WEBVTT - Bloomberg Surveillance TV: December 31st, 2025 0:00:02.400 --> 0:00:06.760 Bloomberg Audio Studios, Podcasts, radio News. 0:00:11.680 --> 0:00:15.480 This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 0:00:15.520 --> 0:00:18.720 with Lisa Bromwitz and Amerie Hordern. Join us each day 0:00:18.760 --> 0:00:22.320 for insight from the best in markets, economics, and geopolitics 0:00:22.440 --> 0:00:24.880 from our global headquarters in New York City. We are 0:00:24.960 --> 0:00:27.680 live on Bloomberg Television weekday mornings from six to nine 0:00:27.720 --> 0:00:31.319 am Eastern. Subscribe to the podcast on Apple, Spotify or 0:00:31.320 --> 0:00:33.960 anywhere else you listen, and as always on the Bloomberg 0:00:34.040 --> 0:00:35.880 Terminal and the Bloomberg Business app. 0:00:36.400 --> 0:00:39.559 Stocks cutting into gains of more than seventeen percent for 0:00:39.720 --> 0:00:42.920 this year. Michael Purvis of Taubuck and Capital Advisors writing, 0:00:43.159 --> 0:00:45.120 the biggest threat to the S and P next year 0:00:45.400 --> 0:00:48.120 is the AI spend will be considered not to generate 0:00:48.159 --> 0:00:52.000 compelling returns. This means multiple contraction for a key part 0:00:52.080 --> 0:00:52.640 of the market. 0:00:52.640 --> 0:00:55.000 Michael joins us. Now, Michael, thank you so much for 0:00:55.040 --> 0:00:56.720 being with us. Happy New Year to you. 0:00:57.360 --> 0:01:00.319 Let's start with this idea of how much AI really 0:01:00.440 --> 0:01:02.400 upheld the rally so far this year. 0:01:02.880 --> 0:01:04.440 Can you take a look back and give us a. 0:01:04.400 --> 0:01:07.560 Sense of how dominant that theme was and how that 0:01:07.680 --> 0:01:09.920 might be poised to shift in twenty twenty six. 0:01:11.280 --> 0:01:15.240 Well, Lisa, you know, if you look at the large 0:01:15.319 --> 0:01:21.200 tech relative to cyclical value pair over the last not year, 0:01:21.319 --> 0:01:25.760 but the last six or seven years, that line goes 0:01:26.000 --> 0:01:28.760 up to the right, just like the overall market does. 0:01:28.800 --> 0:01:30.000 It's sort of one and the same. 0:01:30.040 --> 0:01:32.000 And what I've argued for years now is that. 0:01:31.920 --> 0:01:35.720 The big tech rally is kind of the broader SPX rally. 0:01:36.600 --> 0:01:36.839 There. 0:01:36.880 --> 0:01:39.960 There's just consistent of performance in almost every year, except 0:01:39.959 --> 0:01:43.759 when you have bear markets like twenty twenty two, and 0:01:43.840 --> 0:01:47.600 even that it wasn't really that ferociously sold off there. 0:01:47.640 --> 0:01:49.640 There's very good reasons for that, which is that they 0:01:49.800 --> 0:01:54.560 generate not only superior quantity of earnings, but the quality, 0:01:54.640 --> 0:01:58.520 meaning the volatility of those earnings is remarkably low, and 0:01:58.600 --> 0:02:03.000 so compared to cyclical value earning streams, they're just a 0:02:03.040 --> 0:02:06.080 lot more superior. What I'm really the question I think 0:02:06.120 --> 0:02:09.400 that I have as we look into twenty twenty six 0:02:09.600 --> 0:02:14.120 is that you have these giant companies you have you know, Microsoft, Meta, Amazon, 0:02:14.120 --> 0:02:16.919 and so forth. All of them are very distinct business models, 0:02:17.560 --> 0:02:20.360 and many of these companies are really now converging in 0:02:20.400 --> 0:02:23.320 a very massive way on this AI spend, which is 0:02:23.880 --> 0:02:26.240 that they're taking their business models from a very distinct place, 0:02:26.280 --> 0:02:29.640 almost too somewhat similar place in some respects, right you 0:02:29.680 --> 0:02:31.959 know that, you know, we're talking about a trillion dollars 0:02:31.960 --> 0:02:34.000 of cash out of four companies over the next twenty 0:02:34.000 --> 0:02:38.639 four months here there. So just to finish the thought, 0:02:38.720 --> 0:02:42.240 he said, I think the question that I'm really asking 0:02:42.320 --> 0:02:45.480 is that if the return on invested capital is not there, 0:02:45.880 --> 0:02:47.880 and if you look at the free cashlow yield on 0:02:47.919 --> 0:02:51.320 stocks like Microsoft, there are you know, record lows right now, 0:02:51.360 --> 0:02:57.200 so the price earnings and earnings growth ratios looking very compelling. 0:02:57.400 --> 0:03:00.200 The free cash flow is the problem. And so it 0:03:00.200 --> 0:03:03.560 all works if the returns are there, but if it's not, 0:03:03.960 --> 0:03:06.280 you're going to see a real rerate in the big 0:03:06.320 --> 0:03:07.840 tech pillar of the market. 0:03:07.960 --> 0:03:09.800 Is there a signal that you're getting, Michael, just to 0:03:09.800 --> 0:03:12.560 sort of build up this idea from the race of 0:03:12.919 --> 0:03:14.799 some of the acquisitions that we've seen to close out 0:03:14.800 --> 0:03:17.639 the year, whether it's in Vidia with Grock, whether it's 0:03:17.639 --> 0:03:20.760 what we saw with Meta and that Singapore based company 0:03:20.800 --> 0:03:22.679 having to do with AI, whether it's what we see 0:03:22.760 --> 0:03:26.239 right now with Nvidia potentially acquiring an Israeli based tech company. 0:03:26.240 --> 0:03:29.000 I mean, they're using their free cash flow to do something. 0:03:29.360 --> 0:03:31.359 What's the signal for how much this is a shift 0:03:31.360 --> 0:03:33.160 and narrative going into twenty twenty six. 0:03:34.720 --> 0:03:38.560 Well, yeah, I mean I think there it does remind 0:03:38.600 --> 0:03:40.680 me of a little bit of nineteen ninety eight, nineteen 0:03:40.720 --> 0:03:44.400 ninety nine, two thousand, when telecom and tech we're converging 0:03:44.720 --> 0:03:49.640 and frantically there was frantic deal activity and frantic cap 0:03:49.800 --> 0:03:53.280 x activity as well there and of course there were 0:03:53.320 --> 0:03:56.160 some ultimately great winners and there was a lot of 0:03:56.240 --> 0:03:59.080 ride hosts as well. I don't think, you know, like 0:03:59.120 --> 0:04:01.160 we talked about foam in the stock market, and I 0:04:01.160 --> 0:04:03.800 think there's fomo in the c suite here too, Which 0:04:03.840 --> 0:04:05.920 is that all these you know, all these giant companies 0:04:05.960 --> 0:04:10.200 are frantically trying to position themselves, uh, you know, for 0:04:10.280 --> 0:04:12.960 the long haul here, and in that process you're going 0:04:13.000 --> 0:04:18.120 to see a lot of narrative rewrites going on and 0:04:18.160 --> 0:04:20.480 a lot of people speculating as to who are the 0:04:20.520 --> 0:04:24.640 winners and losers ultimately are? You know, I go back to, 0:04:24.720 --> 0:04:26.520 you know, three years ago when Google had that all 0:04:26.560 --> 0:04:30.560 hands on deck meeting because they were frantically behind an 0:04:30.600 --> 0:04:33.320 AI and open Aye was going to clean the clock, 0:04:33.360 --> 0:04:35.919 and you know, here we are, and that narrative seems 0:04:35.920 --> 0:04:38.320 to have just twisted on its head here. I still 0:04:38.320 --> 0:04:40.480 think it's still so early in this game that it's 0:04:40.600 --> 0:04:45.520 very hard to declare, you know, where the ultimate. 0:04:47.120 --> 0:04:48.120 Winners are going to be. 0:04:48.400 --> 0:04:49.800 I mean I think that, you know, I talked to 0:04:49.880 --> 0:04:52.359 a lot of tech executives there that are on the 0:04:52.400 --> 0:04:54.520 fort on the front lines of AI, and they are 0:04:54.560 --> 0:04:57.760 just sort of bewildered. I have the stuff is going 0:04:57.800 --> 0:05:01.680 to shake out, uh themselves, and they're in this market 0:05:01.720 --> 0:05:02.120 every day. 0:05:02.160 --> 0:05:04.159 Well, to me, this really goes to the question of 0:05:04.279 --> 0:05:06.680 how do you broaden out what does it mean to diversify. 0:05:06.760 --> 0:05:08.640 Everyone who has come on this show to end the 0:05:08.720 --> 0:05:11.520 year has said that diversification is the key for next year. 0:05:11.560 --> 0:05:13.520 We've seen that in the precious metals trail, though it's 0:05:13.640 --> 0:05:17.279 arguable that that's not exactly diversification, particularly like when it 0:05:17.279 --> 0:05:20.680 comes to silver. How much do you see equal weight 0:05:20.760 --> 0:05:23.680 as being true diversification in this type of backdrop. 0:05:23.880 --> 0:05:28.640 Well over the really since last January, I started pushing 0:05:28.640 --> 0:05:30.880 this narrative that you know, as much as I love 0:05:30.960 --> 0:05:33.279 the big tech story as the core part of the portfolio, 0:05:33.360 --> 0:05:36.320 if you want to rotate and diversify, not to go 0:05:36.360 --> 0:05:39.040 into US cyclicals and values. So obviously there's a lot 0:05:39.080 --> 0:05:42.240 of specific sectors and specific stocks that have done incredibly 0:05:42.240 --> 0:05:44.640 well this year in the United States, but thematically at 0:05:44.640 --> 0:05:48.040 the index level, what I'd advocated for was a rotation 0:05:48.200 --> 0:05:53.240 into European equities, which were sort of the ugly ducklings. 0:05:54.400 --> 0:05:56.640 For so long, and some respects they still are. 0:05:56.720 --> 0:06:00.719 But I think where I am right now is that, Look, 0:06:00.720 --> 0:06:03.320 you know, we've got the SX five I call it 0:06:03.360 --> 0:06:08.039 the SPX for the European continent that has outperformed most 0:06:08.080 --> 0:06:11.919 every US index in local terms, almost caught up with 0:06:11.960 --> 0:06:17.839 the MAGS seven index, and on a currency j justment basis, 0:06:17.880 --> 0:06:21.400 it's blown away most of the US major equity index. 0:06:22.000 --> 0:06:25.719 So looking forward into twenty twenty six, where I'm at 0:06:25.800 --> 0:06:27.880 right now is I think that's going to happen. It's 0:06:27.880 --> 0:06:30.839 a very different set of dynamic. So I think, look, 0:06:31.000 --> 0:06:33.719 if the Germans really are going to start of committing 0:06:33.800 --> 0:06:36.120 to the stimulus, and I think that's happening, It's hard 0:06:36.160 --> 0:06:38.800 to tell, but that is sort of a massive and 0:06:38.880 --> 0:06:42.120 a very different type of force than say the AI force. Right, 0:06:42.160 --> 0:06:46.000 you know, when You're talking about this pretty significant economy 0:06:46.040 --> 0:06:49.279 really pushing stimulus to a place and it's never been 0:06:49.640 --> 0:06:52.080 They have the fiscal space to do it, unlike many 0:06:52.120 --> 0:06:56.680 other sovereign nations in the developed world, and that will 0:06:56.720 --> 0:06:59.599 be really resonate there. 0:07:00.000 --> 0:07:01.120 Meanwhile, I think. 0:07:01.240 --> 0:07:03.920 For the US colclal and value trade, well, there's still 0:07:03.960 --> 0:07:05.800 a lot of I think sentiment tied to that. So 0:07:05.839 --> 0:07:09.320 if you are concerned about the tech I don't want 0:07:09.320 --> 0:07:12.120 to use the word bubble, but you know, the tech theme, 0:07:13.680 --> 0:07:15.560 the dominance of tech them if you're sort of worried 0:07:15.600 --> 0:07:19.760 about that kind of not really working next year. To me, 0:07:19.880 --> 0:07:22.480 I think it's it's I sort of see Europe as 0:07:22.480 --> 0:07:25.120 as a pretty good place, with a caveat that. The 0:07:25.240 --> 0:07:28.400 rally this year has been driven largely by pe expansion 0:07:28.600 --> 0:07:31.920 and the relative tope from Europe to say their US 0:07:32.040 --> 0:07:36.360 counterparts are in a less compelling place than they were 0:07:36.440 --> 0:07:37.160 twelve months ago. 0:07:38.400 --> 0:07:41.840 Stay with US multplempeg's Survinmon's coming up off to this. 0:07:50.960 --> 0:07:53.960 Investors are waiting the last read unemployment in twenty twenty five. 0:07:54.040 --> 0:07:57.120 Java's claims do at eight thirty am Eastern for the 0:07:57.160 --> 0:07:58.240 holiday shortened week. 0:07:58.320 --> 0:07:59.960 Michael Reid of ARBC capital market. 0:08:00.040 --> 0:08:02.920 It's writing we maintain our view that tariffs will weigh 0:08:02.960 --> 0:08:05.840 on the labor market and put upward pressure on inflation, 0:08:06.240 --> 0:08:11.040 reinforcing that the US economy is experiencing stagflation light. Michael 0:08:11.120 --> 0:08:13.280 joins us now in the flesh in New York. Thank 0:08:13.320 --> 0:08:16.080 you so much for being here on this New Year's eve. 0:08:16.200 --> 0:08:19.320 I'm just wondering, from your perspective, stagflation light, what does 0:08:19.360 --> 0:08:21.280 that mean? And why do you see that taking hold 0:08:21.520 --> 0:08:22.480 in twenty twenty six? 0:08:22.680 --> 0:08:23.880 Sure, and thanks for having me. 0:08:24.320 --> 0:08:27.600 So what we are expecting is generally below trend growth 0:08:27.640 --> 0:08:31.960 that means below two percent, and inflation that remains uncomfortably high, 0:08:32.000 --> 0:08:33.960 really in that core space. So when you think about 0:08:34.000 --> 0:08:35.959 some of the dynamics, and it's not just tariffs, I 0:08:35.960 --> 0:08:38.400 should add, we just think it's going to be really 0:08:38.400 --> 0:08:41.160 hard to get back to two percent, even if you 0:08:41.200 --> 0:08:42.520 take tariffs off the table. 0:08:42.760 --> 0:08:45.160 Does it seem like FED officials really care? I mean, 0:08:45.200 --> 0:08:47.319 based on the meeting minutes, there was a priority on 0:08:47.480 --> 0:08:49.640 the labor market, not necessarily inflation. 0:08:50.240 --> 0:08:51.040 I think they do care. 0:08:51.080 --> 0:08:53.160 And what's really interesting is if you look at what 0:08:53.200 --> 0:08:57.160 they've said, especially in the last meeting, you know, you 0:08:57.240 --> 0:09:00.000 include the fact that they view tariffs as being traned. 0:09:00.880 --> 0:09:04.120 Yet they're starting to take that cautious approach. They think 0:09:04.120 --> 0:09:07.360 they've gotten to a place that is much more closer 0:09:07.360 --> 0:09:12.199 to neutral. So they're concerned about the inflationary pressure not 0:09:12.320 --> 0:09:14.520 just from terrafts but coming from other places. And we 0:09:14.520 --> 0:09:17.400 think that's showing up in the services space in particular 0:09:17.800 --> 0:09:19.320 as it relates to labor supply. 0:09:20.000 --> 0:09:22.319 So where exactly are you seeing this inflationary pressure. I 0:09:22.360 --> 0:09:24.520 can hear Neil Datta in my head saying, look at housing, 0:09:24.559 --> 0:09:26.680 you're not seeing any inflationary pressure there. In fact, the 0:09:26.679 --> 0:09:29.840 housing data yesterday we did get some signs that maybe 0:09:29.960 --> 0:09:31.960 is picking up, but otherwise you've seen pretty much flat 0:09:31.960 --> 0:09:34.800 home prices across the country. At what point do you 0:09:34.840 --> 0:09:37.720 see some sort of inflationary pressure that could be sticky. 0:09:38.320 --> 0:09:40.640 We see it in the wage space, and you know, 0:09:40.640 --> 0:09:42.439 when you think about some of the dynamics that we're 0:09:42.480 --> 0:09:47.319 seeing in terms of supply, we have immigration that's falling, 0:09:47.720 --> 0:09:52.160 we have retirements that we think continue to accelerate. At 0:09:52.200 --> 0:09:56.600 the same time, your demand for labor, while slowing, still 0:09:56.880 --> 0:09:59.280 hanging in there. So what that means is you're going 0:09:59.320 --> 0:10:02.080 to have a situation where the need for workers is 0:10:02.120 --> 0:10:05.600 still there, it's just showing up as replacement demands. So 0:10:05.640 --> 0:10:08.000 payrolls aren't going to look great by any means, But 0:10:08.640 --> 0:10:11.280 we are going to expect an environment where the unemployment 0:10:11.360 --> 0:10:14.319 rate remains low and we think at plateaus around four 0:10:14.320 --> 0:10:16.480 and a half percent for most of this year, and 0:10:16.520 --> 0:10:18.959 that just means you're going to have an environment where 0:10:19.080 --> 0:10:20.920 wage pressures, say, elevated. 0:10:21.640 --> 0:10:23.760 Yeah, so this is definitely the truth. When it comes 0:10:23.760 --> 0:10:26.079 to healthcare. We've seen the bulk of hiring so far 0:10:26.120 --> 0:10:27.840 this year in healthcare. We're getting older, are we still 0:10:27.840 --> 0:10:30.480 need to be taken care of? This is the raise 0:10:30.520 --> 0:10:33.760 of question about other sectors and what that means about 0:10:33.760 --> 0:10:36.040 the strength of the labor market. I mean, how durable 0:10:36.320 --> 0:10:37.880 is some of the strength that we've seen if it 0:10:37.920 --> 0:10:41.440 is concentrated in a completely recessioned proof area like healthcare. 0:10:41.800 --> 0:10:43.000 I mean, healthcare is a big one. 0:10:43.040 --> 0:10:45.360 So again going back to this demographic story, you think 0:10:45.400 --> 0:10:49.040 about the sheer size of the population that's now over 0:10:49.120 --> 0:10:52.439 sixty five. You have about just one undred and forty 0:10:52.440 --> 0:10:54.680 million people in the workforce right now who are fifty 0:10:54.679 --> 0:10:58.120 five plus, so they're approaching that retirement age. That's who 0:10:58.160 --> 0:11:00.520 we're really focused on. Those are theolks who are going 0:11:00.559 --> 0:11:04.760 to continue to use healthcare services across the board. So 0:11:04.840 --> 0:11:08.040 that's a sector that we expect both will continue to 0:11:08.120 --> 0:11:09.920 hire at a very healthy clip. 0:11:10.120 --> 0:11:11.240 Fifty to sixty. 0:11:10.960 --> 0:11:14.040 Thousand jobs per month over the next five years seems 0:11:14.120 --> 0:11:17.320 very reasonable to us. And in addition, you do have 0:11:17.360 --> 0:11:20.400 that price pressure, so when you think about some of 0:11:20.160 --> 0:11:24.760 the factors impacting prices in terms of tariffs, but as 0:11:24.760 --> 0:11:27.600 well as supply chains, that's going to continue to put 0:11:27.640 --> 0:11:32.040 upward pressure on services. So for healthcare, which is a 0:11:32.160 --> 0:11:39.160 very service intensive type of sector, there's very little relief 0:11:39.240 --> 0:11:40.440 that we expect to see there. 0:11:40.600 --> 0:11:42.360 There's a theory that the FED is trying to run 0:11:42.360 --> 0:11:45.520 the economy hot to keep people employed as we get 0:11:45.520 --> 0:11:49.000 this structural shift with artificial intelligence, that as people become 0:11:49.040 --> 0:11:51.000 less necessary, you want to keep as many people as 0:11:51.040 --> 0:11:55.320 possible employed before we get to whatever that next future is. 0:11:55.840 --> 0:11:57.840 How much credence do you see in that? 0:11:57.920 --> 0:12:00.520 Do you think that that is wise for them to 0:12:00.600 --> 0:12:04.200 take that approach given some of the cannibalization from human jobs. 0:12:04.360 --> 0:12:07.960 I mean, look, their dual mandate is low prices and 0:12:08.000 --> 0:12:11.800 stable employment, So I think that aligns to what they're 0:12:11.920 --> 0:12:13.439 trying to do in terms of the mandate. 0:12:14.200 --> 0:12:17.079 Now, the outcomes for AI are still very early. 0:12:17.600 --> 0:12:20.800 Could we see a productivity boost, Absolutely, we expect that. 0:12:21.320 --> 0:12:23.040 Do we expect to see in twenty twenty six, Not 0:12:23.080 --> 0:12:26.480 so much. But when you think about some of the 0:12:26.559 --> 0:12:28.679 dynamics that are going on right now over the next 0:12:28.800 --> 0:12:33.000 four to five years, when you account for that retirement 0:12:33.080 --> 0:12:37.160 boom that we continue to see and the slowdown in immigration, 0:12:37.640 --> 0:12:39.760 you're going to need more workers. And if you don't 0:12:39.760 --> 0:12:44.480 have it coming from the outside that immigration story, AI 0:12:44.559 --> 0:12:46.800 is going to have a very very important role to 0:12:46.840 --> 0:12:50.440 play there to help supplement the falling labor supply. So 0:12:51.080 --> 0:12:54.319 that could help offset some of those inflationary pressures coming 0:12:54.400 --> 0:12:55.640 in the wage space. 0:12:55.640 --> 0:12:57.760 Just in a shorter term TIMESPRAE. 0:12:57.760 --> 0:12:59.760 So we are going to get some real data in 0:13:00.000 --> 0:13:03.400 Manuary that people think will be some cleaner data points 0:13:03.440 --> 0:13:06.160 to look at when the Fed meets on January twenty eighth. 0:13:06.360 --> 0:13:08.559 What are you expecting when it comes to both CPI 0:13:09.000 --> 0:13:11.680 and of course the jobs report from the month of December. 0:13:12.000 --> 0:13:17.040 So we're going to get a lot of mixed signals here. Again, 0:13:17.240 --> 0:13:23.040 even in December Q one for the jobs report, you know, 0:13:23.480 --> 0:13:27.000 like the Fed, we expect that the number will be 0:13:27.040 --> 0:13:29.640 you know, look okay at face value, but you have 0:13:29.720 --> 0:13:32.439 to subtract out the benchmark revisions that are going to 0:13:32.480 --> 0:13:35.559 come from QCW. So already you have to take out 0:13:35.559 --> 0:13:39.280 fifty to seventy thousand jobs per month based on that revision. 0:13:39.320 --> 0:13:42.680 So that's a big part of I think how the 0:13:42.679 --> 0:13:45.600 Fed is thinking about this, especially as it relates to 0:13:45.600 --> 0:13:47.920 that break even pace of employment. That's why we've seen 0:13:47.920 --> 0:13:52.240 that unemployment rate rise despite rather healthy job job gains 0:13:52.559 --> 0:13:55.680 from the Paywell report in terms of CPI, you know, 0:13:55.760 --> 0:13:59.360 for December, we think we continue to see kind of 0:13:59.400 --> 0:14:02.560 a modest slow down in terms of the pace, but 0:14:03.480 --> 0:14:06.200 it's really t one that's our concern. We've seen these 0:14:06.200 --> 0:14:10.679 seasonal quirks, notably in January, and we think that could 0:14:10.679 --> 0:14:14.840 be more pronounced as tar pressure starts to add up. 0:14:15.520 --> 0:14:19.120 Stay with US multiple INPEX Savana's coming up off to this. 0:14:27.840 --> 0:14:31.160 Enhanced Affordable Care Act subsidies are so to expire tonight, 0:14:31.480 --> 0:14:35.240 sending premium skyrocketing and impacting coverage for millions of Americans. 0:14:35.280 --> 0:14:39.320 Congress failing to find a resolution before the deadline. Joining 0:14:39.360 --> 0:14:42.800 US now is George Pollock of Signal Global, Can you 0:14:42.800 --> 0:14:44.200 just give us a sense and great to see you, 0:14:44.240 --> 0:14:46.880 George stepping back, how much of a focus this is 0:14:46.920 --> 0:14:50.800 for Republicans to keep some sort of healthcare solution. How 0:14:50.880 --> 0:14:53.120 much it is a popular thing for them to do 0:14:53.200 --> 0:14:54.600 heading into the midterm elections. 0:14:55.560 --> 0:14:57.960 Well, the biggest issue for Republicans is healthcare. Is are 0:14:58.000 --> 0:15:00.920 the one issue where Democrats pull better than Republicans. 0:15:01.200 --> 0:15:01.680 This is the. 0:15:01.640 --> 0:15:03.720 Issue where Democrats can. 0:15:03.680 --> 0:15:06.040 Really go on offense and say we have the better ideas, 0:15:06.160 --> 0:15:08.640 or at least the more popular ideas. And going into 0:15:08.680 --> 0:15:10.720 a midterm election that's already going to be a challenge 0:15:10.720 --> 0:15:11.600 when they've. 0:15:11.480 --> 0:15:12.640 Had the trifecta in DC. 0:15:13.400 --> 0:15:17.360 Allowing these subsidies to expire and exposing people to doubling 0:15:17.360 --> 0:15:20.440 of healthcare premiums is just not sustainable, especially if they 0:15:20.480 --> 0:15:21.320 want to keep the House. 0:15:21.760 --> 0:15:23.360 We were talking at the end of last year or 0:15:23.400 --> 0:15:25.040 the beginning of a lot of this year, excuse me, 0:15:25.360 --> 0:15:29.920 about cutting the budget deficit and about cutting expenses. Dose 0:15:30.080 --> 0:15:32.560 was a big effort. Now there is a question of 0:15:32.760 --> 0:15:34.760 how much of those custom are going to basically come 0:15:34.800 --> 0:15:36.960 back onto the balance sheet, whether it's AEBA or whether 0:15:37.040 --> 0:15:39.600 it's some of these subsidies that get passed over. I'm 0:15:39.600 --> 0:15:42.120 just wondering, from your perspective, how much of a focus 0:15:42.360 --> 0:15:45.560 cutting the budget deficit still is in Washington, DC. 0:15:46.560 --> 0:15:47.920 Look, I think it's a great line. 0:15:47.960 --> 0:15:49.760 I think when you're the party out of power, it's 0:15:49.760 --> 0:15:52.480 something you discussed and you've seen moderate Democrats talk about it, 0:15:52.560 --> 0:15:54.520 and you've seen most Republicans talk about it. But the 0:15:54.560 --> 0:15:57.480 reality is when they pass to one big, beautiful bill, yes, 0:15:57.560 --> 0:15:59.760 that made tax cuts and a tax system permanent and 0:15:59.800 --> 0:16:02.680 may you know, gave businesses and Americans a dea of permanence, 0:16:02.720 --> 0:16:05.600 but it also cost billions, and it costs a significant 0:16:05.560 --> 0:16:07.080 amount of money and added to the deficit. 0:16:07.440 --> 0:16:08.239 It's a great. 0:16:08.000 --> 0:16:11.360 Campaign line, but unless there's no real appetite for embracing 0:16:11.360 --> 0:16:13.400 a talent and reform or anything like that, because it 0:16:13.480 --> 0:16:15.880 really is the third rail of US politics, how do. 0:16:15.840 --> 0:16:18.760 You see twenty twenty six being different politically than twenty 0:16:18.840 --> 0:16:21.040 twenty five. Given the fact that the midterm elections are 0:16:21.040 --> 0:16:23.920 coming up and what happened in the mid midterm elections 0:16:23.960 --> 0:16:25.040 that we just saw. 0:16:25.840 --> 0:16:27.520 I think what you're really going to see is these 0:16:27.640 --> 0:16:30.480 moderate Republicans who voted for things like the one big 0:16:30.520 --> 0:16:33.320 beautiful Bill, who have defended the president, who are facing 0:16:33.360 --> 0:16:36.000 a very tough reelect, and with Democrats getting some pretty 0:16:36.000 --> 0:16:39.200 strong recruits and moderate districts, they're going to really try 0:16:39.200 --> 0:16:41.440 to separate themselves from the administration, and they're going to 0:16:41.440 --> 0:16:46.720 really try to stake out themselves as independent, focus oriented 0:16:47.080 --> 0:16:49.200 members of Congress who just want to do what's best 0:16:49.200 --> 0:16:51.680 for American And I think we're Speaker Johnson having a 0:16:51.760 --> 0:16:54.000 very narrow majority, that's going to be something that he 0:16:54.040 --> 0:16:56.160 struggles to navigate, especially if he wants to do a 0:16:56.160 --> 0:16:57.360 second reconciliation Bill. 0:16:57.520 --> 0:16:59.120 George, There's something that not a lot of people are 0:16:59.120 --> 0:17:02.560 talking about is coming up increasingly on talk shows as 0:17:02.600 --> 0:17:05.680 well as just a not ed pages across the country, 0:17:05.680 --> 0:17:07.800 across the world. How much of a focus there's going 0:17:07.840 --> 0:17:11.000 to be an artificial intelligence and either regulating it or 0:17:11.040 --> 0:17:13.600 providing some sort of safety net should there be some 0:17:13.640 --> 0:17:16.479 sort of mass job loss in the wake of a 0:17:16.520 --> 0:17:19.720 real adoption that does mean that certain humans are not 0:17:19.800 --> 0:17:22.879 needed anymore. How much of a discussion is there in Washington, 0:17:22.960 --> 0:17:25.960 DC about this as we head into twenty twenty six. 0:17:26.880 --> 0:17:28.600 I think what you're going to see is the Republican 0:17:28.800 --> 0:17:31.640 the administration has fully embraced AI as the next great 0:17:31.640 --> 0:17:33.600 thing for the US economy. And what you're going to 0:17:33.600 --> 0:17:35.600 see is the likes of both Republicans, so like Governor 0:17:35.680 --> 0:17:38.080 Roland Descantis or Governor of Spencer Cox, and you're going 0:17:38.119 --> 0:17:41.080 to see Democrats as well campaign against the administration's whole 0:17:41.119 --> 0:17:44.200 hog embrace. You've already seen Senator Bernie Sanders talk about 0:17:44.240 --> 0:17:45.800 suspending data center construction. 0:17:46.200 --> 0:17:48.000 I think what I put in at parallel. 0:17:47.640 --> 0:17:50.280 To is when they were negotiating the original NAFTA and 0:17:50.320 --> 0:17:53.120 that trade disruption in the job disruption. I think Democrats 0:17:53.160 --> 0:17:57.200 are going to say, you're disrupting American jobs, you're threatening 0:17:57.400 --> 0:18:00.520 social stability, and you're increasing cost and things like energy, 0:18:00.560 --> 0:18:02.000 and they're going to use it as a huge attack 0:18:02.040 --> 0:18:05.719 line for the president, especially because Americans are pretty divided. 0:18:05.760 --> 0:18:07.920 I think there was a recent poll out that only 0:18:07.960 --> 0:18:10.159 by five percent are they really positive about AI. And 0:18:10.200 --> 0:18:12.520 that's really people who haven't yet learned all the details. 0:18:12.680 --> 0:18:15.480 And I think as Democrats hit the administration in the 0:18:15.600 --> 0:18:17.320 likes of David Sachs, I think that's going to be 0:18:17.359 --> 0:18:19.280 a very potent issue for Democrats in particular. 0:18:19.320 --> 0:18:20.360 In twent twenty six, you. 0:18:20.280 --> 0:18:23.320 Mentioned Senator Bernie Sanders of Vermont. He is going to 0:18:23.320 --> 0:18:27.280 be at the inauguration of Zoro and Mam Donnie, I believe, tonight, 0:18:27.359 --> 0:18:31.960 along with AOC, along with a host of other progressive Democrats. 0:18:32.080 --> 0:18:35.080 I just wonder what this really signifies for the Democratic 0:18:35.080 --> 0:18:38.480 Party in twenty twenty six, Not necessarily Zora Mam Donnie's inauguration, 0:18:38.640 --> 0:18:40.840 but just is this going to be the mainstream of 0:18:40.880 --> 0:18:44.879 the Democratic Party heading into the next presidential election season. 0:18:45.640 --> 0:18:47.280 Look, I think that's a fantastic question. 0:18:47.359 --> 0:18:49.639 If you were a tri state Democrat like Laura Gillen 0:18:49.760 --> 0:18:52.439 or Tom Swazi, you're not happy about this because you're 0:18:52.480 --> 0:18:54.040 going to have to run against Mom Donni and you're 0:18:54.040 --> 0:18:55.600 going to have to deal with the after effects of 0:18:55.640 --> 0:18:58.760 Mam Donnie's policies. But I think in reality, this midterm 0:18:58.800 --> 0:19:00.639 election is going to be a referendum on the president, 0:19:00.680 --> 0:19:03.680 a referendum on the Republicans, And when the Democratic Party 0:19:03.720 --> 0:19:06.680 has legs of Marie losing camp Paris in Washington, Jaca 0:19:06.720 --> 0:19:10.720 Anceloss in Massachusetts, and formably Jared Golden in Maine, it's 0:19:10.760 --> 0:19:13.719 really just going to be. Yeah, the Republicans will try 0:19:13.760 --> 0:19:15.920 to make it circa Nancy Pelosi two thousand and six, 0:19:15.960 --> 0:19:17.840 two thousand and eight. But it's really not going to 0:19:17.880 --> 0:19:20.800 fly when Americans are more concerned about increasing health premiums, 0:19:20.960 --> 0:19:23.440 increasing energy costs, and the potential threat of AI. 0:19:24.760 --> 0:19:25.400 Stay with us. 0:19:25.720 --> 0:19:37.560 Maulblindex Saveland's coming up after this, And. 0:19:37.520 --> 0:19:39.480 I just learned that Matt Miller is also wearing a 0:19:39.560 --> 0:19:44.359 kilt because he is celebrating Hogmanay, which is the Scottish 0:19:44.400 --> 0:19:46.840 New Year. That is what we learned from Lizzie Burton 0:19:46.960 --> 0:19:47.760 over in London. 0:19:47.760 --> 0:19:50.600 Thank you for that. I'm glad to see that it's 0:19:50.640 --> 0:19:52.600 not true true. 0:19:53.040 --> 0:19:54.840 I wish, I wish, well. 0:19:54.640 --> 0:19:56.200 You know, maybe next year, if they get. 0:19:56.040 --> 0:19:58.719 Another double as your return, Matthew Miller will show up 0:19:58.760 --> 0:20:00.840 in a cult. Barbara Durant, it's not wearing a kult 0:20:01.080 --> 0:20:02.360