Gil, 0:00:39.560 --> 0:00:42.960 you follow thirty companies. You got a very measured out look. 0:00:43.040 --> 0:00:46.640 Fourteen buy sixteen holds off the Bloomberg this morning, What 0:00:46.840 --> 0:00:51.960 is the character of your enthusiasm on Nvidia given fourteen 0:00:52.040 --> 0:00:53.960 buy sixteen, hold zero cells. 0:00:54.200 --> 0:00:56.800 They're doing very well and they're set up to do 0:00:56.920 --> 0:00:59.319 well this year. But this may be as good as 0:00:59.360 --> 0:01:04.400 it gets for video. Their big customers have increased spend 0:01:04.440 --> 0:01:08.160 the most into the fourth quarter of last year. They're 0:01:08.200 --> 0:01:11.679 probably going to start moderating the growth and spend this year, 0:01:11.800 --> 0:01:14.600 so this may be as good as it gets for Nvidia. 0:01:14.800 --> 0:01:17.280 Off the screen, you got a neutral on in video, 0:01:17.400 --> 0:01:22.160 neutral on Salesforce, Nutrol on Zoom. I'm loving this neutral 0:01:22.240 --> 0:01:25.440 on five to nine Away we go what's a neutral? 0:01:25.640 --> 0:01:28.640 Should I hold the stack? Do I want to find 0:01:28.680 --> 0:01:31.119 something else to do? What does neutral mean? Gilherty? 0:01:32.520 --> 0:01:35.920 There's better things to do, so if we're to look, 0:01:36.120 --> 0:01:40.959 last night was a great view of what the AI 0:01:41.000 --> 0:01:43.760 trade is, right and video was the AI trade a 0:01:43.760 --> 0:01:47.360 couple of years ago, and last year Salesforce is not 0:01:47.600 --> 0:01:54.279 quite ready for AI. Snowflake was a fantastic report. Infrastructure 0:01:54.400 --> 0:01:58.320 software is incredibly important for companies to be able to 0:01:58.440 --> 0:02:02.640 run AI application. They need to get their data ready 0:02:03.120 --> 0:02:06.280 and Snowflake is leading the way in terms of doing that. 0:02:06.360 --> 0:02:10.640 They have the main analytical database, the leading product, and 0:02:10.720 --> 0:02:13.360 so companies are using them to put all the data 0:02:13.400 --> 0:02:17.240 in one place so they can even start building AI applications. 0:02:17.560 --> 0:02:22.080 That's why Snowflake did well. That's why we like infrastructure 0:02:22.120 --> 0:02:28.079 software companies like Snowflake, Data Dog, Dina, trace Jyfrog. We 0:02:28.200 --> 0:02:30.640 like half the companies. We just prefer them over the 0:02:30.639 --> 0:02:31.200 other half. 0:02:31.280 --> 0:02:35.160 All these names, Detroit, Lions, blue Light, all these names. 0:02:35.680 --> 0:02:39.040 Is it like two thousand reducts? It sounds like a 0:02:39.120 --> 0:02:41.120 Super Bowl list from two. 0:02:40.960 --> 0:02:42.240 Thousand exactly right? 0:02:42.360 --> 0:02:45.840 Hey, Gil, we just had President Trump put out a 0:02:45.880 --> 0:02:51.560 tweet saying that these tariffs are going into place, including China. 0:02:51.639 --> 0:02:52.680 Here, how does the. 0:02:52.600 --> 0:02:59.680 Tech world view a world of increasing tariffs, Well. 0:02:59.560 --> 0:03:01.920 It depends on if you're selling hard goods or if 0:03:01.919 --> 0:03:07.200 you're selling software. If you're selling hardware, let's say in Nvidia, 0:03:07.360 --> 0:03:11.040 this makes your life a little bit more complicated. Higher 0:03:11.080 --> 0:03:15.760 tariff borders between the US and China, between China and Taiwan, 0:03:16.280 --> 0:03:20.960 between Taiwan and where they source their materials, all those 0:03:21.000 --> 0:03:23.640 types of tariffs will add up to make the product 0:03:23.720 --> 0:03:27.840 more expensive. For the software companies, in the internet companies, 0:03:28.280 --> 0:03:31.160 it'll be more subtle. Let's not forget part of the 0:03:31.200 --> 0:03:34.800 reason we're talking about putting tariffs on Europe is that 0:03:34.880 --> 0:03:38.000 the Europeans have made a habit of charging our big 0:03:38.040 --> 0:03:41.640 technology companies billions of dollars at a time as quote 0:03:41.680 --> 0:03:47.200 unquote penalties for whatever behavior they choose to penalize. So 0:03:47.680 --> 0:03:53.120 as we escalate with Europe, those companies may suffer more. 0:03:53.160 --> 0:03:56.800 As we escalate with China, Apple may get in the 0:03:56.840 --> 0:04:00.440 crosshairs again. So it could have an impact, But it 0:04:00.480 --> 0:04:02.800 really depends on how much follow through there is in 0:04:02.880 --> 0:04:08.000 terms of tariffs and how combative our adversaries are going 0:04:08.040 --> 0:04:10.600 to be. Once we do raise tariffs. 0:04:10.640 --> 0:04:14.120 So if you're a Microsoft, how much attention are you 0:04:14.160 --> 0:04:18.400 paying to what's happening in Washington, DC with tariffs? 0:04:20.200 --> 0:04:23.240 A lot of attention again, especially as it has to 0:04:23.320 --> 0:04:27.240 do with Europe. Again, the Europeans have fined Microsoft many times, 0:04:27.240 --> 0:04:31.600 have extracted their penalties and fees out of Microsoft, and 0:04:31.880 --> 0:04:34.840 they'll go right back to that. Well if they decide 0:04:34.880 --> 0:04:38.320 that's a good way to retaliate against tariffs that we 0:04:38.360 --> 0:04:42.560 put on European cars. Perhaps, So for all of these companies, 0:04:42.560 --> 0:04:46.159 they're paying a lot of attention because on many of 0:04:46.160 --> 0:04:50.200 these frontiers they are right in the crosshairs of retaliation. 0:04:51.680 --> 0:04:54.840 So in the eleven o'clock hour, Gil Caroline Heide to 0:04:54.839 --> 0:04:57.600 Bloomberg Television is going to be interviewing mister Jasse from Amazon. 0:04:59.040 --> 0:05:00.919 What do you need to hear from mister Jesse in 0:05:00.920 --> 0:05:03.159 the days and weeks to come Amazon, because I know 0:05:03.279 --> 0:05:04.880 that's one of the names you have a buyer reading on. 0:05:06.920 --> 0:05:07.280 Yeah. 0:05:07.320 --> 0:05:12.680 So the progress they're making across the board is very impressive. 0:05:12.880 --> 0:05:17.240 It's our favorite megacap pig because they're leading the way 0:05:17.360 --> 0:05:21.520 in terms of facilitating enterprise AI because AWS is the 0:05:21.520 --> 0:05:24.799 biggest hyperscaler. They're also going to have the biggest AI 0:05:24.920 --> 0:05:28.960 business there. On the consumer side, the introd Alexa plus 0:05:29.040 --> 0:05:34.000 yesterday have rufus on the shopping app so they're helping 0:05:34.160 --> 0:05:38.880 consumers shop through better and better AI tools. And then 0:05:38.920 --> 0:05:42.599 on the retail business they're doing well as the US 0:05:42.640 --> 0:05:46.800 consumer holds up, the European consumer can possibly pick up. 0:05:47.160 --> 0:05:50.720 And all these things feed into each other. The advertising 0:05:50.800 --> 0:05:54.920 business is getting better with AI with more volume, so 0:05:55.000 --> 0:05:57.839 that flywheel is working pretty well for Amazon right now. 0:05:57.960 --> 0:06:01.080 How is their box business? See, people like you, Gil, 0:06:01.160 --> 0:06:04.560 you never talk about you get a cardboard box? You know? 0:06:04.800 --> 0:06:07.119 Did you like the new phone ones? Paul? They little 0:06:07.320 --> 0:06:08.160 little thing you need? 0:06:08.200 --> 0:06:08.560 All right? 0:06:08.839 --> 0:06:10.360 You know? What do you what do you think? I mean? 0:06:10.440 --> 0:06:13.719 Is a box business going to put the US Post Office, 0:06:13.800 --> 0:06:16.000 FedEx and everybody else out of business? 0:06:18.560 --> 0:06:22.560 The UPS and FedEx a few years ago when Amazon 0:06:22.680 --> 0:06:26.240 came to them before it started doing its own delivery 0:06:26.440 --> 0:06:29.880 and asked them for price concessions, and they said no. 0:06:30.520 --> 0:06:34.040 And boy do they regret it, because now Amazon's already 0:06:34.040 --> 0:06:38.960 surpassed UPS and will will soon make those two companies 0:06:39.400 --> 0:06:44.320 smaller and smaller. They're they're making US postal service smaller. 0:06:45.400 --> 0:06:47.640 I know the Amazon trucks at my house at least 0:06:47.640 --> 0:06:48.760 two or three times a day. 0:06:48.920 --> 0:06:50.839 I mean, it's great here. But you know, one of 0:06:50.839 --> 0:06:53.400 the things you know, with Gil Lauria and d Davidson, folks, 0:06:53.400 --> 0:06:56.479 we can do this because a really holistic view on 0:06:56.600 --> 0:07:01.440 securities research. We were talking earlier to Carolina. She swears 0:07:01.440 --> 0:07:03.800 they still got one day delivery in the United Kingdom. 0:07:03.839 --> 0:07:06.839 Grant's tenzy waens. I mean at the distance from Carolina 0:07:06.880 --> 0:07:09.560 Hie to John Faraow's house now England is like forty 0:07:09.640 --> 0:07:12.720 two miles. But is one day delivery gone? That was 0:07:12.760 --> 0:07:16.400 an experiment Giloria of years ago. Have they just given 0:07:16.440 --> 0:07:21.280 that up quietly so they can profit? No, it's quite 0:07:21.320 --> 0:07:25.320 the contrary. Delivery times they are still getting shorter, and 0:07:25.360 --> 0:07:29.960 they are absolutely relentless about it. They are constantly adding 0:07:30.080 --> 0:07:36.040 more fulfillment centers, last mile operations. They're still talking about 0:07:36.160 --> 0:07:40.920 using drones. They are going to be relentless about shortening 0:07:41.000 --> 0:07:47.440 delivery times and while keeping the delivery costs lower. They're 0:07:47.480 --> 0:07:50.360 investing billions of dollars in it, and they're not going 0:07:50.400 --> 0:07:52.560 to stop until we get everything we want the same 0:07:52.640 --> 0:07:55.760 day we go to surveillance. How many boxes are at 0:07:55.760 --> 0:07:59.320 the front door, correspond at Lisa Matteo, do you, Lisa, 0:07:59.360 --> 0:08:01.360 I don't buy it. I don't see one day delivery 0:08:01.360 --> 0:08:02.880 anymore at Amazon, do you. 0:08:03.080 --> 0:08:06.320 I get a sad Yeah. Absolutely, that's where I live. 0:08:06.520 --> 0:08:10.200 It could be just yeah, no, I mean you make 0:08:10.200 --> 0:08:12.120 a phone call when you're doing your morning, you know, 0:08:12.280 --> 0:08:13.840 run around during your morning towards by the time you 0:08:13.840 --> 0:08:15.920 get back home and right there. 0:08:16.160 --> 0:08:19.480 Okay, so that's Mayor Adam's fault. We'll talk to him about. 0:08:19.400 --> 0:08:24.120 What's upper eastside things cans about four day delivery. It's 0:08:24.120 --> 0:08:25.720 a whole third avenue taking over. 0:08:26.240 --> 0:08:27.800 As John Tucker always reports to. 0:08:27.800 --> 0:08:31.400 Us, Apple, Gil, you have a buy rating on Apple 0:08:31.720 --> 0:08:34.360 if I'm an, If I'm Apple, I. 0:08:34.400 --> 0:08:36.400 Still have to worry about China. 0:08:36.400 --> 0:08:39.520 I get twenty percent of my revenue in China'm despite 0:08:39.520 --> 0:08:41.560 what I'm trying to do when friendshuring and on shurn, 0:08:41.920 --> 0:08:45.839 my supply chain is completely tied to China. Here, How 0:08:45.840 --> 0:08:48.440 can I buy Apple stock if I've got that China 0:08:48.600 --> 0:08:50.040 is still hanging over me. 0:08:51.400 --> 0:08:54.439 Yeah, China is the big risk. It's it's the most 0:08:54.440 --> 0:08:58.160 competitive market, it's the most dynamic market. And again it's 0:08:58.200 --> 0:09:03.720 it gets ensnared in the UI. China dispute, trade dispute. 0:09:03.800 --> 0:09:06.480 So it is a risk. It's down to fifteen percent, 0:09:06.640 --> 0:09:10.480 it may go down to even less of Apple's revenue 0:09:10.520 --> 0:09:13.000 going forward. And at the same time, Apple is investing 0:09:13.360 --> 0:09:17.240 in the next break market, which is India, and they're 0:09:17.280 --> 0:09:19.920 hoping to get over the next twenty thirty years the 0:09:19.960 --> 0:09:22.199 same type of growth they've gone out of China over 0:09:22.240 --> 0:09:24.840 the last twenty years, because China is not going to 0:09:24.880 --> 0:09:29.520 be supportive of the growth story on the product side. 0:09:29.559 --> 0:09:32.520 And then to your point, it's also a challenge in 0:09:32.600 --> 0:09:36.240 terms of the supply chain. Apple has diversified away from 0:09:36.320 --> 0:09:41.600 China largely, but again with a higher tariffs. Any goods 0:09:41.600 --> 0:09:46.400 in service, any goods that get shipped anywhere in the world, 0:09:46.720 --> 0:09:49.000 are going to be at risk of having higher costs. 0:09:49.960 --> 0:09:53.120 All right, So stepping back, GIL, looking across all your 0:09:53.240 --> 0:09:56.640 coverage and again cover you know thirty some odd names 0:09:56.640 --> 0:10:00.360 in broad tech. Have we seen peak AI. 0:10:01.440 --> 0:10:03.160 That's come up a couple of times today. 0:10:03.240 --> 0:10:06.400 Yeah, it's important, not at all, not at all. We're 0:10:06.440 --> 0:10:09.000 just getting started. AI is going to make all of 0:10:09.040 --> 0:10:12.280 us more productive. It's going to be a contributor to 0:10:12.400 --> 0:10:16.440 GDP growth. It's just not going to happen overnight. There's 0:10:16.480 --> 0:10:19.720 going to be different waves of benefit. Again, the last 0:10:19.760 --> 0:10:24.640 wave was Microsoft and Nvidia. Now the wave is infrastructure software. Again, 0:10:24.720 --> 0:10:28.040 I highlighted Snowflake, but there's others. And then in two 0:10:28.160 --> 0:10:29.800 or three years there's going to be a wave of 0:10:29.840 --> 0:10:34.680 applications that take off and drive a lot of activity there, 0:10:35.320 --> 0:10:39.720 including through the Apple ecosystem, which will make the iPhone 0:10:39.760 --> 0:10:45.120 more valuable. Eventually, it'll be becomes so big that it'll 0:10:45.120 --> 0:10:48.400 make all of us more productive. We'll all have personal 0:10:48.440 --> 0:10:52.720 assistance that can help us at work, can help with 0:10:52.760 --> 0:10:56.360 our personal lives. This future is coming, it's just not 0:10:56.480 --> 0:10:59.920 going to happen overnight. And unfortunately we had some companies 0:11:00.080 --> 0:11:03.920 raise expectations as if it's imminent, when in fact it'll 0:11:03.960 --> 0:11:05.920 take a few more years before we see it in 0:11:06.080 --> 0:11:07.560 everyday life all the time. 0:11:07.640 --> 0:11:11.000 Yeah, that's absolutely brilliant. I mean, that's a very nice summary, Gilory. 0:11:11.000 --> 0:11:13.280 That's why we're having you on here. But I don't 0:11:13.400 --> 0:11:16.439 where's the proof of concept. I mean, give me one 0:11:17.160 --> 0:11:20.680 infrastructure thing in the New York Tri state area. I mean, 0:11:21.160 --> 0:11:25.520 is AI helping them land airplanes at EWR, is AI 0:11:25.760 --> 0:11:28.679 helping with the building of the many tunnels under the 0:11:28.760 --> 0:11:32.720 Hudson River, the Sweeney Tunnels. We're calling though mean where 0:11:32.840 --> 0:11:38.320 Giloria is the first proof of concept of AI doing that. 0:11:39.720 --> 0:11:44.560 Software code. Software engineers were, if you look two three 0:11:44.640 --> 0:11:48.280 years ago, were in such short supply that the main 0:11:48.360 --> 0:11:50.959 reason we didn't have advances in softwares we didn't have 0:11:51.080 --> 0:11:55.360 enough software engineers. What's happening now is Generator of AI 0:11:55.480 --> 0:11:59.800 is actually perfectly suited for software because it's a language 0:11:59.840 --> 0:12:03.679 that easy to understand and easy to translate to. And 0:12:03.760 --> 0:12:07.560 so we're having an explosion of software code development. It's 0:12:07.559 --> 0:12:09.920 going to take a couple of years before we see 0:12:09.960 --> 0:12:12.720 the results of it, but it's already starting to happen. 0:12:13.120 --> 0:12:16.320 And those are the infrastructure software companies that we're talking 0:12:16.360 --> 0:12:19.800 about again, names like get lab and JFrog are helping 0:12:19.840 --> 0:12:25.000 develop more code. Snowflake is helping store these new applications. 0:12:25.480 --> 0:12:29.400 That's already happening. That's why those companies are doing better 0:12:29.440 --> 0:12:33.360 than other software companies right now. But it's going to 0:12:33.360 --> 0:12:35.800 take time before we see it in our everyday life. 0:12:35.800 --> 0:12:39.960 For now, we just have chatbots and Alexa plus ordering 0:12:40.800 --> 0:12:43.120 April towels when you ask it to don't. 0:12:42.920 --> 0:12:45.679 Be a stranger. This is really informative. Thank you so much, 0:12:45.720 --> 0:12:48.880 gil Loria, with a nice mix of uys and neutrals. 0:12:49.000 --> 0:12:55.320 We like to see that. On the sell side. 0:12:57.120 --> 0:13:00.720 You're listening to the Bloomberg Surveillance podcast got us Live 0:13:00.760 --> 0:13:03.920 weekday afternoons from seven to ten am Eastern Listen on 0:13:04.000 --> 0:13:07.680 Applecarplay and Android Otto with the Bloomberg Business app, or 0:13:07.840 --> 0:13:09.280 watch us Live on YouTube. 0:13:09.360 --> 0:13:11.720 This is a joy in an important day to speak 0:13:11.760 --> 0:13:16.480 to Wendy Schiller's professor at Brown University, but far more nationally, 0:13:17.040 --> 0:13:20.560 and forget about the Republican Democrat thing. Just here is 0:13:20.640 --> 0:13:23.920 our civics second paragraph. This happens to be from the 0:13:24.000 --> 0:13:28.720 Washington Post, Professor Schiller. The brief administrative order, which did 0:13:28.760 --> 0:13:33.360 not address the underlying legal issues, will allow time for 0:13:33.520 --> 0:13:38.760 a full Supreme Court review. Professor Schiller, what should our 0:13:38.800 --> 0:13:43.959 listeners either pro Trump, anti Trump, anti Democrat pro this 0:13:44.640 --> 0:13:49.320 da What should we expect from Justice Roberts in the 0:13:49.360 --> 0:13:50.120 Supreme Court? 0:13:51.440 --> 0:13:53.360 Well, I mean, I think, Tom, I go all way 0:13:53.360 --> 0:13:55.160 back to John Marshall. I mean, I really do think 0:13:55.160 --> 0:13:58.720 about Marvey v. Madison. I think about crucial decisions that 0:13:58.800 --> 0:14:02.200 the Court has made in history that shift the balance 0:14:02.240 --> 0:14:06.360 of power across branches. And that's certainly what MARVV Medicine did, 0:14:06.440 --> 0:14:10.280 elevating this I courts power and reducing president's power. Thomas 0:14:10.320 --> 0:14:13.040 Jefferson was not happy about that. I think in this case, 0:14:13.160 --> 0:14:15.280 this isn't just a one off. This isn't there's a 0:14:15.320 --> 0:14:18.600 whole series of cases that will, in fact, you know, 0:14:18.720 --> 0:14:24.440 affirm or restrain or expand the president's discretionary power over 0:14:24.480 --> 0:14:28.280 the money that Congress appropriates across the board. It's not 0:14:28.360 --> 0:14:32.040 just about aid, it's not just about DEI, It's not 0:14:32.080 --> 0:14:34.680 about just a single thing. So this is a real 0:14:34.800 --> 0:14:37.480 moment for Roberts, who's had a number of these really 0:14:37.520 --> 0:14:41.360 important moments. The immunity decision obviously, but even going back 0:14:41.360 --> 0:14:44.640 to Obamacare, you know, affirming the you know, Obamacare is 0:14:44.640 --> 0:14:47.600 a program, but then also limiting the federal government's power 0:14:47.600 --> 0:14:50.560 to be coercive in how it distributes money. And that's 0:14:50.680 --> 0:14:52.760 this balancing act that Roberts is facing. 0:14:52.800 --> 0:14:55.040 I think right now, let's take a given justice. I'm 0:14:55.040 --> 0:14:59.360 going to go with Wizard White, Byron White, hugely respected 0:14:59.640 --> 0:15:03.200 with the our Supreme Court history, legitimate college you have 0:15:03.280 --> 0:15:07.880 to lead at Colorado, legitimate baseball draftee with the Pittsburgh Pirates. 0:15:08.200 --> 0:15:11.600 He got to the Supreme Court, and he surprised those 0:15:11.800 --> 0:15:14.840 people that thought Wizard White would do this, do this, 0:15:14.920 --> 0:15:18.000 do this. Are we going to get the same surprise 0:15:18.440 --> 0:15:21.680 from the more conservative members of the court or do 0:15:21.760 --> 0:15:24.160 you suggest they'll go lockstep with a president. 0:15:25.880 --> 0:15:29.160 I think they're probably literally starting to think about middle ground. 0:15:29.240 --> 0:15:32.280 I don't know that they'll go completely lock step, but 0:15:32.360 --> 0:15:35.840 there's a lot of room in this structure Articles one, two, 0:15:35.960 --> 0:15:38.760 and even three of the Constitution to have the president 0:15:38.920 --> 0:15:42.280 exert power. The difference today from any other Roman history 0:15:42.520 --> 0:15:45.440 is the size and scope of the federal government. That's 0:15:45.560 --> 0:15:49.400 the big new factor in the sense of this constitutional arrangement. 0:15:49.640 --> 0:15:51.480 You know, they were writing Constitution for a president that 0:15:51.520 --> 0:15:54.760 was overseeing a very tiny federal government, and that stayed 0:15:54.800 --> 0:15:57.720 tiny for on more than one hundred years. So now 0:15:57.720 --> 0:16:00.600 we've got something that affects everybody's daily life. You know, 0:16:00.640 --> 0:16:03.120 what does that mean? How much responsibility does the president 0:16:03.200 --> 0:16:06.160 have in power and how much does Congress have a 0:16:06.240 --> 0:16:08.400 say in it? And this is going to be crucial 0:16:08.440 --> 0:16:10.960 going forward because of the scope of the federal government. 0:16:11.040 --> 0:16:14.160 It really does affect everybody's life. And that's where the 0:16:14.200 --> 0:16:16.880 Court now has so much more at stake, not just 0:16:16.920 --> 0:16:19.840 for the separation powers, but for its own survival. If 0:16:19.840 --> 0:16:22.320 you give the president, you know, free reign over everything, 0:16:22.640 --> 0:16:24.480 what's to say he's not going to want changes in 0:16:24.520 --> 0:16:28.239 the Court or ignore the Court. So the Court's survival 0:16:28.280 --> 0:16:31.520 in terms of influential here is also on the line. 0:16:32.120 --> 0:16:32.600 Professor. 0:16:32.680 --> 0:16:38.240 We had President Trump's first cabinet meeting yesterday, Tellwes, and 0:16:38.280 --> 0:16:40.280 we had mister Musk there. What did you take away 0:16:40.680 --> 0:16:41.680 from that cabinet meeting? 0:16:42.760 --> 0:16:44.920 Well, I mean it's something you could not even imagine, 0:16:45.000 --> 0:16:47.120 even like in a movie, you know, like you wouldn't 0:16:47.160 --> 0:16:48.960 even you know, Wag the you know, Wag the Dog, 0:16:49.040 --> 0:16:51.040 that movie about sort of a fake war. And we thought, oh, 0:16:51.240 --> 0:16:54.160 these things can't ever happen. I never, in my days 0:16:54.200 --> 0:16:56.360 teaching every thought this would be the first photo of 0:16:56.400 --> 0:16:59.720 a major cabinet meeting. I thought Trump was doing Trump. 0:17:00.040 --> 0:17:01.960 He was sort of giving Elon Musk a little bit 0:17:02.280 --> 0:17:05.040 you know, of shade at some point, but then also 0:17:05.080 --> 0:17:09.800 reaffirming Musk's authority. He clearly wants to walk away with 0:17:09.880 --> 0:17:13.640 a definitive, visible cut in the size of the federal workforce, 0:17:13.920 --> 0:17:17.240 and whoever can get there first will be Trump's favorite, 0:17:17.359 --> 0:17:19.600 and so right now it's Musk. But if it starts 0:17:19.640 --> 0:17:22.480 to cause some backlash and problems, He'll just instruct all 0:17:22.520 --> 0:17:25.880 of his cabinet members to do that and literally say 0:17:25.920 --> 0:17:27.399 do it or you're fired. I mean, this is the 0:17:27.400 --> 0:17:29.520 way he will run the cabinet. So it was a 0:17:29.520 --> 0:17:32.359 bit surreal, but you could see that Trump was power 0:17:32.400 --> 0:17:35.760 playing even within his own cabinet, which every president does. 0:17:35.840 --> 0:17:36.280 By the way. 0:17:36.840 --> 0:17:37.399 It's interesting. 0:17:37.440 --> 0:17:40.240 I mean, I think you know, you looked around the 0:17:40.240 --> 0:17:43.000 table when you saw mister Musk, and I figure, if 0:17:43.040 --> 0:17:45.360 you're a cabinet person, this is kind of the. 0:17:45.320 --> 0:17:47.280 Peak of your political career. You've become. 0:17:47.720 --> 0:17:50.560 You know, you have your heading up a big department 0:17:50.600 --> 0:17:54.280 within US government, but I guess you kind of have 0:17:54.359 --> 0:17:56.720 to report to mister Musk. Is that kind of the 0:17:56.800 --> 0:17:58.000 vibe taken from yesterday? 0:17:58.880 --> 0:18:01.080 Well, I mean, certainly it's the public visible vibe, but 0:18:01.160 --> 0:18:03.840 of course underneath, you know, behind the scenes, you're gonna 0:18:03.840 --> 0:18:06.920 see cabinet members now they're confirmed, and the FBI is 0:18:06.920 --> 0:18:10.600 an awfully powerful place, the Treasury is an awfully powerful place. 0:18:11.359 --> 0:18:15.160 I think these people will assert themselves behind the scenes constantly. 0:18:15.160 --> 0:18:18.560 With Trump trying to sort of minimize Musk's capacity to 0:18:18.640 --> 0:18:22.280 tell them what to do. But we have real things happening. Sadly, 0:18:22.359 --> 0:18:24.440 somebody died. I think at least one person has died 0:18:24.480 --> 0:18:28.399 of measles in Texas. That's something that RFK has to 0:18:28.440 --> 0:18:30.439 deal with as a cabinet member. You know, there are 0:18:30.520 --> 0:18:32.840 things that will happen that will affect people that will 0:18:32.880 --> 0:18:35.960 be negative. What does Trump do then? Does he blame 0:18:36.080 --> 0:18:38.840 Musk or does he blame Kennedy? You know, and they're 0:18:38.880 --> 0:18:42.320 all trying to like basically avoid blame for the backlash 0:18:42.400 --> 0:18:45.360 and the bad things that will happen from making such drastic, 0:18:45.560 --> 0:18:47.080 you know, visible cuts so quickly. 0:18:47.240 --> 0:18:50.600 One final question, what do you glean is a relationship 0:18:50.640 --> 0:18:54.920 between the leadership of the GOP Senate and the GOP House. 0:18:56.240 --> 0:18:57.879 I knew you were going to ask me this. I 0:18:57.880 --> 0:19:00.960 did some homer before I came on. Ye, so are 0:19:01.040 --> 0:19:04.879 we the Senate Republican majority leaders are saying, Yeah, that 0:19:04.880 --> 0:19:07.960 House resolution that barely passed, that was lauded as a 0:19:08.000 --> 0:19:11.080 political victory twenty four hours ago, Yeah, we're not taking that. 0:19:11.160 --> 0:19:13.399 We're not interested in that one. That's not going to 0:19:13.480 --> 0:19:15.560 do it for us. We want lots of changes, in 0:19:15.600 --> 0:19:19.640 particular Medicaid. This is where senators represent entire states. They 0:19:19.680 --> 0:19:22.359 deal with governors much more frequently, and they understand that 0:19:22.400 --> 0:19:25.160 all the people in the state are affected. Medicaid effects states. 0:19:25.480 --> 0:19:27.600 So this is where you see the institutional design of 0:19:27.600 --> 0:19:30.240 the House and Senate really coming through a particularly on Medicaid. 0:19:30.240 --> 0:19:32.600 On this Budgy resolution, they said the tax cuts weren't 0:19:32.600 --> 0:19:35.199 permanent enough. I'm not sure what that means. George W. 0:19:35.280 --> 0:19:38.120 Bush wanted permanent tax cuts. It's hard to do. So 0:19:38.200 --> 0:19:41.000 the Senate is already planting its flag and telling the 0:19:41.040 --> 0:19:42.879 House that there's a lot of work to be done. 0:19:43.040 --> 0:19:45.560 Professor, you get an a thank you so much, Wendy 0:19:45.600 --> 0:19:50.080 Schuler Brown University. I really appreciate her input. 0:19:50.640 --> 0:19:54.560 This is the Bloomberg Surveillance Podcast. Listen live each weekday 0:19:54.600 --> 0:19:57.640 starting at seven am Eastern on Apple Corplay and Android 0:19:57.640 --> 0:20:01.159 Auto with the Bloomberg Business app. Also listen live on 0:20:01.240 --> 0:20:05.560 Amazon Alexa from our flagship New York station. Just say Alexa, 0:20:05.680 --> 0:20:07.480 play Bloomberg eleven thirty. 0:20:07.480 --> 0:20:08.520 Join us right now. 0:20:09.040 --> 0:20:12.760 Huge response in Julia Pollocks on she's a ZipRecruiter? Really 0:20:12.880 --> 0:20:16.199 is a chief US Economists A starkly different take on 0:20:16.280 --> 0:20:20.120 the labor economy. Julia, we had not ZIP recruiter. He's 0:20:20.119 --> 0:20:23.679 from a small internet firm City Group. Andrew Hollenhorst was 0:20:23.760 --> 0:20:26.480 just on saying there seemed to be a little bit 0:20:26.520 --> 0:20:29.639 of cracks in the employment armor. Do you agree. 0:20:30.960 --> 0:20:33.199 I think it's too soon to tell. So on the 0:20:33.240 --> 0:20:37.000 one hand, you have consumer confidence falling, there's so many 0:20:37.080 --> 0:20:39.919 new things happening. We know that uncertainty can be a 0:20:40.000 --> 0:20:43.840 drag on investments and hiring as companies wait for clarity, 0:20:44.359 --> 0:20:47.040 so it's possible that that is happening. We also know 0:20:47.119 --> 0:20:52.199 that some specific companies are concerned about tariffs and the 0:20:52.200 --> 0:20:56.360 effect on their businesses. But we also know that there 0:20:56.400 --> 0:20:59.920 are many many employers who are basically euphoric. They expect 0:21:00.200 --> 0:21:05.760 far fewer investigations from the government, They expect looser, more 0:21:05.880 --> 0:21:10.800 favorable regulation, a better business environment. So it's really mixed 0:21:10.800 --> 0:21:12.360 bag at the moment, and we don't know how it's 0:21:12.359 --> 0:21:14.480 going to work out. And the aggregate figures, I expect 0:21:14.480 --> 0:21:16.399 this job support will still be a pretty strong one. 0:21:17.320 --> 0:21:21.440 So what drives just stepping back here from a corporation, 0:21:21.520 --> 0:21:24.480 what drives my hiring strategy on a kind of a 0:21:24.520 --> 0:21:28.320 six to twelve month basis, do. 0:21:28.280 --> 0:21:30.399 You look at the market, you see the products and 0:21:30.480 --> 0:21:35.000 services that you are producing, You see how much you 0:21:35.160 --> 0:21:39.400 are able to make for them. If you see an 0:21:39.400 --> 0:21:43.639 opportunity to expand into a new product line or a 0:21:43.680 --> 0:21:48.240 new service and make money, you know, if the profit 0:21:48.400 --> 0:21:51.240 is going to be positive, the revenue will exceed the costs, 0:21:51.280 --> 0:21:53.520 then you go for it. You know, there are lots 0:21:53.560 --> 0:21:56.200 of reasons that people hold back and try to hire 0:21:56.280 --> 0:21:59.240 fewer people. One, the tax code encourages it. You hire 0:21:59.240 --> 0:22:01.760 a person, you pay payroll tax, you get a machine, 0:22:02.280 --> 0:22:04.359 you get a full tax right off. So we have 0:22:04.400 --> 0:22:06.040 a couple of things that we need to do in 0:22:06.080 --> 0:22:11.800 this country to you know, make sure that's what's not inevitable. 0:22:12.200 --> 0:22:15.040 It doesn't happen because we force it to. So, you know, 0:22:15.160 --> 0:22:17.480 people are worried that robust will take over jobs. Well, 0:22:17.680 --> 0:22:21.280 our policies kind of encourage that. There are also states 0:22:21.280 --> 0:22:24.680 with very very tough label laws where employers are terrified 0:22:24.680 --> 0:22:26.400 of hiring someone because they're worried they won't be able 0:22:26.400 --> 0:22:30.560 to terminate them without being sued. So there are lots 0:22:30.560 --> 0:22:33.800 of things that make employers hold back. 0:22:34.280 --> 0:22:36.359 Julie, and we're going to do the economic data here 0:22:36.400 --> 0:22:38.399 in a moment, Julia Pollock with us a zip recruiter. 0:22:38.520 --> 0:22:41.600 Let's go back to first principles. What do you see 0:22:42.200 --> 0:22:47.200 distinctive Zip recruiter? Fossils like us look at it and go, oh, 0:22:47.240 --> 0:22:50.280 it's Internet. It's people you know on a laptop at 0:22:50.359 --> 0:22:52.840 Starbucks trying to find their jobs so they can work 0:22:52.880 --> 0:22:56.879