WEBVTT -  Treasuries, Dollar Fall as Moody’s Sharpens Focus on US Debt 

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<v Speaker 2>Okay, market's the equity market not doing much, but it's

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<v Speaker 2>the long end of the bond market that's getting hit

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<v Speaker 2>pretty hard with yields moving higher. Carol Pepper, founder and

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<v Speaker 2>CEO at Pepper International, joins us.

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<v Speaker 3>Now.

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<v Speaker 2>Carol, if we take a look at what's happening in

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<v Speaker 2>the long end of the bond market, what point do

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<v Speaker 2>yield start to impact the equity market.

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<v Speaker 4>Well, I think we're not too far from it. But

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<v Speaker 4>I think again, people are sort of hoping that this

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<v Speaker 4>will be a temporary.

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<v Speaker 5>Spike everyone's talking about.

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<v Speaker 4>In twenty eleven, the spike didn't last, so I think

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<v Speaker 4>there's similarly people not wanting to be headfaked, not wanting

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<v Speaker 4>to think that it's going to get a lot worse

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<v Speaker 4>than it is. The news have been known for a

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<v Speaker 4>long time. It's not a huge surprise. It's disappointing, of course,

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<v Speaker 4>and signals that at some point the US has to

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<v Speaker 4>get its deficit under control. But I think people are

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<v Speaker 4>just kind of going to take it in stride. That's

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<v Speaker 4>why you don't see the markets moving much today. There

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<v Speaker 4>are other potential moves of foot. What's going to happen

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<v Speaker 4>with the tariffs, what's going.

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<v Speaker 5>To happen with the tax builders. Is it actually going

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<v Speaker 5>to get passed? And in what form?

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<v Speaker 4>There are other more driving factors I think for the

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<v Speaker 4>markets right now. This is just sort of a disappointing

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<v Speaker 4>acknowledgment of reality.

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<v Speaker 6>Carol.

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<v Speaker 3>I know that you and the family offices that you

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<v Speaker 3>work with have for a long time been a tech bulls.

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<v Speaker 3>Do you use trading down days as an opportunity to

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<v Speaker 3>add to those positions here? Do you still think tech

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<v Speaker 3>can leave this market?

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<v Speaker 5>Absolutely? I don't know when, so it may not be

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<v Speaker 5>this year.

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<v Speaker 4>By the way, it may not be this year because

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<v Speaker 4>there are other factors out of the hands of the

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<v Speaker 4>market that are driving things, namely policies out of Washington.

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<v Speaker 4>So as long as Washington's driving the bus right now,

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<v Speaker 4>it's very hard for the markets to do anything other

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<v Speaker 4>than react, as we you know of seeing the Fed

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<v Speaker 4>can only react, everybody can only react at this point. However,

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<v Speaker 4>that doesn't mean that Amazon isn't holding its value, that

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<v Speaker 4>Nvidia isn't holding its value that Microsoft isn't holding its value.

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<v Speaker 4>So if you're underweight in your tech positions because you

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<v Speaker 4>felt it was too expensive before this period, might be

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<v Speaker 4>a good time to get in on a fair day

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<v Speaker 4>and up your positions of it, because those are leaders

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<v Speaker 4>and they will continue to lead.

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<v Speaker 2>We have a breaking headline here from Reuters saying that

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<v Speaker 2>nip On Steel is going to invest fourteen billion dollars

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<v Speaker 2>in US steel If Trump okays that takeover deal. According

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<v Speaker 2>to reports, it will be about four billion dollars for

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<v Speaker 2>a new mill, a new steel mill. Just take that

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<v Speaker 2>in for a second. That'd be huge. Carol, you mentioned

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<v Speaker 2>tech like buy on the dip, right, the valuations make sense.

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<v Speaker 2>Do you feel like there is FOMO right now on tech?

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<v Speaker 4>Not yet, but I do think that there are people

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<v Speaker 4>that missed it completely before, people that were extremely skeptical

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<v Speaker 4>and are very underweight.

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<v Speaker 5>So I don't know if it's FOMA, but I.

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<v Speaker 4>Do think it's not a bad time to get in

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<v Speaker 4>and remember things like AI and the IoT technology that

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<v Speaker 4>it's going to allow you to have data on every

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<v Speaker 4>type of manufacturing that we do in the United States

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<v Speaker 4>thanks to these new manufacturing policies, will need AI, will

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<v Speaker 4>need IoT sensors will need all of the things that

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<v Speaker 4>tech is building for us. And I can tell you

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<v Speaker 4>that many family offices right now are actively investing in

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<v Speaker 4>data centers.

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<v Speaker 5>Data centers are being built all over the country.

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<v Speaker 4>The municipal governments, for example, in the state of Oklahoma,

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<v Speaker 4>the state governments are actively partnering with private sector to

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<v Speaker 4>build more capacity for AI and technology in this country

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<v Speaker 4>over the next ten twenty four months. So don't count

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<v Speaker 4>tech out. It's not out at all. It's just a

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<v Speaker 4>question of when the market starts driving, rather than the policy.

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<v Speaker 3>Hey, Carol, there was a time earlier this year when

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<v Speaker 3>the markets are really trying to digest all these new tariffs,

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<v Speaker 3>people said, hey, how about the rest of the world.

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<v Speaker 3>We saw a lot of capital flow from US equity markets,

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<v Speaker 3>bond markets overseas, particularly to Europe. Is that something you

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<v Speaker 3>think is still viable?

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<v Speaker 5>Yes, I do think that finally we'll see some movement

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<v Speaker 5>in Europe.

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<v Speaker 4>We've had ten to fifteen twenty years of US exceptionalism

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<v Speaker 4>when it really didn't make a lot of sense to

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<v Speaker 4>diversify that much outside.

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<v Speaker 5>Of the US. But now Europe is looking more interesting again.

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<v Speaker 4>They're uniting, they're actively rebuilding defense stocks and they're trying

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<v Speaker 4>to kind of take a bigger role in their own defense,

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<v Speaker 4>and I think that's an area where we can really

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<v Speaker 4>potentially make some money this year.

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<v Speaker 5>I don't think it's a bad thing that Europe is

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<v Speaker 5>going to step up to the plate.

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<v Speaker 4>And there are some people rotating out of the United

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<v Speaker 4>States for other reasons, and the first place they're going

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<v Speaker 4>to go is Europe. It's perceived as less risky then

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<v Speaker 4>let's say emerging markets or Asia.

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<v Speaker 5>So yes, Europe.

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<v Speaker 4>Is a good place if you're thinking of sticking your

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<v Speaker 4>toe in the water and going outside the US right now.

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<v Speaker 3>Very good, Carol, Thank you so much for We really

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<v Speaker 3>appreciate it. Carol Pepper, founder and CEO of Pepper International.

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<v Speaker 1>You're listening to the Bloomberg Intelligence podcast. Catch us live

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<v Speaker 3>The Alextel Paul Swooney live here in our Bloomberg Interactive

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<v Speaker 3>Broker Studio streaming live on YouTube as well, and starting today,

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<v Speaker 3>the video presentations of Bloomberg Intelligence and Balance of power.

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<v Speaker 3>good smart TV stuff. So we're there as well. So

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<v Speaker 3>we welcome that audience to Bloomberg Intelligence. Philolando Joins is here,

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<v Speaker 3>chief equity market strategist and head of Client portfolio Management

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<v Speaker 3>at Federated at Hermes. Phil, it seems like, you know,

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<v Speaker 3>this market has retraced much of its peak to trough

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<v Speaker 3>fall here just over the last several weeks as we

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<v Speaker 3>get maybe a little bit more clarity on the tariffs,

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<v Speaker 3>but a tremendous amount of volatility down then up. Where

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<v Speaker 3>do we go from here?

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<v Speaker 6>Good morning, Paul, Thank you very much for having me back.

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<v Speaker 6>I think you've hit the nail on the head that

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<v Speaker 6>the volatility over the last six weeks, looking at something

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<v Speaker 6>like the vixendix as an example, you know, went from

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<v Speaker 6>like fifteen to sixty and is now back in the

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<v Speaker 6>mid teen so the volatility is completely round tripped. Same

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<v Speaker 6>story with the equity market. You know, from the Liberation

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<v Speaker 6>Day announcement on April second, market dropped like fifteen percent

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<v Speaker 6>and then over the course of the last six weeks

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<v Speaker 6>or so, we've rallied, like I don't know, twenty one

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<v Speaker 6>to twenty two percent. We've gotten all the money back.

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<v Speaker 6>So we're now, you know, back ahead of where we were.

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<v Speaker 6>And so now, you know, I guess investors are asking

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<v Speaker 6>the question, well, what's next. You know, we're heading into

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<v Speaker 6>what typically is a seasonally sluggish time of the year,

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<v Speaker 6>you know, the sell and may go away period, you know.

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<v Speaker 6>But the underlying fundamentals of the market I think are

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<v Speaker 6>going to be driving the bus here, and what has

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<v Speaker 6>lately improved the prospects of the market are two things.

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<v Speaker 6>Number One, we're making some positive progress with the tariff negotiations,

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<v Speaker 6>you know, with the UK and China, and the hope

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<v Speaker 6>is that there's another you know, a dozen or eighteen

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<v Speaker 6>or so countries that are sort of in the mix

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<v Speaker 6>now and we'll get some positive announcements in coming days

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<v Speaker 6>or weeks. And then second is that when you actually

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<v Speaker 6>look at the data that that you know drives the market,

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<v Speaker 6>we've got this ongoing tug of war, you know, between

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<v Speaker 6>the hard data which has been which has been fine,

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<v Speaker 6>and the soft data, the sentiment data, which has been terrible.

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<v Speaker 6>So what yeah, yeah, go ahead, Alex, I'm sorry well doesn't.

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<v Speaker 2>Say something, Where does that? Where does that leave us?

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<v Speaker 6>Well, we're we're we're we're looking for more, you know,

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<v Speaker 6>Where's like again, the hard data that we saw last week,

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<v Speaker 6>you know, CPI and PPI data was fine. The retail

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<v Speaker 6>sales for the Marparol season up five point two percent

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<v Speaker 6>year on year versus three percent a year ago. So

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<v Speaker 6>the the consumer data is fine. But then additional sentiment data,

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<v Speaker 6>the HMI, the housing data is terrible. The the Michigan

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<v Speaker 6>data was terrible. And so now the next big data

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<v Speaker 6>point we're going to get this week is you know,

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<v Speaker 6>the claims data. Uh, this is the survey week for

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<v Speaker 6>the main jobs report, so incrementally what investors are looking for.

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<v Speaker 6>It's okay, well, what's the next data point? You know,

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<v Speaker 6>how do we how do we sort of complete this

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<v Speaker 6>giant jigsaw puzzle. There are some folks like us who

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<v Speaker 6>think that this situation is going to continue to improve,

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<v Speaker 6>that we'll get more countries that will sort of fall

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<v Speaker 6>into place with the tariff negotiations, and the heart data

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<v Speaker 6>is ultimately going to prevail. The soft data will sort

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<v Speaker 6>of fade. But there are other folks that you know,

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<v Speaker 6>are looking at the other side. Of the coin are

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<v Speaker 6>saying that the good hard data is going to dissipate,

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<v Speaker 6>and then it's the soft data that's pointing in the

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<v Speaker 6>right direction. So the short answer is alex right now,

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<v Speaker 6>no one knows and they're just waiting for more incremental

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<v Speaker 6>information to sort of form that picture.

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<v Speaker 3>Now nobody knows. That probably includes the Federal Reserve. Don't

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<v Speaker 3>you think, Phil, how do you think they're preceding these days?

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<v Speaker 6>Well, exactly right. I mean you look at the last

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<v Speaker 6>FOMC meeting where Powell basically said we're going to take

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<v Speaker 6>a wait and see approach like two dozen times because

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<v Speaker 6>they're waiting for more data. They're waiting for clarity of

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<v Speaker 6>the picture. And the bond market, which you know, a

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<v Speaker 6>couple of weeks ago, was thinking that we're going to

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<v Speaker 6>have three or four cuts in the back half of

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<v Speaker 6>the year. They now think we're we're only going to

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<v Speaker 6>have two, with the first cut maybe not coming until

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<v Speaker 6>the September FOMC meeting. Because the thing thinking is that

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<v Speaker 6>the FED needs more data to be able to figure

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<v Speaker 6>out what their next policy move is. Our position here

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<v Speaker 6>at Federated Hermes is that the FED will cut, give

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<v Speaker 6>us two or three cuts in the back half of

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<v Speaker 6>the year. Maybe that first cut comes to the July meeting,

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<v Speaker 6>because the economy is slowing down, but the labor market's

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<v Speaker 6>not collapsing. And as we saw with the CPI, the

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<v Speaker 6>retail and the wholesale inflation data last week that the

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<v Speaker 6>inflation data is pretty good. All of that suggests that

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<v Speaker 6>the federal reserves should be reducing interest rates in the

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<v Speaker 6>back half of the year, and we're pretty comfortable with

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<v Speaker 6>that position.

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<v Speaker 2>Before I let you go, are you surprised about the

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<v Speaker 2>non market reaction to the Moody's downgrade.

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<v Speaker 6>I'm sort of surprised that Moody's was as late to

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<v Speaker 6>the party as they were in terms of when, you know,

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<v Speaker 6>Fitch and s and P made their downgrades years ago,

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<v Speaker 6>And in my mind, I'm asking the question, if Moody's

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<v Speaker 6>is down grading now, where were they, you know, over

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<v Speaker 6>the last three or four years when inflation spiked up

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<v Speaker 6>to the highest levels in forty years. Why are they

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<v Speaker 6>picking this moment as opposed to, you know, perhaps a

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<v Speaker 6>more reasonable moment a couple of years ago. So I

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<v Speaker 6>don't know what to read into that.

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<v Speaker 3>All right, Phil, thanks so much for joining us. Always

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<v Speaker 3>appreciate getting your thoughts. Fill Orlando, chief equity market strategist

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<v Speaker 3>and head Client Portfolio Management, and Federated Hermes joining us there.

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<v Speaker 1>You're listening to the Bloomberg Intelligence Podcast. Catch us live

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<v Speaker 3>All right, Alex Steel, Paul Sweeney live here on Bloomberg

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<v Speaker 3>and Arctia Broker Studio streaming live on YouTube as well.

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<v Speaker 3>on your smart TV. Let's talk Apple, Let's talk AI.

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<v Speaker 3>I mean, we've all followed Apple for twenty thirty four years.

0:12:01.280 --> 0:12:05.120
<v Speaker 3>They don't miss very often. They kind of get the PC,

0:12:05.360 --> 0:12:09.079
<v Speaker 3>they get the phone, they get the gadgets. But boy,

0:12:09.760 --> 0:12:12.360
<v Speaker 3>even to this person who doesn't really follow that closely,

0:12:12.559 --> 0:12:14.600
<v Speaker 3>they're not getting AI. And I think I wonder if

0:12:14.600 --> 0:12:16.719
<v Speaker 3>just what extent that's the problem. Our next guests will

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<v Speaker 3>help us out there. Mark Herman, Managing editor for Global

0:12:19.480 --> 0:12:22.800
<v Speaker 3>Consumer Tech for Bloomberg News. He's based in LA but

0:12:22.840 --> 0:12:25.120
<v Speaker 3>he's here in New York's. We got him in studio.

0:12:25.440 --> 0:12:28.120
<v Speaker 3>You've got a Bloomberg BusinessWeek big take story out today

0:12:28.200 --> 0:12:31.800
<v Speaker 3>on Apple, and they're just kind of missing AI. What's

0:12:31.840 --> 0:12:34.080
<v Speaker 3>going on in Coopertino as it relates to AI.

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<v Speaker 7>Well, philosophical differences, mismanagement, and the biggest thing is they

0:12:40.160 --> 0:12:43.640
<v Speaker 7>were blindsided when generative AI with chat, GPT and GitHub

0:12:43.760 --> 0:12:47.200
<v Speaker 7>launched back in twenty twenty two. November twenty twenty two,

0:12:47.360 --> 0:12:52.120
<v Speaker 7>I'm told Apple Intelligence wasn't even an idea back then. Why, well,

0:12:52.160 --> 0:12:52.959
<v Speaker 7>they missed the boat.

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<v Speaker 2>But how I mean, I mean, I don't understand.

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<v Speaker 7>Yeah, well, clearly there was philosophical disagreement, in philosophical dis

0:13:00.120 --> 0:13:03.160
<v Speaker 7>interest in the topic of artificial intelligence. I write about

0:13:03.160 --> 0:13:07.000
<v Speaker 7>how Craig Federighi, Apple's senior VP of software engineering, doesn't

0:13:07.040 --> 0:13:11.600
<v Speaker 7>really believe in these multi billion dollar projects. He tends

0:13:11.640 --> 0:13:14.240
<v Speaker 7>to try to shut down or steer away from projects

0:13:14.280 --> 0:13:16.920
<v Speaker 7>of that sort, and AI is something of that nature.

0:13:17.000 --> 0:13:19.319
<v Speaker 7>AI is quite a bit messy. They're known for the

0:13:19.480 --> 0:13:24.360
<v Speaker 7>very intricate and well designed user experiences. AI sometimes with hallucidations,

0:13:24.360 --> 0:13:26.640
<v Speaker 7>can take away from that. But I think they didn't

0:13:26.679 --> 0:13:28.120
<v Speaker 7>think it was going to be as big of a

0:13:28.160 --> 0:13:30.240
<v Speaker 7>thing as it became today. A lot of it fell

0:13:30.280 --> 0:13:33.720
<v Speaker 7>on deaf years years ago, I'm told. But really, this

0:13:33.760 --> 0:13:36.439
<v Speaker 7>is a company that's known for updating their operating systems

0:13:36.480 --> 0:13:40.079
<v Speaker 7>once a year. It's known as a company that focuses

0:13:40.280 --> 0:13:43.360
<v Speaker 7>on the minutia, and they missed the big picture here

0:13:43.640 --> 0:13:47.360
<v Speaker 7>with artificial intelligence, and it really is a shame. You know,

0:13:47.400 --> 0:13:50.520
<v Speaker 7>the big picture here isn't the AI capabilities of its

0:13:50.520 --> 0:13:54.400
<v Speaker 7>devices today. The big picture today is the AI capability

0:13:54.760 --> 0:13:57.760
<v Speaker 7>of future hardware. If you don't have the core technology,

0:13:57.800 --> 0:14:00.080
<v Speaker 7>the AI ready to go at a deep level, how

0:14:00.080 --> 0:14:04.160
<v Speaker 7>are you going to develop products like humanoid robots, smart glasses,

0:14:04.800 --> 0:14:08.479
<v Speaker 7>watches in AirPods with depth sens and cameras for AI purposes.

0:14:08.920 --> 0:14:11.280
<v Speaker 7>Can't do any of that if you don't have that technology.

0:14:11.600 --> 0:14:14.439
<v Speaker 7>So they need to seriously turn this thing around quickly

0:14:14.559 --> 0:14:17.120
<v Speaker 7>or are they're going to be in big trouble. This

0:14:17.360 --> 0:14:20.440
<v Speaker 7>is as core technology as the touchscreen.

0:14:21.440 --> 0:14:23.920
<v Speaker 3>Wow. I mean, first of all, how many words is

0:14:23.960 --> 0:14:24.720
<v Speaker 3>this story, dude?

0:14:24.920 --> 0:14:25.520
<v Speaker 7>Six thousand?

0:14:25.600 --> 0:14:25.800
<v Speaker 2>Yeah?

0:14:25.800 --> 0:14:29.240
<v Speaker 3>This is a long, well story, folks. So if you

0:14:29.240 --> 0:14:31.920
<v Speaker 3>wantn't get smart on AI and Apple, you got to

0:14:31.960 --> 0:14:33.760
<v Speaker 3>read the story. It's in the Bloomberg Business Week, It's

0:14:33.800 --> 0:14:35.680
<v Speaker 3>on the Terminal up shirts everywhere else as well.

0:14:36.480 --> 0:14:36.760
<v Speaker 6>Mark.

0:14:37.000 --> 0:14:40.120
<v Speaker 3>What can they do if I'm an investor, That's the

0:14:40.160 --> 0:14:42.960
<v Speaker 3>only question I have for Tim Cook. Can you guys

0:14:43.240 --> 0:14:45.560
<v Speaker 3>catch up and get some of that AI pixie dusk

0:14:45.640 --> 0:14:46.280
<v Speaker 3>in your stock?

0:14:46.440 --> 0:14:49.240
<v Speaker 7>Yes, they need to make acquisitions, and they need to

0:14:49.680 --> 0:14:53.520
<v Speaker 7>up the percentage of that R and D budget tied

0:14:53.560 --> 0:14:55.560
<v Speaker 7>to AI. They need to up that percentage. They need

0:14:55.600 --> 0:14:58.200
<v Speaker 7>to allocate more of their hires to AI as well.

0:14:58.280 --> 0:15:00.480
<v Speaker 7>So they need to go bigger, go home on this.

0:15:00.800 --> 0:15:02.520
<v Speaker 6>And I think did they know that?

0:15:02.560 --> 0:15:02.920
<v Speaker 5>Do you think?

0:15:03.000 --> 0:15:03.200
<v Speaker 4>Yeah?

0:15:03.200 --> 0:15:03.920
<v Speaker 7>Of course they know that.

0:15:03.960 --> 0:15:05.760
<v Speaker 2>Okay, how do they go big?

0:15:06.480 --> 0:15:09.280
<v Speaker 7>You got to spend more money. AI is really one

0:15:09.320 --> 0:15:12.120
<v Speaker 7>of the only things that you can buy your way

0:15:12.160 --> 0:15:15.080
<v Speaker 7>into when it comes to this technology, right, you can

0:15:15.120 --> 0:15:17.040
<v Speaker 7>buy your way into it. You just need to throw

0:15:17.120 --> 0:15:20.080
<v Speaker 7>billions and billions at AI training. They need to make

0:15:20.080 --> 0:15:22.800
<v Speaker 7>probably some tweaks to their privacy policy. Right, they have

0:15:22.960 --> 0:15:25.160
<v Speaker 7>so many devices, They have more devices than anyone else

0:15:25.200 --> 0:15:27.800
<v Speaker 7>as a single brand of a hardware company, of any

0:15:27.840 --> 0:15:29.800
<v Speaker 7>company in the entire world in the history of the world.

0:15:30.000 --> 0:15:32.520
<v Speaker 7>But they don't leverage that because of their privacy stand

0:15:32.600 --> 0:15:34.320
<v Speaker 7>So maybe make some tweaks there to be able to

0:15:34.320 --> 0:15:37.160
<v Speaker 7>collect some more data. Maybe figure out a way to

0:15:37.160 --> 0:15:39.000
<v Speaker 7>convince people to give up some of their data for

0:15:39.040 --> 0:15:42.040
<v Speaker 7>this purpose, and I think that could go a long

0:15:42.080 --> 0:15:44.560
<v Speaker 7>way for them. So spending money collecting more data.

0:15:45.680 --> 0:15:48.040
<v Speaker 3>Is there somebody out there that they could buy, should buy,

0:15:48.120 --> 0:15:50.480
<v Speaker 3>that would leapfrog them? Do you think I hate doing

0:15:50.480 --> 0:15:50.760
<v Speaker 3>that though?

0:15:50.840 --> 0:15:51.120
<v Speaker 4>Right?

0:15:51.280 --> 0:15:54.840
<v Speaker 7>Well, the problem is this philosophical disgust. I would say

0:15:54.920 --> 0:15:58.600
<v Speaker 7>to making these large acquisitions. If I told you, I mean,

0:15:58.640 --> 0:16:00.640
<v Speaker 7>you know this is true, so maybe you're not good. Example,

0:16:00.640 --> 0:16:03.200
<v Speaker 7>But if I said to someone who didn't know the

0:16:03.200 --> 0:16:05.000
<v Speaker 7>company as well as you too, would you believe me

0:16:05.040 --> 0:16:07.240
<v Speaker 7>if I told you that Apple's biggest acquisition in the

0:16:07.280 --> 0:16:09.400
<v Speaker 7>history of the company was three billion dollars.

0:16:09.360 --> 0:16:10.560
<v Speaker 2>I actually believe that much.

0:16:10.640 --> 0:16:12.480
<v Speaker 7>Well, you believe that because you know that, But I

0:16:12.520 --> 0:16:14.440
<v Speaker 7>think if you ask people who didn't know that, that

0:16:14.480 --> 0:16:18.280
<v Speaker 7>would be completely unbelievable. Yeah, they make these small acquisitions,

0:16:18.520 --> 0:16:20.720
<v Speaker 7>and in addition to not wanting to spend big bucks

0:16:21.120 --> 0:16:25.560
<v Speaker 7>on a company, they're really poor at integrating companies. The

0:16:25.600 --> 0:16:30.240
<v Speaker 7>Beats integration, integrating all those engineers into the company, Disaster Intel,

0:16:30.280 --> 0:16:32.280
<v Speaker 7>they bought the motim unit for a billion dollars back

0:16:32.280 --> 0:16:36.080
<v Speaker 7>in nineteen Disaster, what is it going to feel as

0:16:36.120 --> 0:16:39.600
<v Speaker 7>an AI person at Apple today. If you're bringing if

0:16:39.640 --> 0:16:42.680
<v Speaker 7>the company buys your replacement to bring them in, it's

0:16:42.680 --> 0:16:44.840
<v Speaker 7>not going to be fun. There's enough turf wars as

0:16:44.840 --> 0:16:45.600
<v Speaker 7>it is at Apple.

0:16:46.080 --> 0:16:49.480
<v Speaker 2>So they do then have to do it internally. They've

0:16:49.520 --> 0:16:50.960
<v Speaker 2>still not done well at that.

0:16:51.400 --> 0:16:53.320
<v Speaker 7>They've got to do both. They got to make the acquisition.

0:16:53.320 --> 0:16:54.880
<v Speaker 7>They got to just deal with that. They got to

0:16:54.880 --> 0:16:57.320
<v Speaker 7>make their biggest acquisition ever, and it has to be

0:16:57.360 --> 0:17:01.400
<v Speaker 7>for AI, maybe multiple acquisitions. They have to turn things

0:17:01.440 --> 0:17:03.920
<v Speaker 7>up a notch internally as well. They're going to be

0:17:04.000 --> 0:17:07.399
<v Speaker 7>making changes. I mean, there's so many philosophical disagreements. The

0:17:07.400 --> 0:17:10.600
<v Speaker 7>biggest is about chatbots. When it comes to AI. They

0:17:10.680 --> 0:17:13.520
<v Speaker 7>are allergic to AI chatbots. They don't like the technology.

0:17:13.520 --> 0:17:16.880
<v Speaker 7>They don't think open AI has staying power. So you're yes,

0:17:17.320 --> 0:17:17.840
<v Speaker 7>I know, I.

0:17:17.800 --> 0:17:18.840
<v Speaker 2>Made a face when he said that.

0:17:19.400 --> 0:17:22.280
<v Speaker 7>Okay, you're going to see deeper integrations with other companies.

0:17:22.280 --> 0:17:24.640
<v Speaker 7>They're going to see Google Gemini integration. I think next

0:17:24.680 --> 0:17:29.200
<v Speaker 7>year you'll see Perplexity integration, maybe some Anthropic integration, maybe

0:17:29.200 --> 0:17:32.680
<v Speaker 7>some Microsoft integration. But they're going to keep pushing and

0:17:32.760 --> 0:17:34.399
<v Speaker 7>this is going to be a multi year thing. The

0:17:34.400 --> 0:17:36.920
<v Speaker 7>biggest problems they were caught off. Guvernment's happened, so they

0:17:37.000 --> 0:17:40.399
<v Speaker 7>had no head start on this. They're coming way from behind.

0:17:41.000 --> 0:17:45.000
<v Speaker 3>Oh yeah, it's amazing. It's amazing. Now some people would say, hey,

0:17:45.000 --> 0:17:48.359
<v Speaker 3>they're rarely first phones. Oh boy, when they decide to

0:17:48.400 --> 0:17:49.760
<v Speaker 3>get into phones, they do it.

0:17:49.920 --> 0:17:52.720
<v Speaker 7>That's the big difference. They were not first, and they're

0:17:52.720 --> 0:17:53.119
<v Speaker 7>the worst.

0:17:53.400 --> 0:17:55.280
<v Speaker 3>Okay companies.

0:17:55.359 --> 0:17:57.600
<v Speaker 2>Yeah, yea is the reason why I need to read

0:17:57.600 --> 0:17:59.720
<v Speaker 2>the six thousand page word article.

0:17:59.760 --> 0:18:00.520
<v Speaker 3>Thank you, Thank you so much.

0:18:00.560 --> 0:18:03.280
<v Speaker 2>Mark, really a pleasure. Mark German, Bloomberg News Managing editor

0:18:03.320 --> 0:18:04.480
<v Speaker 2>for Global Consumer Tech.

0:18:04.760 --> 0:18:09.480
<v Speaker 1>This is the Bloomberg Intelligence Podcast, available on Apple, Spotify,

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