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Speaker 2: Constancena joins us right now, thrilled that she could be
Speaker 2: with us today. I look at where we are, and BOYD,
Speaker 2: does it reaffirm? I'm gonna call it Wallerian rate cuts?
Speaker 2: Are we now generating rate cuts into the first quarter
Speaker 2: of next year?
Speaker 3: Well? I think I said in my note to you
Speaker 3: that whatever we see in today's CPI is not going
Speaker 3: to reflect what's coming down the pike.
Speaker 4: Right.
Speaker 3: We have seen companies absorb a lot of the tariffs
Speaker 3: because there's so much uncertainty. And why would you pass
Speaker 3: on tariffs if you think that they're going to be
Speaker 3: removed or negotiated lower. You're just going to impair your
Speaker 3: market share and impair your brand. And I think that
Speaker 3: is about to come to an end, and we're going
Speaker 3: to see that in future CPI reports.
Speaker 2: With that said, the FED is going to.
Speaker 3: Cut next week, and this certainly gives them cover for
Speaker 3: next week and possibly even to cut again in December.
Speaker 2: Are we anywhere near the territory of a fifty basis
Speaker 2: point right and cut cool? We have a dearth of data,
Speaker 2: But I mean, come on, if we were just to
Speaker 2: make it up, folks, it's Friday helping her folks. If
Speaker 2: we made it up Constance and we said we got
Speaker 2: a fifty seven thousand non farm payroll and then maybe
Speaker 2: next month we get a forty two thousand non farm payroll,
Speaker 2: I mean, come on, they got to get it going,
Speaker 2: don't they.
Speaker 3: Well, it's interesting, and I'm actually sitting here in Michigan
Speaker 3: where close to GM where the where you mentioned those layoffs,
Speaker 3: And certainly if you look at at a state like Michigan,
Speaker 3: it's got a higher rate of unemployment than the rest
Speaker 3: of the country. It's definitely suffering. And it has been
Speaker 3: our view that the FED is going to look at
Speaker 3: labor markets more than inflation, because they're going to look
Speaker 3: through that that CPI increase that we do eventually expect
Speaker 3: from tariffs, and Paul to say, the private data suggests
Speaker 3: that the job market is weakening as well. Right in
Speaker 3: the absence of government data, we have the ism we
Speaker 3: have ADP we have.
Speaker 2: Indeed, Paul I just figured it out. Constance Hunter is
Speaker 2: going with Diane Swack to the Michigan Michigan State.
Speaker 5: Go compan Good, good, good, Constance. I mean again, I'm
Speaker 5: just looking at the CPI data today. I'm just not
Speaker 5: seeing this tariff induced inflation here. I know, seems like
Speaker 5: maybe the companies are just kind of taking it in
Speaker 5: a P and L and we are not going to
Speaker 5: see tariff induced inflation.
Speaker 2: Well, I don't think.
Speaker 3: That that means we're never going to see it. On
Speaker 3: the other hand, I mean, I guess there is the
Speaker 3: possibility that firms find ways to be efficient and absorb
Speaker 3: these tariff costs, but it seems somewhat unlikely, and firms,
Speaker 3: if you survey them, have said they want to pass
Speaker 3: on tariff price increases. But it's really challenging when you
Speaker 3: think of what a CA shaped economy we are in,
Speaker 3: right that top ten percent of consumers of wage earners
Speaker 3: are also those that own equities and are participating in
Speaker 3: this bowl market. Where's the bottom part of that k
Speaker 3: We're starting to see increased delinquencies with credit cards and
Speaker 3: auto loans. Those are levels that we saw coming out
Speaker 3: of the global financial crisis, and that indicates that that
Speaker 3: segment of the market is really struggling.
Speaker 5: So where will we see that when we see that
Speaker 5: in consumer spending? Will we see that in retail sales?
Speaker 5: Where do you think we'll see that?
Speaker 3: Well, we're not going to see it in retail sales
Speaker 3: because it's not inflation adjusted. So if anything, we might
Speaker 3: see retail sales go up a bit, but I think
Speaker 3: we'll see it in the inflation adjusted consumer spending numbers.
Speaker 3: Households are going to have to pull back.
Speaker 2: And the other thing is, while it's not in.
Speaker 3: This report, the anticipation is that we're going to see
Speaker 3: upward pressure on utilities like electricity, which is going to
Speaker 3: curb the ability of households to spend in other areas.
Speaker 5: Labor market here, that's another mandate of this Federal Reserve.
Speaker 5: The headline numbers look fine, but I know there are
Speaker 5: definitely some concerns underneath the hood there. How do you
Speaker 5: think about the US labor market?
Speaker 3: Well, the labor market is weakening because we're seeing a
Speaker 3: declining breadth that we have seen for some time now.
Speaker 3: I'm looking at them talking about the August data. Of course,
Speaker 3: we don't have that September data. And then if we
Speaker 3: look at again alternative indicators. So so if you look
Speaker 3: at the ISM employment indicator, that's been a very good
Speaker 3: especially on service, is a very good predictor of overall
Speaker 3: jobs growth, and that also is weak. And then we're
Speaker 3: seeing a pullback in state and local hiring. The state
Speaker 3: and local municipalities received huge windfall money from the rise
Speaker 3: in real estate prices, and they were hiring a deficit
Speaker 3: of workers that they didn't hire coming out of the
Speaker 3: global financial crisis.
Speaker 2: Comes as quickly. Here does a president deserve to be
Speaker 2: impatient with the Fed?
Speaker 3: Well, it depends on what you think the Fed's job is.
Speaker 4: Right.
Speaker 3: If you think the Fed's job is to move fast,
Speaker 3: break things, be anticipatory, behave like a hedge fund, I
Speaker 3: suppose yes. But by design, the FED is supposed.
Speaker 6: To be a little late to.
Speaker 2: React because if they react.
Speaker 3: Preemptively and they're wrong, there's much more downside risk then
Speaker 3: there than if they're fashionably late but still in the
Speaker 3: right direction like that fashionly lady.
Speaker 2: Yes, Constant, thank you so much. Constance Hunter. Coming to
Speaker 2: us to the Economic Intelligence Unit today on this inflation
Speaker 2: to review here REQUIESCE and report futures up twenty two
Speaker 2: they double features up forty one, up sixtents of a percent,
Speaker 2: Nazak one hundred and features up one percent, now a
Speaker 2: point nine percent as well, the vics solidly under seventeen wow,
Speaker 2: sixteen point sixty four. Speaking of well, let's do this
Speaker 2: first Bloomberg surveillance. I'm so out of practice with their data, Paul,
Speaker 2: I know, it's a shock to have data. He is
Speaker 2: at the height of fashion at all time. It's good
Speaker 2: to catch up and get a framework for the weekend
Speaker 2: with Kit Jukes. He's had a foreign exchange strategy at
Speaker 2: Society General. Kit just cut to the chase. What are
Speaker 2: you going to write about for Monday within the geopolitics
Speaker 2: that you see the litmus paper of the foreign exchange system?
Speaker 2: What's your theme to get to Monday morning?
Speaker 7: Going into Monday morning, I suspect it's going to be
Speaker 7: the resilience of this strong dollar. In all honesty, even
Speaker 7: just looking now over my shoulder at what's going on
Speaker 7: since the release of a soft CPI print, the market
Speaker 7: is not you know, it's going to price in some
Speaker 7: rate cuts from the Fed with more enthusiasm at the
Speaker 7: margin than before. We don't know much more than we did,
Speaker 7: but we'll price a little bit more enthusiastically on easing.
Speaker 7: And I'm not seeing the dollar backing off very much
Speaker 7: at all on that because and it's.
Speaker 2: Sorry, no, not continue, please please, I.
Speaker 7: Was going to say, because the CPI numbers don't tell
Speaker 7: us anything new about growth, and that's where the real
Speaker 7: debate about the US economy is going to happen.
Speaker 2: What you're so good at, kit, Is there a bet
Speaker 2: in the market right now?
Speaker 7: I think the market's betting on rate carts, but it's
Speaker 7: also betting on resilient growth. That keeps me confused. And
Speaker 7: I should add this is the most dollar centric, US
Speaker 7: centric economic cycle that I can remember in ages because
Speaker 7: the uncertainty around the US GDP numbers retail sales number
Speaker 7: because sure prize numbers is much bigger than the uncertainty
Speaker 7: about the lack of growth in Europe or in Asia.
Speaker 7: So it's all about you, guys, and and we're getting
Speaker 7: no information. So when we get some we think the
Speaker 7: we think the labor market's weakening, but not knowing more
Speaker 7: where I think collectively assuming that we shouldn't be revising
Speaker 7: down GDP forecasts so that there's lots of productivity, there's
Speaker 7: lots of ail, there's lots of good things. The equity
Speaker 7: market's still strong. So US exceptionalism is still in place.
Speaker 7: That bet is there. Today's soft CPI prints will encourage
Speaker 7: rate cuts, but they won't change that optimism about the
Speaker 7: economy is my bet.
Speaker 5: And Kit it's interesting for me at least to hear
Speaker 5: you say it's it's it's still all about the US,
Speaker 5: US exceptionalism because the trade has been that. It's you know,
Speaker 5: it's kind of about you guys over in Europe. I mean,
Speaker 5: you're starting to spend some money on defense and infrastructure,
Speaker 5: and you know you can't really depend upon the US
Speaker 5: to the extent that you did maybe you did before.
Speaker 5: How do you think about that dynamic? Because we do
Speaker 5: have the euro again add at one sixteen here, well, the.
Speaker 7: Europopped up to one sixteen on a move down in
Speaker 7: US rate expectations that narrawed the gap significantly, on some
Speaker 7: optimism in growth. Obviously the fiscal problems in France haven't
Speaker 7: helped on that. And equally that there's a there's not
Speaker 7: a huge amount of you know, there's hope, but if
Speaker 7: we look at the if we look at the exceptional
Speaker 7: spending that the Germans were getting ready to unleash. It's
Speaker 7: not happening fast enough. So you see, the real performers
Speaker 7: in Europe are the people that can be more fleet
Speaker 7: of foot. The Swedish Chrona has been doing very well
Speaker 7: because they are going to be they have a bigger
Speaker 7: arms industry their economy, but they also are pushing forwards.
Speaker 7: The Norwegian kroner is doing really well. The euro is
Speaker 7: lagging those and the Swiss Frank is doing as well
Speaker 7: as the euro is speaks volumes about safe Aden's that's right.
Speaker 2: Where I wanted to go. Audrey Child Freeman with Bloomberg
Speaker 2: at Queen Victoria's Street Kit was just brilliant yesterday. And
Speaker 2: analyzing Swiss franc I mean, I guess it's out of
Speaker 2: the purview of many of our listeners and viewers explain
Speaker 2: the ramifications for America, for Zurich, for Geneva. If the
Speaker 2: Swiss Frank breaks to new strength.
Speaker 7: I think it causes I mean, I think people will
Speaker 7: then turn around and see much more clearly that there's
Speaker 7: money chasing Haven's. That the money that we see enthusiastically
Speaker 7: going to gold, because we quite like that story that Actually,
Speaker 7: this is a world where people want to put their
Speaker 7: money somewhere safe and a vault deep underneath the alps.
Speaker 7: That that's not animal spirits in the sense that we
Speaker 7: know and understand them. So it tells people that although
Speaker 7: the US economy is dominant, people aren't really confident in
Speaker 7: the dollar, and they're not confident in the euroe. They're
Speaker 7: not confident in the yet. And hey, hey, presto, we
Speaker 7: don't mind if the rates of zero were coming to Switzerland.
Speaker 2: Kitchooks, thanks for the brief wait too short, Kitchooks for
Speaker 2: society general. Let us know kid, when you're in New
Speaker 2: York City next. I'm honored to have you in the studio.
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
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Speaker 2: Michael Darta joins some roth capital here steeped in Wisconsin economics. Michael,
Speaker 2: I'm just going to cut to the chase. Everyone's head spinning,
Speaker 2: and yet we just got a disinflationary vector. All in all,
Speaker 2: like we got real GDP wrong and nominal GDP wrong
Speaker 2: this year, are we getting massively wrong? The need for
Speaker 2: the FED to cut where they're.
Speaker 6: Going to have to pick it up, Well, that is
Speaker 6: yet to be seen.
Speaker 4: Tom, I think the FED is a little bit on
Speaker 4: a preset course here at for the next two meetings,
Speaker 4: and then we'll see what happens to this big divergence
Speaker 4: between the labor market data which has been exceptionally weak
Speaker 4: and the activity indicators. Uh, you know, looks like Q
Speaker 4: three probably ended on a pretty strong note with underlying
Speaker 4: you know, real growth pretty close to three percent and
Speaker 4: you know, not nominal you know, up in the fives.
Speaker 4: You know, that is not a picture of an economy
Speaker 4: that needs a lot of monetary support. Yet the labor
Speaker 4: market indicators that the fees watching have been have been weak,
Speaker 4: and and so there's a bit of a divergence and puzzle.
Speaker 6: That I think needs to be solved there.
Speaker 2: You know.
Speaker 5: Tom Michael is a native of Wisconsin. He did graduate
Speaker 5: from the University Wisconsin at Whitewater, but it lives in Naples, Florida.
Speaker 5: He bailed on the Wisconsin winters residents.
Speaker 2: Yeah, I mean, you know, I mean.
Speaker 5: I see these Wisconsin people that you know, they're all
Speaker 5: they just they go to Florida.
Speaker 2: A transportation of the dogs, keeping united in delting in chips.
Speaker 5: Hey, Michael, So we're not I guess if youuld just
Speaker 5: look at the CPI print today, we're not seeing any
Speaker 5: real tariff induced inflation in this economy.
Speaker 2: Does that surprise you, Well.
Speaker 4: We definitely saw a lift, you know, mostly in goods
Speaker 4: prices over the course of the last few months.
Speaker 6: And that may be easing back now.
Speaker 4: But I will say this, I mean, the bond market
Speaker 4: does not look like it's really concerned about inflation. The
Speaker 4: bond yields have fallen from a high of four point
Speaker 4: eight percent early in the year. You know, we're just
Speaker 4: a touch below four now. Inflation expectations in the bond
Speaker 4: market have been coming down. That's a forward looking measure,
Speaker 4: and so I think a lot of the tariff oriented
Speaker 4: upward pressure on inflation is likely to be quite temporary.
Speaker 4: And that's exactly what forward looking markets are saying. I'll
Speaker 4: also throw this out. There's a private sector group called Trueflation.
Speaker 4: The data is on the Bloomberg terminal and they update
Speaker 4: daily in terms of year over year inflation readings, and
Speaker 4: it's a much broader swath of prices. The CPI is
Speaker 4: based on about ninety thousand prices. The True Inflation Index,
Speaker 4: which is blockchain based, is driven by fifteen million or
Speaker 4: so prices, and that's pretty close to two percent, And
Speaker 4: historically it doesn't typically undershoot overall CPI inflation, So there's
Speaker 4: not an obvious downward bias there. It's just higher frequency
Speaker 4: and it's you know, it's measuring a much broader swath
Speaker 4: of prices, and this kind of a divergence is exactly
Speaker 4: what you'd expect with a one time relative price shock
Speaker 4: from the tariffs.
Speaker 6: It's very different.
Speaker 4: From a monetary inflation, and so that definitely gives the
Speaker 4: FED a bit more room to maneuver here to try
Speaker 4: to support the labor market trueflation.
Speaker 5: Tom, I've worked here at Bloomberg for sixteen years. This guy,
Speaker 5: this Michael Dark guy, just taught me a Bloomberg function
Speaker 5: I didn't even know existed.
Speaker 2: The history here, I mean, we've got to get to
Speaker 2: the market open here. But I really want to express
Speaker 2: the originality of what young Darda did years ago. He
Speaker 2: used to put out he worked for Jude Weninski. It
Speaker 2: was legendary when he was like eighteen years old, and
Speaker 2: then he went over and all of a sudden there
Speaker 2: were these research reports melding the market and economics. And
Speaker 2: the only reason we talked to him is he used
Speaker 2: Bloomberg terminal screens boom, and it was like ed Heimens.
Speaker 2: People were like stealing research from data over the years.
Speaker 2: Now at rough Capital, Michael, I think I want to
Speaker 2: focus on the equity markets. Here it's Friday, and I'm
Speaker 2: going to get my angst of gloom crew rationalizing this
Speaker 2: is going to end. What's your treatment? Speaking of Jude Weininsky,
Speaker 2: of the history of great bull markets, how do they end?
Speaker 4: Well, Tom, you know, if you want some efficient markets
Speaker 4: hypothesis and theory here you know the market will end
Speaker 4: when the profits expansion ends. So typically bear markets are
Speaker 4: clustered around recessionary periods. But here, how's this for a statistic.
Speaker 4: Ninety percent of the time post World War Two, the
Speaker 4: economy is in an expansion phase, not a contraction phase,
Speaker 4: and the equity market tends to go up about seventy
Speaker 4: five percent of the time. So the default position should
Speaker 4: be more optimistic than pessimistic. All of that said, people
Speaker 4: are nervous because the valuations are quite high concentrated and
Speaker 4: infotech and the AI driven story, but that's not going
Speaker 4: to be enough to know, to cause the market to
Speaker 4: crack here. I really think you'd need to have the
Speaker 4: earning story evaporate. Q three earnings have been pretty good
Speaker 4: so far, high single digits. It looks like we're probably
Speaker 4: going to end up double digits year over year for
Speaker 4: earnings growth. So as long as that support structures under
Speaker 4: the equity market, you know, I think we'll probably hold
Speaker 4: on to most of these games.
Speaker 5: Michael, what's your view of the US labor market here?
Speaker 5: The headline numbers seem pretty more than fine, more than good,
Speaker 5: but I know there are concerns under the hood.
Speaker 4: Yeah, there are some concerns, Paul. You know, the ADP
Speaker 4: figures that we have through September showed actual job declines
Speaker 4: in three out of the last four months. That's not
Speaker 4: typically something that you would see in a healthy economy.
Speaker 4: Yet the activity indicators I mentioned, GDP tracking and so
Speaker 4: forth still look pretty strong. There's a Dallas Fed index
Speaker 4: that is weekly that scaled to year to year GDP growth,
Speaker 4: and that's still running up.
Speaker 2: You know.
Speaker 6: Above two percent, and.
Speaker 4: So I think what could end up happening here is
Speaker 4: that as we move into next year, we'll see some
Speaker 4: of these jobs figures improve. I think the tariff and
Speaker 4: uncertainty shock caused employers to pull back, But if the
Speaker 4: top line growth is still there, the profitability story is
Speaker 4: still intact, then you know pretty unlikely that you would
Speaker 4: see the labor market completely fall out of bed. And
Speaker 4: that is something you know, Tom asked about the FED.
Speaker 4: And if the easing expectations were too aggressive. If we
Speaker 4: do start to see a better tone and tenor to
Speaker 4: the employment data, you know, the market will have to
Speaker 4: reprice the the totality of the easing cycle that you
Speaker 4: know is now pretty aggressive.
Speaker 2: Michael Data. Thank you so much, Ruth Kapa, I really
Speaker 2: appreciate it. Stay with us. More from Bloomberg Surveillance coming
Speaker 2: up after this.
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Speaker 2: One LUs A Palti Guswin right now, founder Vista Energy.
Speaker 2: She has been absolutely fabulous about the larger politics of it.
Speaker 2: Just a Friday question, maybe the president meets with the president.
Speaker 2: G Is China energy independent? They really rely an oil
Speaker 2: coming through Singapore, right.
Speaker 8: Yes, but China once, maybe one day to become independent.
Speaker 8: They are producing a lot of hydrocarbons right now. I
Speaker 8: mean they're producing their own coal and they are becoming
Speaker 8: one of the largest natural gas producer. The amount of
Speaker 8: gas they are producing now is but almost the same
Speaker 8: as the whole African continent. But they are still importing.
Speaker 8: They are still importers, and their strategy has been also
Speaker 8: to create links and relationship between all those suppliers.
Speaker 2: My head is spinning this morning with your geography. Which
Speaker 2: geography are you most interested in? What you're writing about
Speaker 2: for Monday?
Speaker 8: My focus has always been global, as you can hear
Speaker 8: with my accents. I was born and raised educated in France,
Speaker 8: so Europe, I know it. But I've been based in
Speaker 8: the US for twenty years now and I've been focusing
Speaker 8: a lot on Asia. So the US maritime roots so
Speaker 8: very global. But my sectorial is, you know, expertise is
Speaker 8: energy commodities geologetics.
Speaker 2: Yeah, it's not a job interview. More so, there's lots
Speaker 2: of boats on the water that everything's floating around right now,
Speaker 2: Is that true?
Speaker 8: There are many boats, Yeah.
Speaker 2: There is.
Speaker 5: There a lot of oil in the marketplace these days.
Speaker 8: So we have the same question on the gas side too.
Speaker 8: There are you know, we are washed with oil and
Speaker 8: gas potentially, but the key question for countries is how
Speaker 8: to get it just on time in a safe manner.
Speaker 8: Diversification of roots prices and I think we need more
Speaker 8: oil c the countries exporting their supply.
Speaker 5: Where do we where in reality does the Russia gas
Speaker 5: and oil go and can that be curved or is
Speaker 5: always going to be a way for that that those
Speaker 5: hydrocarbons to find their way to a buyer.
Speaker 8: Yeah, that's a great question because actually this week we've
Speaker 8: seen a ramping up of sanctions on the European side
Speaker 8: and on the US side. In Europe, the European Union
Speaker 8: has agreed on phasing out Russian gas and Russian energy
Speaker 8: by the first of January two Salon twenty six, with
Speaker 8: a two year transition period. So they will start first
Speaker 8: potentially with energy and then pipeline gas. Right now, there
Speaker 8: is almost no I mean, you know, the share of
Speaker 8: Russian gas in Europe we used to be forty five
Speaker 8: percent is done to you know, a trivial amount and
Speaker 8: zero into zero persons in twenty twenty eight. And so
Speaker 8: it means that in Europe is going to be possible
Speaker 8: with a cost potentially, So Europe is going to be
Speaker 8: more dependent on other suppliers. Like the mix has really changed,
Speaker 8: more Norwegian gas, more US energy into Europe.
Speaker 5: Russian hydrocarbons. Are they going to go to India? Are
Speaker 5: they going to go to China? Because that's kind of
Speaker 5: where I think we Absolutely.
Speaker 8: We've seen a reconfiguration of trid flows. The gas from Russia,
Speaker 8: especially the sanctioned gas is going to China, like the
Speaker 8: energy cargoes from Arctic two. Only China has been taking it.
Speaker 2: Thank you, the sanction thing. And I'm not up to speed.
Speaker 2: And as human Stenus is brilliant. Yesterday and Leslie, how
Speaker 2: does India and MODI fit into successful sanctions? If Modi
Speaker 2: doesn't play with Trump, it doesn't work, right.
Speaker 8: Yeah, So yesterday was all about the oil sanctions, and
Speaker 8: it's going to be a matter if they are successful,
Speaker 8: it's going to be a matter of enforcement and whether
Speaker 8: the US alliances are strong enough. Real mody still take
Speaker 8: Luke oil or rost Nev oil right now after yesterday's sanction.
Speaker 8: I'm not sure will China still take it? Probably maybe,
Speaker 8: I think strong allies from the US, we're not there
Speaker 8: taking this oil anymore.
Speaker 5: Interesting so, but with Brent crew it's sixty six dollars
Speaker 5: a barrow. The global energy complex can't be very happy
Speaker 5: these days, don't they need oil seventy five eighty eighty
Speaker 5: five dollars a barrel.
Speaker 8: So it depends what you're talking to if you're a producer.
Speaker 5: That's what I'm thinking about my friends in Texas and Oklahoma.
Speaker 5: Not to mention the folks at Opek.
Speaker 8: Yes, it's a fine balance. For the Trump administration, you
Speaker 8: want the right equilibrium price. The same for Savudi Arabia,
Speaker 8: they want the right price for their economy. In the US,
Speaker 8: you know, we're lucky because the US has abundant oil
Speaker 8: and gas. The producers need to see return on their investments.
Speaker 8: What is going to be interesting to see on the
Speaker 8: gas side is whether we're going to start using more
Speaker 8: on the dry gas, which is less dependent from the
Speaker 8: oil price. So just the shields that are producing only gas,
Speaker 8: not associated oil, and in this case they are less
Speaker 8: dependent from the oil price.
Speaker 2: So gas.
Speaker 5: I thought gas kind of natural gas came out of
Speaker 5: oil wells and fracking and all that kind of stuff.
Speaker 2: But there are separate sources of natural gas.
Speaker 5: Civil engineering with Paul exactly, we're diving deep into this now.
Speaker 8: So I'm talking mostly about shell gas right in the US,
Speaker 8: and you have shell oil too some of the depending
Speaker 8: on the bat sun the US, you get both shell
Speaker 8: shell oil and shell gas. And then when you're moving
Speaker 8: to different person you have only dry gas what we
Speaker 8: call dry gas gas and it's only gas.
Speaker 2: In ten years is the United States of America energy
Speaker 2: independent ten years out fifteen years out?
Speaker 8: So it depends the definition of energy in dependent. But
Speaker 8: right now the US is the largest oil and gas
Speaker 8: producer exporter globally.
Speaker 5: See and that just happened like twenty sixteen. Up until
Speaker 5: like that, we were energy importers. Great and then thanks
Speaker 5: to the whole fracking technology, we're now net exporters.
Speaker 2: Right. Yeah, that's awesome. This is thank you for this brief.
Speaker 2: To have Ed Morrison from our Heart treat and to
Speaker 2: have Leslie Palty Gozman and this has really been a
Speaker 2: wonderful week in hydrog.
Speaker 5: Tommy how to watch Lambmann. You'll just you'll be all
Speaker 5: h I guess.
Speaker 2: I'm watching slow horses. That's right, Okay, all right. Yeah.
Speaker 2: One of my kids said, you look like Jackson Lamb.
Speaker 2: I said, well, thank you. Uh, I'll watch Limban is it?
Speaker 5: Yes, Yes, You're gonna love it.
Speaker 2: Okay.
Speaker 5: It's all about the energy.
Speaker 2: Leslie Pault Gozman. Thank you so much, Vista Energy really
Speaker 2: really appreciated. Stay with us. More from Bloomberg Surveillance coming
Speaker 2: up after this.
Speaker 1: This is the Bloomberg Surveillance Podcast. Listen live each week
Speaker 1: day starting at seven am Eastern on Apple, Cocklay and
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Speaker 1: Just say Alexa play Bloomberg. Eleven thirty we.
Speaker 2: Cut to the chase, joining us now for with a
Speaker 2: question our AI Conversation of the day, Jeffery Schumacher, I'm sorry,
Speaker 2: Ernstin Winnie Erstin Young Ey Growth Platforms leader at Ey Parthenon.
Speaker 2: You are in the depths of this and what I
Speaker 2: love about what you do. It's not about stupid chat
Speaker 2: bots and tech boys with eight dollars Latte, It's about
Speaker 2: what are companies going to do? What is Target going
Speaker 2: to do with your neuro symbolic ail Brooks? That nailed
Speaker 2: nailed it, nailed it, nailed it.
Speaker 9: That's good.
Speaker 2: Nsai.
Speaker 9: Yes, to tell me, Like, what we have is a
Speaker 9: growth platform, right, so it takes enterprise data, it unifies
Speaker 9: it with other external sources, and it allows predictions around
Speaker 9: growth that enterprises and CEOs such as Target and Cornell
Speaker 9: back in the day can bank the bank their business?
Speaker 2: Ow are they the audience is scared stiff about this?
Speaker 2: How many jobs are going to go? Do you guys
Speaker 2: have an euy parthenon? Do you have some what's going
Speaker 2: to do to the unemployment rate? Et cetera?
Speaker 9: Will I think you got to look at the two
Speaker 9: sides of that that the medallion, right, there's one side
Speaker 9: around productivity where Jennai is there. The other side is growth.
Speaker 9: That's where Neurosymbolic plates. The growth is where you're going
Speaker 9: to activate a lot of jobs. Right. So if you
Speaker 9: have both sides, I think you might lose some on
Speaker 9: the productivity, but you're going to replace.
Speaker 2: Okay, so Target's coming out with this headline. Do you
Speaker 2: see buried in that that they're quietly going to do
Speaker 2: what do you call it, Paul, synergies? Yeah, Duke, they
Speaker 2: call it synergies. They're doing synergies, but they're going to
Speaker 2: hire people on the other side of it.
Speaker 9: I think I think you'll see the evolution of jobs
Speaker 9: to where these growth opportunities lie, and corporations that embrace
Speaker 9: the neuro symbolic side of this equation favors first movers.
Speaker 2: Did I do? Okay, that's pretty good. That was all
Speaker 2: the viral brief I know, all right.
Speaker 5: I think most of our listeners and viewers have some
Speaker 5: grasp of what AI is. It's an evolutionary thing. We're
Speaker 5: still learning. What is neurosymbolic AI.
Speaker 9: Yeah, so if you look at the analysts, they'll tell
Speaker 9: you it's about two to five years away.
Speaker 2: We have it today.
Speaker 9: The neuro side of it is the unification of data
Speaker 9: to understand behavior, the symbolic side of the rules to
Speaker 9: which you look at.
Speaker 2: That behavior, and how do companies use that?
Speaker 9: So it focuses on their commercial model. Set another way
Speaker 9: for your listeners, how they make money? Okay, so, how
Speaker 9: they price, how they forecast, how they enter a market,
Speaker 9: how they create a new product, new service, how they
Speaker 9: buy something or divest.
Speaker 2: Don't we hire?
Speaker 5: Don't Those companies hire lots of MBAs to figure out
Speaker 5: how to price a product, how to market a product,
Speaker 5: how to account for that product.
Speaker 9: Yes, and just like in pricing, you'll have MBAs that
Speaker 9: do regression models, but you regression, which is how you
Speaker 9: figure out what.
Speaker 2: Is the right price?
Speaker 9: Right, So are you pricing for margin or you're pricing
Speaker 9: for growth? Neurosymbolic can take, well, what market are you in,
Speaker 9: who are your competitive sets? What if the products don't
Speaker 9: line up? All of those things, which that tree of
Speaker 9: reasoning grows right, and neurosymbolic allows you to apply all
Speaker 9: of that and grab margin that you otherwise wouldn't get.
Speaker 9: We had one business. We created eight million an e
Speaker 9: BIT on a fifty million dollar business, and.
Speaker 2: How many jobs exited in that example? It's more how
Speaker 2: many jobs created in that example on a net basis?
Speaker 2: Jobs or created.
Speaker 9: Jobs are created on a net.
Speaker 2: I mean, I'm going to be honest, folks, I'm in
Speaker 2: that camp, which is this is all going to end up?
Speaker 2: I said this at the CFA, Sorry last night at
Speaker 2: the Luzzetti building. I'm sorry. I'm in the camp where
Speaker 2: this is going to be net positive. X percent of
Speaker 2: my audience totally disagrees with what I said, Jeff, speak
Speaker 2: to the people's scared stiff that fourteen point two percent
Speaker 2: of every company's jobs are going to walk out the door.
Speaker 9: Yes, So if you look at productivity, Tom, I agree
Speaker 9: with you. There are things that you're going to do
Speaker 9: faster and more. Now, if you're just doing that, you're
Speaker 9: going to reduction and jobs on that side. But on
Speaker 9: the other side, you're going to create jobs. I'll give
Speaker 9: you another one example a manufacturer, big equipment manufacturer.
Speaker 2: John Deere. Good example, like, very similar. It's only when
Speaker 2: I know, so go with it, John Dear. What is
Speaker 2: neuro what's it called neurosymbolic? Hey, the red sox the
Speaker 2: neuro symbolic A. What is neuro symbolic? AI going to
Speaker 2: do to Puia Illinois?
Speaker 9: I love that, John, So if you take John Deere,
Speaker 9: you can take telemetrics data, and you can take the
Speaker 9: financing data when they sell a machine, and you can
Speaker 9: apply that to OSHA data coming from the government. And
Speaker 9: guess what I can do for John Deere, Well, they
Speaker 9: finance all their products. Well, now I can create an
Speaker 9: insurance on the bottom side or the backside of that,
Speaker 9: so they have a better By taking in telemetrics data,
Speaker 9: the machine data, OSHA data from the government telling you
Speaker 9: cite location construction, and then the financing data, I can
Speaker 9: build a better underwriting model than an insurance company.
Speaker 2: I just created a whole.
Speaker 9: New revenue line for John Deere, a whole set of
Speaker 9: new employees for John Deere, and a whole changing their
Speaker 9: margin mix and revenue mix of their business. Which if
Speaker 9: you change your margin profile, you change your ebitdebt profile,
Speaker 9: change the multiple, therefore your market capitalization. Right there, Tom,
Speaker 9: I just probably added thirty percent of the market cap
Speaker 9: at John Deere.
Speaker 2: Nice.
Speaker 5: Well, I'm just convinced that the first three or four
Speaker 5: years of my investment backing career can be completely replaced
Speaker 5: by AI. I mean, all I did is make pitch
Speaker 5: books and proofrea prospectuses, and that can all be done.
Speaker 5: When you go to the board of a company, I'm
Speaker 5: sure the board's asking, what's this return I should be
Speaker 5: getting on all these investments I've been making on AI
Speaker 5: over the last two or three years. How do you
Speaker 5: kind of frame that out for them? The return on
Speaker 5: AI investments.
Speaker 9: Well, I think there's you got to understand there's two
Speaker 9: sides to that medallion. One side is productivity, there's your
Speaker 9: Genai and your Augentic, and the other side is growth.
Speaker 9: There is Neurosymbolic. So when you look at those two,
Speaker 9: you're going to have your productivity gains, which means you're
Speaker 9: going to be able to write emails faster, You're going
Speaker 9: to be able to do call center scripts faster, You're
Speaker 9: gonna be able to do all thosings faster. Neurosymbolic is
Speaker 9: going to give you the precision to understand where the
Speaker 9: value is in market. And what we've seen with Neurosymbolic
Speaker 9: in the companies that we're working with using it, it
Speaker 9: favors dramatically first movers and tom to your example, you're
Speaker 9: going to go play moneyball, and you're going to when
Speaker 9: everybody else is buying players, you're buying wins, and you're
Speaker 9: buying wins by buying runs, and you're buying runs by
Speaker 9: getting on base. And if you if you build that,
Speaker 9: you'll build a team for a fraction of the dollars
Speaker 9: and in two thousand and three, you win more games
Speaker 9: thannybody else in American League.
Speaker 2: This sounds like a Brewers fan. So what can you
Speaker 2: mentioned medallion twice? If I get an Ey Parthenon medallion,
Speaker 2: can I convince after thought to empty the dishwasher this weekend?
Speaker 2: I mean, what side of them? What's a medalion?
Speaker 9: Well, it's not a Medallion's just an example of the
Speaker 9: way to think about it. If you want to branch
Speaker 9: it into two, use me see another business term, mutually exclusive,
Speaker 9: collectively exhausted. One side is productivity, Jennai. The other side
Speaker 9: is growth in neurosymbolic.
Speaker 2: Should we have them back, Lisa? What do you think?
Speaker 6: I mean, my head is blown.
Speaker 2: Yes, a successful visit and you know it would be
Speaker 2: scary Schumacher and Greg doco together. Oh yeah, that would
Speaker 2: be like scary, like the economics tied into the neurosymbolic
Speaker 2: AI the mathematics. Thank this is brilliant, Jeff Schumacher, Thank
Speaker 2: you so much. Outa Mauclair, Wisconsin and with ernstin Young Parthanon.
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