1 00:00:00,040 --> 00:00:06,720 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,640 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,480 --> 00:00:18,680 Speaker 2: with Lisa Bromwitz and Amrie Hordert. Join us each day 4 00:00:18,720 --> 00:00:22,280 Speaker 2: for insight from the best in markets, economics, and geopolitics 5 00:00:22,400 --> 00:00:24,880 Speaker 2: from our global headquarters in New York City. We are 6 00:00:24,920 --> 00:00:27,680 Speaker 2: live on Bloomberg Television weekday mornings from six to nine 7 00:00:27,720 --> 00:00:31,280 Speaker 2: am Eastern. Subscribe to the podcast on Apple, Spotify or 8 00:00:31,320 --> 00:00:33,919 Speaker 2: anywhere else you listen, and as always on the Bloomberg 9 00:00:34,000 --> 00:00:36,879 Speaker 2: Terminal and the Bloomberg Business app. We begin this out 10 00:00:36,880 --> 00:00:38,960 Speaker 2: with stocks a little change following two weeks of games, 11 00:00:38,960 --> 00:00:42,000 Speaker 2: heading into this week's inflation data. Lori Cavasina of RBC 12 00:00:42,120 --> 00:00:45,120 Speaker 2: writing the sentiment story has been one of mixed emotions, 13 00:00:45,120 --> 00:00:48,080 Speaker 2: with takeaways varying depending on which data set one is 14 00:00:48,120 --> 00:00:50,480 Speaker 2: looking at. Lori joins us now for more. Louri, good morning, 15 00:00:50,640 --> 00:00:53,120 Speaker 2: to see you, Good morning. Does the bullcase stand up 16 00:00:53,200 --> 00:00:54,520 Speaker 2: to the rate high debate at the moment? 17 00:00:55,120 --> 00:00:57,600 Speaker 3: I think so, as long as you have a moderate 18 00:00:57,640 --> 00:00:59,680 Speaker 3: amount of rate hikes. We talked about this in our 19 00:00:59,680 --> 00:01:01,680 Speaker 3: Weekly few weeks ago, that whether you're looking at it 20 00:01:01,760 --> 00:01:05,039 Speaker 3: from the perspective of the FED taking rate, taking their 21 00:01:05,040 --> 00:01:07,640 Speaker 3: interest right up, or ten year bond yields moving up. 22 00:01:07,880 --> 00:01:09,200 Speaker 3: That when we go back and we look at the 23 00:01:09,280 --> 00:01:12,040 Speaker 3: history both since twenty twenty two on the bond yield side, 24 00:01:12,160 --> 00:01:14,000 Speaker 3: or if we look back to nineteen ninety and look 25 00:01:14,000 --> 00:01:16,080 Speaker 3: at sort of FED moves over the context of twelve 26 00:01:16,120 --> 00:01:19,520 Speaker 3: month moves in the market, everything in moderation seems like 27 00:01:19,640 --> 00:01:22,200 Speaker 3: something the equity market can handle. If you go back 28 00:01:22,240 --> 00:01:24,600 Speaker 3: to twenty twenty one, twenty twenty two, we priced an 29 00:01:24,760 --> 00:01:26,880 Speaker 3: enormous amount of hikes, we had a massive move up 30 00:01:26,880 --> 00:01:27,920 Speaker 3: in ten year bond yields. 31 00:01:28,000 --> 00:01:29,240 Speaker 1: It was a real regime change. 32 00:01:29,240 --> 00:01:32,319 Speaker 3: We've been sort of stuck in this bond yield environment 33 00:01:32,319 --> 00:01:34,200 Speaker 3: on the ten year yield side between sort of three 34 00:01:34,240 --> 00:01:36,480 Speaker 3: point three to five percent. If we stay contained in 35 00:01:36,560 --> 00:01:38,280 Speaker 3: that range, I think that we could have some short 36 00:01:38,360 --> 00:01:41,679 Speaker 3: term indigestion in markets, but still have a fairly good 37 00:01:41,720 --> 00:01:44,399 Speaker 3: outlook over the next twelve months. Similarly, if you go 38 00:01:44,480 --> 00:01:47,199 Speaker 3: back and you look at how stocks perform in different 39 00:01:47,280 --> 00:01:50,040 Speaker 3: hiking and cutting cycles, your best environment is when the 40 00:01:50,040 --> 00:01:52,320 Speaker 3: FED does absolutely nothing. So we can keep our fingers 41 00:01:52,360 --> 00:01:54,360 Speaker 3: crossed for that scenario. But you tend to get like 42 00:01:54,400 --> 00:01:57,440 Speaker 3: thirteen to fourteen percent returns on both the hiking side 43 00:01:57,480 --> 00:02:00,160 Speaker 3: and the cutting side when you're seeing moves and the 44 00:02:00,240 --> 00:02:02,160 Speaker 3: zero to one hundred basis point range. As long as 45 00:02:02,160 --> 00:02:05,760 Speaker 3: we stay within say two ish hikes over the next 46 00:02:05,760 --> 00:02:08,000 Speaker 3: twelve months of twenty five basis points, I think stocks 47 00:02:08,040 --> 00:02:09,079 Speaker 3: will ultimately be okay. 48 00:02:09,360 --> 00:02:10,760 Speaker 1: They may not like it in the short term. 49 00:02:10,800 --> 00:02:13,480 Speaker 2: Lisa mentioned Deutsche Bank looking for a call right hikes 50 00:02:13,520 --> 00:02:15,480 Speaker 2: lantor this year Bank of America doing the same. That 51 00:02:15,560 --> 00:02:18,440 Speaker 2: note just drop earlier on this morning, this call, this 52 00:02:18,480 --> 00:02:21,640 Speaker 2: conversation accelerated by this move and energy, but energy drop 53 00:02:21,680 --> 00:02:23,760 Speaker 2: back to the seventies. When you speak to the team 54 00:02:23,880 --> 00:02:26,919 Speaker 2: at RBC, how dependent is the outlook for interest rates 55 00:02:27,080 --> 00:02:28,600 Speaker 2: on what's happening in the commodity mail kit? 56 00:02:28,680 --> 00:02:31,480 Speaker 3: So Blake went on our US rates strategy team handles 57 00:02:31,520 --> 00:02:33,520 Speaker 3: the FED call for us. He's not currently looking for 58 00:02:33,560 --> 00:02:35,680 Speaker 3: any FED moves, though he has also written that his 59 00:02:35,760 --> 00:02:38,480 Speaker 3: conviction and that has come down, and our econ team 60 00:02:38,480 --> 00:02:40,200 Speaker 3: has talked about how the next move may be a 61 00:02:40,280 --> 00:02:42,000 Speaker 3: hike rather than a cut. I think there's a lot 62 00:02:42,040 --> 00:02:44,640 Speaker 3: of fluidity in the situation right now. One of the 63 00:02:44,639 --> 00:02:47,320 Speaker 3: things that came out in my meetings with investors last week. 64 00:02:47,480 --> 00:02:49,919 Speaker 3: Is just a lot of uncertainty is in the air, 65 00:02:49,960 --> 00:02:52,280 Speaker 3: whether you're looking at the path of the FED going forward, 66 00:02:52,360 --> 00:02:55,080 Speaker 3: how the FED is going to operate going forward, and frankly, 67 00:02:55,120 --> 00:02:57,040 Speaker 3: also this situation in the Middle East in terms of 68 00:02:57,040 --> 00:02:59,520 Speaker 3: what that means for oil prices, what should your assumption 69 00:02:59,680 --> 00:03:01,800 Speaker 3: be over the next twelve months. I don't think a 70 00:03:01,800 --> 00:03:04,239 Speaker 3: lot of people know that, but that does have reverberations 71 00:03:04,240 --> 00:03:07,480 Speaker 3: and headline inflation. One thing that Blake has really emphasized 72 00:03:07,480 --> 00:03:10,360 Speaker 3: to us internally is that he hasn't really viewed the 73 00:03:10,400 --> 00:03:13,640 Speaker 3: FED policy rate as the appropriate path or the appropriate 74 00:03:13,680 --> 00:03:17,320 Speaker 3: tool really to combat any get inflation emanating from oil prices. 75 00:03:17,360 --> 00:03:19,040 Speaker 3: But we do know, of course that we have inflation 76 00:03:19,160 --> 00:03:20,960 Speaker 3: emanating from other sources as well. 77 00:03:21,160 --> 00:03:24,160 Speaker 4: What's more important for the equity market Core PCE coming 78 00:03:24,160 --> 00:03:25,760 Speaker 4: out on Thursday, or Micron. 79 00:03:25,440 --> 00:03:26,760 Speaker 1: Earning is coming out on Wednesday. 80 00:03:26,880 --> 00:03:29,200 Speaker 3: I think that this is a situation in the equity 81 00:03:29,240 --> 00:03:32,760 Speaker 3: market where we have very very strong earnings tailwinds that 82 00:03:32,800 --> 00:03:35,880 Speaker 3: are running up against very stiff headwinds on the PE side, 83 00:03:36,040 --> 00:03:38,120 Speaker 3: and you tend to get compression in the PE right 84 00:03:38,160 --> 00:03:40,960 Speaker 3: when you have higher inflation, higher interest rates but so 85 00:03:41,080 --> 00:03:43,560 Speaker 3: far in our modeling, it looks like the earning story 86 00:03:43,640 --> 00:03:47,000 Speaker 3: is strong enough to offset those headwinds from compression. So 87 00:03:47,080 --> 00:03:50,000 Speaker 3: I would say, right now, earnings matter more at this point. 88 00:03:50,040 --> 00:03:52,520 Speaker 4: A lot of people keep talking about that, and yet 89 00:03:52,760 --> 00:03:54,240 Speaker 4: you take a look at some of the earnings, they've 90 00:03:54,240 --> 00:03:56,760 Speaker 4: been driven by names that have pricing power. 91 00:03:57,280 --> 00:03:59,000 Speaker 5: There is a bit of pushback on. 92 00:03:58,960 --> 00:04:02,160 Speaker 4: The pricing side in a significant way, from hyperscalers and 93 00:04:02,200 --> 00:04:05,040 Speaker 4: from other companies that are realizing that there are some 94 00:04:05,200 --> 00:04:08,120 Speaker 4: limits we might be bumping up against. At what point 95 00:04:08,240 --> 00:04:09,920 Speaker 4: is that a tension that needs to get resolved that 96 00:04:09,960 --> 00:04:11,560 Speaker 4: could potentially be a risk factor. 97 00:04:11,840 --> 00:04:13,880 Speaker 3: So look, I think it is something that investors are 98 00:04:13,880 --> 00:04:16,479 Speaker 3: already thinking about and digesting, which takes some of the 99 00:04:16,640 --> 00:04:19,040 Speaker 3: edge off. Frankly, I think we just have to go 100 00:04:19,120 --> 00:04:22,120 Speaker 3: through reporting season right and hear what the latest commentary 101 00:04:22,240 --> 00:04:23,080 Speaker 3: is from companies. 102 00:04:23,720 --> 00:04:25,120 Speaker 1: One of the things we've talked. 103 00:04:24,880 --> 00:04:27,360 Speaker 3: About is the capex cycle, and we're doing a lot 104 00:04:27,400 --> 00:04:28,640 Speaker 3: of questions on this last week. 105 00:04:28,680 --> 00:04:31,040 Speaker 1: A lot of that is hyperscaler driven, is AI driven. 106 00:04:31,800 --> 00:04:34,080 Speaker 3: If you look at rates of change on S and 107 00:04:34,120 --> 00:04:37,000 Speaker 3: P five hundred capex, you're kind of hovering around peaklike 108 00:04:37,080 --> 00:04:39,360 Speaker 3: type levels. But if you x out the top ten names, 109 00:04:39,400 --> 00:04:40,920 Speaker 3: we're in the very early stages of. 110 00:04:40,839 --> 00:04:42,240 Speaker 1: A capex recovery cycle. 111 00:04:42,560 --> 00:04:44,760 Speaker 3: So can you elongate the cycle as you get more 112 00:04:44,800 --> 00:04:48,200 Speaker 3: companies participating in the capex boom. That's something we have 113 00:04:48,240 --> 00:04:50,000 Speaker 3: to think about given the tax bill that we saw 114 00:04:50,080 --> 00:04:52,279 Speaker 3: last year, so we're still sorting through a lot of 115 00:04:52,279 --> 00:04:52,960 Speaker 3: these issues. 116 00:04:53,080 --> 00:04:55,160 Speaker 6: Our come more companies are going to be participating when 117 00:04:55,160 --> 00:04:57,640 Speaker 6: it comes to doing better in the stock market, given 118 00:04:57,680 --> 00:05:01,039 Speaker 6: they could put the Iron War behind them. Prices are 119 00:05:01,240 --> 00:05:02,200 Speaker 6: moving much lower. 120 00:05:02,320 --> 00:05:04,360 Speaker 3: So I'll tell you Marie, last week on the Business 121 00:05:04,440 --> 00:05:07,200 Speaker 3: Roundtable put out the CEO confidence survey that they run, 122 00:05:07,240 --> 00:05:09,599 Speaker 3: and we actually saw that tick up, and it was 123 00:05:09,640 --> 00:05:13,720 Speaker 3: on the strength of capex expectations, sales expectations, hiring expectations 124 00:05:13,760 --> 00:05:15,960 Speaker 3: were pretty neutral. But there's just really been a clear 125 00:05:16,080 --> 00:05:18,719 Speaker 3: contrast between say, investor sentiment, which has been kind of 126 00:05:18,720 --> 00:05:21,560 Speaker 3: weak or meh, it's gotten a little bit better recently, 127 00:05:21,640 --> 00:05:24,360 Speaker 3: but hasn't been that fantastic. And then if you look 128 00:05:24,360 --> 00:05:26,640 Speaker 3: at the corporate side, I wouldn't say they're off to 129 00:05:26,680 --> 00:05:29,120 Speaker 3: the races, but are still generally optimistic. So I think 130 00:05:29,160 --> 00:05:31,200 Speaker 3: we have to take some comfort from that, especially as 131 00:05:31,200 --> 00:05:32,719 Speaker 3: we head into this next reporting season. 132 00:05:32,720 --> 00:05:35,680 Speaker 2: Can I answer the question, Can I just say Micron? Yeah, right, Micron, 133 00:05:35,760 --> 00:05:38,839 Speaker 2: probably because I think most economists understand where PCEA will 134 00:05:38,839 --> 00:05:42,200 Speaker 2: probably come in after seeing CPI and PPM the last week. 135 00:05:42,279 --> 00:05:44,480 Speaker 4: Yeah, and how high expectations are from Micron given the 136 00:05:44,520 --> 00:05:46,640 Speaker 4: fact that it's rallied like some eight hundred percent scot 137 00:05:46,720 --> 00:05:47,080 Speaker 4: last year. 138 00:05:47,080 --> 00:05:47,839 Speaker 5: I mean, it's insane. 139 00:05:47,920 --> 00:05:50,440 Speaker 4: You started wondering can they keep having this transfer of 140 00:05:50,440 --> 00:05:52,920 Speaker 4: wealth coming from hyperscalers to them. There was a chart 141 00:05:52,920 --> 00:05:55,719 Speaker 4: showed the divergency performance between the hyperscalers and the. 142 00:05:55,800 --> 00:05:57,400 Speaker 5: Chip makers, and it's bonkers. 143 00:05:57,400 --> 00:05:59,479 Speaker 4: I mean, it just shows what's going on right now, 144 00:05:59,520 --> 00:06:00,400 Speaker 4: and it. 145 00:06:00,040 --> 00:06:02,839 Speaker 5: Feels like maybe not totally sustainable in perpetuity. 146 00:06:02,920 --> 00:06:05,640 Speaker 2: Sometimes you just can't please some people and they'll say 147 00:06:05,680 --> 00:06:07,479 Speaker 2: things like this is as good as it gets, even 148 00:06:07,800 --> 00:06:10,039 Speaker 2: it is so good, have we seen peak? 149 00:06:10,200 --> 00:06:11,119 Speaker 5: As good as it gets? 150 00:06:11,240 --> 00:06:13,120 Speaker 3: So if you look at the rate of upward revisions 151 00:06:13,120 --> 00:06:15,280 Speaker 3: for either the semiconductor companies or the S and P 152 00:06:15,400 --> 00:06:17,800 Speaker 3: five hundred in general, it does look like we've sort 153 00:06:17,800 --> 00:06:21,320 Speaker 3: of hit those peak levels of earnings enthusiasm. If we 154 00:06:21,400 --> 00:06:23,640 Speaker 3: looked at the SMP five hundred, the rate of upward revisions. 155 00:06:23,680 --> 00:06:25,719 Speaker 3: I think it got to around eighty nine ninety percent 156 00:06:25,839 --> 00:06:28,120 Speaker 3: recently at the high. The high tends to be kind 157 00:06:28,120 --> 00:06:29,960 Speaker 3: of in that ninety to ninety four percent range, and 158 00:06:29,960 --> 00:06:32,360 Speaker 3: in our latest update at tick down to eighty six percent. 159 00:06:32,400 --> 00:06:33,839 Speaker 1: So these are all very good numbers. 160 00:06:33,920 --> 00:06:38,479 Speaker 3: Right. You're still generally seeing upgrades, just slightly slightly slower pace. 161 00:06:38,800 --> 00:06:41,080 Speaker 3: If you look at the semiconductors, we're still sort of 162 00:06:41,120 --> 00:06:44,040 Speaker 3: sitting at peak levels of upward revisions. And so we've 163 00:06:44,040 --> 00:06:45,720 Speaker 3: been talking a lot to clients about this because I've 164 00:06:45,720 --> 00:06:46,960 Speaker 3: talked to a lot of people who have been in 165 00:06:46,960 --> 00:06:48,800 Speaker 3: the semi's names, who have been in the AI theme. 166 00:06:49,560 --> 00:06:51,560 Speaker 3: You know, a fair number of people doing well with that, 167 00:06:51,600 --> 00:06:53,440 Speaker 3: but they're saying, maybe I should be looking around at 168 00:06:53,440 --> 00:06:56,280 Speaker 3: other opportunities. So we look at that chart and I say, 169 00:06:56,320 --> 00:06:59,360 Speaker 3: you know, this is a risk factor, but I can't 170 00:06:59,400 --> 00:07:01,280 Speaker 3: just tell you to sit here and hold your nose 171 00:07:01,320 --> 00:07:03,400 Speaker 3: and sell because if you go back and look in 172 00:07:03,440 --> 00:07:05,560 Speaker 3: the past, sometimes you sit at these peak levels of 173 00:07:05,640 --> 00:07:07,480 Speaker 3: upward revision for multiple years. 174 00:07:07,800 --> 00:07:09,200 Speaker 1: So we have to watch how. 175 00:07:09,080 --> 00:07:10,480 Speaker 3: They move in time. And I know that's not a 176 00:07:10,520 --> 00:07:12,960 Speaker 3: satisfactory answer. We're all supposed to have crystal balls in 177 00:07:13,000 --> 00:07:14,920 Speaker 3: this business and predict what's going to happen six months 178 00:07:14,960 --> 00:07:15,679 Speaker 3: down the road. 179 00:07:15,600 --> 00:07:17,960 Speaker 2: With certainty and conviction, righty, But I. 180 00:07:17,880 --> 00:07:20,040 Speaker 3: Do think in this plus yeah, but I do think 181 00:07:20,080 --> 00:07:23,120 Speaker 3: in this particular situation, we kind of have to take 182 00:07:23,120 --> 00:07:23,800 Speaker 3: it day by day. 183 00:07:24,200 --> 00:07:24,840 Speaker 7: Stay with us. 184 00:07:25,160 --> 00:07:37,640 Speaker 2: More Bloomberg surveillance coming up after this. The UK Prime 185 00:07:37,640 --> 00:07:41,240 Speaker 2: Minister Kase Tharmas stepping down after two years in the role. 186 00:07:41,520 --> 00:07:45,960 Speaker 8: The question my party is asking now is whether I 187 00:07:46,000 --> 00:07:50,840 Speaker 8: am best placed to lead us into the next general election. 188 00:07:51,120 --> 00:07:54,400 Speaker 8: That is why I will resign as leader of the 189 00:07:54,480 --> 00:07:55,240 Speaker 8: Labor Party. 190 00:07:55,520 --> 00:07:58,520 Speaker 2: Sama's exit opening the door for Britain's fifth prime minister 191 00:07:58,640 --> 00:08:01,880 Speaker 2: since twenty twenty two, the former Manchester mayor Andy Burnham, 192 00:08:01,920 --> 00:08:04,960 Speaker 2: putting himself forward with a backing of former Health Secretary 193 00:08:05,080 --> 00:08:07,920 Speaker 2: Where Streeting Jordan Rochester of MISSOUI right. In the following, 194 00:08:07,920 --> 00:08:11,120 Speaker 2: Burnham wins either way according to polling. His policy positions 195 00:08:11,120 --> 00:08:13,440 Speaker 2: are clearly to the left of Starmer, but lack detail 196 00:08:13,760 --> 00:08:16,480 Speaker 2: on how they would be achieved. Jord and Rochester joined 197 00:08:16,560 --> 00:08:18,920 Speaker 2: us now for more. Welcome to the program sir, As 198 00:08:18,960 --> 00:08:22,760 Speaker 2: you know, the nervousness in UK markets was less about 199 00:08:22,880 --> 00:08:25,520 Speaker 2: secure Starmer leaving. It was always about the worries about 200 00:08:25,520 --> 00:08:27,840 Speaker 2: what would replace him, Jordan, what comes. 201 00:08:27,640 --> 00:08:30,880 Speaker 9: Next well, as you said John earlier in your previous section, 202 00:08:31,000 --> 00:08:33,840 Speaker 9: was about their chancellor choice too. I think Burnham's positions 203 00:08:33,920 --> 00:08:37,040 Speaker 9: the market knows they're quite expensive, some of them, especially 204 00:08:37,080 --> 00:08:39,560 Speaker 9: the full nationalization. But in terms of the next step, John, 205 00:08:39,960 --> 00:08:42,520 Speaker 9: it's about how soon does this contest take place. We're 206 00:08:42,559 --> 00:08:44,120 Speaker 9: kind of get in the details of that, and when 207 00:08:44,400 --> 00:08:46,480 Speaker 9: will it finish, and how quickly could a new PM 208 00:08:46,520 --> 00:08:49,160 Speaker 9: be in place, and if it is a coronation, essentially 209 00:08:49,200 --> 00:08:51,680 Speaker 9: it's going to be around three to four weeks, similar 210 00:08:51,760 --> 00:08:55,400 Speaker 9: timelines to when Theresa May took over from David Cameron. 211 00:08:55,679 --> 00:08:57,800 Speaker 9: If there is a longer drawn out contest, then you're 212 00:08:57,840 --> 00:09:00,800 Speaker 9: talking the sort of August period into September. And there's 213 00:09:00,800 --> 00:09:04,959 Speaker 9: some commentary commentary this morning suggesting that Andy Burnham hasn't 214 00:09:05,000 --> 00:09:06,839 Speaker 9: yet got all of his plans in place, so it 215 00:09:06,880 --> 00:09:09,839 Speaker 9: doesn't really want to be a prime minister within three weeks. 216 00:09:09,840 --> 00:09:13,520 Speaker 9: He'd rather be a little bit longer and perhaps even 217 00:09:13,720 --> 00:09:15,920 Speaker 9: in fruit to September. So those are the timelines, but 218 00:09:16,000 --> 00:09:18,320 Speaker 9: let's just imagine it's in three weeks. Then it's about 219 00:09:18,320 --> 00:09:20,840 Speaker 9: who the cabinet choices are and we get that within 220 00:09:20,880 --> 00:09:23,760 Speaker 9: a twenty four to forty our well wind of news 221 00:09:24,120 --> 00:09:27,840 Speaker 9: And as add Marieves suggested earlier, if Streeting has put 222 00:09:27,880 --> 00:09:30,600 Speaker 9: and he has he's put his name behind Andy Burnham, 223 00:09:30,880 --> 00:09:33,200 Speaker 9: does that make him more Likelyp's chancellor. 224 00:09:33,240 --> 00:09:34,800 Speaker 7: It could be a Vet Cooper as well. She about 225 00:09:34,920 --> 00:09:35,240 Speaker 7: my mood. 226 00:09:35,240 --> 00:09:37,079 Speaker 9: These are of the names that were being considered, as 227 00:09:37,080 --> 00:09:40,240 Speaker 9: well as the sort of the dark horse, Ed Milliband, 228 00:09:40,280 --> 00:09:43,200 Speaker 9: which is Edmndiband was once considered for prime minister. So 229 00:09:43,240 --> 00:09:45,840 Speaker 9: he's not the end of the world for UK rates markets, 230 00:09:45,880 --> 00:09:48,320 Speaker 9: but that's kind of how the commentary kind of frames it. 231 00:09:48,520 --> 00:09:50,040 Speaker 9: But he is definitely to the left of most of 232 00:09:50,080 --> 00:09:51,880 Speaker 9: those other candidates, so that is the one which leads 233 00:09:51,920 --> 00:09:54,640 Speaker 9: to and that sort of outcome a guilt sell. 234 00:09:54,520 --> 00:09:55,920 Speaker 5: Off Jordan, what's priced in? 235 00:09:56,000 --> 00:09:57,880 Speaker 4: Because ultimately it seems like there's not a lot of 236 00:09:57,920 --> 00:10:01,199 Speaker 4: action on the heels of some pretty signsificate headlines. 237 00:10:00,800 --> 00:10:04,480 Speaker 9: This morning well indeed, so essentially the price action took 238 00:10:04,520 --> 00:10:07,080 Speaker 9: place towards the end of last week. We had a 239 00:10:07,200 --> 00:10:09,439 Speaker 9: UK rate started to sell off as it started to 240 00:10:09,480 --> 00:10:12,200 Speaker 9: seem quite likely after the Make a Field result, which 241 00:10:12,240 --> 00:10:13,920 Speaker 9: was a very strong result for Andy Burnham, it was 242 00:10:13,960 --> 00:10:16,800 Speaker 9: supposed to be a tight contest between him and Reform 243 00:10:16,840 --> 00:10:19,680 Speaker 9: and it was actually pretty gangbusters over twenty percent lead. 244 00:10:20,000 --> 00:10:22,640 Speaker 9: That suggests that as a leader he could boost the 245 00:10:22,720 --> 00:10:25,120 Speaker 9: Labor Party's fortunes, because that's what politics is all about, 246 00:10:25,120 --> 00:10:28,400 Speaker 9: it about getting elected, and the party is going behind 247 00:10:28,400 --> 00:10:31,240 Speaker 9: that sort of Burnham momentum that if you look back 248 00:10:31,320 --> 00:10:33,200 Speaker 9: over the past few months, the writing has been on 249 00:10:33,240 --> 00:10:35,800 Speaker 9: the wall for Keir Starmer. In the public opinion polls, 250 00:10:36,000 --> 00:10:38,559 Speaker 9: he was deemed to be the most sort of unpopular 251 00:10:38,559 --> 00:10:41,920 Speaker 9: prime minister in UK modern history. So the writing down 252 00:10:42,000 --> 00:10:43,920 Speaker 9: the war should been a matter of time. And the 253 00:10:43,920 --> 00:10:46,040 Speaker 9: main reason why Guilt's move last week was because of 254 00:10:46,080 --> 00:10:48,560 Speaker 9: that lead that Andy Burnham had in the makefield. But 255 00:10:48,679 --> 00:10:52,040 Speaker 9: apart from that, the bigger picture is Okay, that's the politics, 256 00:10:52,080 --> 00:10:53,000 Speaker 9: but what about the data? 257 00:10:53,080 --> 00:10:54,040 Speaker 7: What about the Bank of England? 258 00:10:54,080 --> 00:10:56,959 Speaker 9: Where's oil price is going and helping rates a little bit? 259 00:10:57,000 --> 00:10:59,079 Speaker 7: This morning? Is oil coming off the. 260 00:10:59,040 --> 00:11:02,160 Speaker 9: Sort of recent level slightly thanks to progress being made 261 00:11:02,200 --> 00:11:03,160 Speaker 9: in US around. 262 00:11:02,960 --> 00:11:05,480 Speaker 4: Talks well Jordan To that point, how much is this 263 00:11:05,559 --> 00:11:09,880 Speaker 4: story a very specific story for a political sort in 264 00:11:09,920 --> 00:11:14,360 Speaker 4: the UK versus a broader macro story that suggests something 265 00:11:14,400 --> 00:11:16,679 Speaker 4: bigger about bond and FX markets. 266 00:11:17,400 --> 00:11:20,120 Speaker 9: Well, the specific part is for all these policy details 267 00:11:20,160 --> 00:11:22,800 Speaker 9: and how much guilts can sell off versus treasuries versus buns. 268 00:11:22,800 --> 00:11:24,240 Speaker 9: So I think going forward, if you want to take 269 00:11:24,240 --> 00:11:25,880 Speaker 9: a burriage fee on the UK, you need to do 270 00:11:25,880 --> 00:11:27,920 Speaker 9: it as a spread versus US or Europe, because the 271 00:11:27,960 --> 00:11:30,640 Speaker 9: broader picture is that yields have come down thanks to 272 00:11:30,679 --> 00:11:32,040 Speaker 9: the US around war ending. 273 00:11:32,360 --> 00:11:33,760 Speaker 7: But the broader picture the. 274 00:11:33,800 --> 00:11:36,200 Speaker 9: UK slots into actually something that's quite similar, which is 275 00:11:36,480 --> 00:11:39,559 Speaker 9: fiscal spending is now potentially being entertained again. Even though 276 00:11:39,559 --> 00:11:41,840 Speaker 9: the UK has been boxed in by these fiscal rules, 277 00:11:42,040 --> 00:11:44,920 Speaker 9: could they be redefined And the policy agenda that Andy 278 00:11:44,920 --> 00:11:48,040 Speaker 9: Burnham has probably needs the fiscal rules to be tweaked 279 00:11:48,080 --> 00:11:50,160 Speaker 9: in a way, at least on capital expenditure. 280 00:11:50,360 --> 00:11:52,000 Speaker 7: So that feeds in through to the bigger picture. 281 00:11:52,160 --> 00:11:54,560 Speaker 9: US is spending on the one big beautiful bill, Japan's 282 00:11:54,559 --> 00:11:58,319 Speaker 9: doing a consumption tax on food. Potentially you've got Germany's 283 00:11:58,320 --> 00:12:01,920 Speaker 9: defense spending from just the pre this year, an infrastructure 284 00:12:02,120 --> 00:12:06,280 Speaker 9: feeing through to the UK thinking about a public utility nationalization, 285 00:12:07,240 --> 00:12:11,120 Speaker 9: better spending on NHS, healthcare, etc. So more physical spending. 286 00:12:11,440 --> 00:12:13,160 Speaker 9: It definitely starts into a broader theme. 287 00:12:13,480 --> 00:12:15,719 Speaker 6: The head of one of Britain's biggest trade unions had 288 00:12:15,760 --> 00:12:18,400 Speaker 6: said that Ed Miliban would be a quote noose around 289 00:12:18,440 --> 00:12:21,600 Speaker 6: the neck of job creation if he became the chancellor. 290 00:12:21,840 --> 00:12:23,559 Speaker 5: Could we see some sort of market. 291 00:12:23,240 --> 00:12:26,079 Speaker 6: Reaction to the downside in the United Kingdom if we 292 00:12:26,080 --> 00:12:28,280 Speaker 6: were to see Miliban become chancellor. 293 00:12:29,240 --> 00:12:32,840 Speaker 9: It's definitely the scenario that most analysts would say that 294 00:12:32,920 --> 00:12:34,840 Speaker 9: leads to a guilt sell off, and it's because of 295 00:12:35,800 --> 00:12:39,600 Speaker 9: a position on for more fiscal spending. But he has 296 00:12:39,640 --> 00:12:42,120 Speaker 9: also outlined that he would respect the fiscal rules. So 297 00:12:42,160 --> 00:12:45,720 Speaker 9: I think the sort of dramatic Liz Trust moves that 298 00:12:45,760 --> 00:12:47,760 Speaker 9: you've got in twenty twenty two you're not really going 299 00:12:47,840 --> 00:12:50,400 Speaker 9: to get as long as all the candidates on potential 300 00:12:50,760 --> 00:12:53,600 Speaker 9: candidates for a chancellor say we'll respect the fiscal rules, 301 00:12:53,800 --> 00:12:56,320 Speaker 9: so that kind of boxes them in. If they don't 302 00:12:56,440 --> 00:12:58,760 Speaker 9: say that, then you do get the bigger moves. And 303 00:12:58,800 --> 00:13:01,720 Speaker 9: I don't believe edmundband had so I think it's the 304 00:13:01,760 --> 00:13:04,920 Speaker 9: scenarios leads to weaker performance of UK gilts. I'm not 305 00:13:04,960 --> 00:13:07,680 Speaker 9: talking about twenty twenty two sell off, but the other 306 00:13:07,720 --> 00:13:09,679 Speaker 9: points I'm guessing from the Union leader. 307 00:13:09,760 --> 00:13:11,280 Speaker 7: I have to look at the quote exactly. 308 00:13:11,440 --> 00:13:13,800 Speaker 9: It's because of the views of north sea drilling and 309 00:13:13,840 --> 00:13:15,240 Speaker 9: this is why admit a band maybe is a little 310 00:13:15,240 --> 00:13:18,960 Speaker 9: bit less likely because the reindustrialization plans that Andy Burnham 311 00:13:19,000 --> 00:13:20,920 Speaker 9: has for the north of England kind of don't tie 312 00:13:20,920 --> 00:13:24,400 Speaker 9: the net zero agenda, and of course the north sea drilling. 313 00:13:24,480 --> 00:13:25,160 Speaker 7: Stay with us. 314 00:13:25,440 --> 00:13:38,160 Speaker 2: More Bloomberg surveillance coming up after this. Negotiators for te 315 00:13:38,200 --> 00:13:41,160 Speaker 2: Run and Washington continue building the roadmap for reaching a 316 00:13:41,200 --> 00:13:44,600 Speaker 2: final deal. The president facing some pushback from his own party. 317 00:13:45,040 --> 00:13:49,640 Speaker 10: History demonstrates that giving billions of dollars to theocratic lunatics 318 00:13:49,640 --> 00:13:52,520 Speaker 10: who want to murder us is an exceptionally bad idea, 319 00:13:52,880 --> 00:13:57,560 Speaker 10: and I think unfortunately the President is receiving some really 320 00:13:57,559 --> 00:13:58,680 Speaker 10: bad advice on this deal. 321 00:13:58,800 --> 00:14:01,360 Speaker 2: The Republican Senator Take comic joins us now for most 322 00:14:01,360 --> 00:14:02,719 Speaker 2: and it's a good morning going to see us, say 323 00:14:03,200 --> 00:14:06,040 Speaker 2: with sending the negoshiandam face. So it's difficult to judge 324 00:14:06,040 --> 00:14:08,520 Speaker 2: a deal that we haven't gone yet. What are your thoughts, 325 00:14:08,559 --> 00:14:10,360 Speaker 2: your assessment of the process and how does this coming 326 00:14:10,400 --> 00:14:11,360 Speaker 2: Togainda Well, let. 327 00:14:11,240 --> 00:14:12,480 Speaker 11: Me let me start by just a word on al 328 00:14:12,559 --> 00:14:15,319 Speaker 11: Greenspan who I knew I know was wife Andrey Mitchell. 329 00:14:15,559 --> 00:14:18,480 Speaker 11: So I really today we celebrate a great a great life. 330 00:14:18,679 --> 00:14:22,680 Speaker 11: And I introduced Kevin Warsh at his hearing, and Kevin 331 00:14:22,720 --> 00:14:25,000 Speaker 11: is a big admirer of Allen's as well, and he 332 00:14:25,080 --> 00:14:27,520 Speaker 11: does it'll be a different challenge, but we have the 333 00:14:27,600 --> 00:14:30,400 Speaker 11: right man for the job. He's he's he's going to 334 00:14:30,440 --> 00:14:32,120 Speaker 11: help lead the FED. I think in a time of 335 00:14:32,520 --> 00:14:36,320 Speaker 11: great change and uncertainty with regard to the release, I 336 00:14:36,360 --> 00:14:39,280 Speaker 11: think you have to start with the beginning of this 337 00:14:39,440 --> 00:14:43,080 Speaker 11: is that the President Trump took a series of actions 338 00:14:43,120 --> 00:14:45,520 Speaker 11: which puts US in a position for a set of negotiations, 339 00:14:45,520 --> 00:14:50,800 Speaker 11: so enormous progress, taking the nuclear program way back under, 340 00:14:51,520 --> 00:14:56,280 Speaker 11: reducing their missile capability their launchers, so AARAN is in 341 00:14:56,440 --> 00:15:01,840 Speaker 11: economic difficult straits and militarily has been and dramatically affected. 342 00:15:02,680 --> 00:15:06,560 Speaker 11: Now as we think about this, MoU there's three things 343 00:15:06,600 --> 00:15:09,400 Speaker 11: that have to be achieved through this sixty day negotiation, 344 00:15:10,280 --> 00:15:12,760 Speaker 11: which I think a critical on the President has more 345 00:15:12,840 --> 00:15:14,280 Speaker 11: or less said this. Number one, the strait has to 346 00:15:14,280 --> 00:15:17,600 Speaker 11: be open with an unhindered by Iran, there can be 347 00:15:17,640 --> 00:15:20,720 Speaker 11: no control. Second, they have to give up their enrich 348 00:15:20,800 --> 00:15:23,520 Speaker 11: uranium and there has to be a path to no 349 00:15:23,640 --> 00:15:26,120 Speaker 11: nuclear program. We may have a step forward on this 350 00:15:26,160 --> 00:15:28,040 Speaker 11: with the new core inspectors. And the third thing is 351 00:15:28,080 --> 00:15:30,520 Speaker 11: needs to be paid for performance. In other words, each 352 00:15:30,560 --> 00:15:33,240 Speaker 11: step along the way in terms of sanctioned relief has 353 00:15:33,280 --> 00:15:37,200 Speaker 11: to be only coming when there's actual movement on the 354 00:15:37,200 --> 00:15:39,040 Speaker 11: part of the Iranians. I think it's too early to 355 00:15:39,080 --> 00:15:42,440 Speaker 11: tell whether that's happening or not, and we'll see as 356 00:15:42,480 --> 00:15:45,320 Speaker 11: these negotiations proceed. But the President's goals were clear from 357 00:15:45,320 --> 00:15:46,840 Speaker 11: the beginning, and I think that's what we have to 358 00:15:46,840 --> 00:15:47,360 Speaker 11: stay true to. 359 00:15:47,600 --> 00:15:49,880 Speaker 6: But there are two of President's goals that are not 360 00:15:50,000 --> 00:15:53,040 Speaker 6: being addressed in this MoU and as the blistic missile program, 361 00:15:53,120 --> 00:15:55,600 Speaker 6: and that's the money to running proxies. Do you expect 362 00:15:55,600 --> 00:15:59,560 Speaker 6: the president to somewhere address these red lines that he 363 00:15:59,640 --> 00:16:02,480 Speaker 6: has had for years since going back to his first term. 364 00:16:02,760 --> 00:16:05,160 Speaker 11: Well, the first one we've made a lot of progress on. 365 00:16:05,320 --> 00:16:09,520 Speaker 11: So I mean the missile attacks that we've done on 366 00:16:09,680 --> 00:16:13,400 Speaker 11: and the air attacks we've done on their missile program, 367 00:16:13,640 --> 00:16:16,680 Speaker 11: on their drones, on their manufacturing capacity, on their launchers 368 00:16:16,920 --> 00:16:19,720 Speaker 11: have been extraordinarily successful. So their capability is a fraction 369 00:16:19,760 --> 00:16:22,560 Speaker 11: of what it was. How far along we are I 370 00:16:22,560 --> 00:16:26,080 Speaker 11: think remains to be seen, but there's been big progress. 371 00:16:26,120 --> 00:16:33,280 Speaker 11: This second issue is whether they're going to actually stop 372 00:16:33,320 --> 00:16:36,080 Speaker 11: the funding for Hesbela and others. We've also made huge 373 00:16:36,120 --> 00:16:40,800 Speaker 11: progress in taking down Hesbela and Hamas. If we move 374 00:16:40,840 --> 00:16:43,640 Speaker 11: forward on this path, we'll see whether there can be 375 00:16:43,840 --> 00:16:47,800 Speaker 11: a future commitment on financing of the terrorist groups. Right now, 376 00:16:47,840 --> 00:16:49,920 Speaker 11: I think the focus on the nuclear program. 377 00:16:49,960 --> 00:16:50,680 Speaker 5: What role do you. 378 00:16:50,600 --> 00:16:52,640 Speaker 6: See Congress playing in all of this, especially when it 379 00:16:52,680 --> 00:16:55,840 Speaker 6: comes to the sanctions relief that the MoU addresses for the. 380 00:16:55,800 --> 00:16:56,920 Speaker 5: Regime, Well, it depends. 381 00:16:57,080 --> 00:16:59,520 Speaker 11: It depends what the agreement turns out to be, but 382 00:16:59,720 --> 00:17:02,080 Speaker 11: I expect Congress will have a role, and for this 383 00:17:02,160 --> 00:17:05,879 Speaker 11: to be lasting and meaningful, Congresses need to be involved 384 00:17:06,080 --> 00:17:08,960 Speaker 11: and hopefully have something that we can approve leading into 385 00:17:09,000 --> 00:17:10,920 Speaker 11: the next administration. I think part of the reason the 386 00:17:11,119 --> 00:17:14,720 Speaker 11: Obama deal was ineffectual was that it was never assigned 387 00:17:14,760 --> 00:17:16,800 Speaker 11: deal and was never passed by Congress. 388 00:17:17,280 --> 00:17:19,320 Speaker 4: I want to go back to Ellen Greenspan for a minute, 389 00:17:19,359 --> 00:17:21,560 Speaker 4: because this is a really pivotal moment, given that we're 390 00:17:21,640 --> 00:17:23,960 Speaker 4: ushering into Kevin Warsh era that potentially is going to 391 00:17:24,000 --> 00:17:27,240 Speaker 4: be very different from what we've seen, Given where inflation 392 00:17:27,359 --> 00:17:30,000 Speaker 4: is currently in Pennsylvania, given what you're seeing in markets, 393 00:17:30,320 --> 00:17:32,399 Speaker 4: do you think it's appropriate to be hiking rates at 394 00:17:32,400 --> 00:17:34,240 Speaker 4: this point? Do you think that this is something that 395 00:17:34,320 --> 00:17:35,560 Speaker 4: even the president would welcome. 396 00:17:35,800 --> 00:17:38,479 Speaker 11: Well, I think Kevin what was wise in the companies. 397 00:17:38,840 --> 00:17:42,480 Speaker 11: You have two big forces coming out the economy at 398 00:17:42,480 --> 00:17:43,920 Speaker 11: the same time. You have what's happening in Middle East. 399 00:17:44,000 --> 00:17:46,200 Speaker 11: You have the oil shock and how that's affecting pricing, 400 00:17:46,520 --> 00:17:50,520 Speaker 11: particularly in energy pricing, but it's affecting everything. We've seen 401 00:17:50,560 --> 00:17:52,240 Speaker 11: a lot of relief on that recently, which is a 402 00:17:52,320 --> 00:17:56,040 Speaker 11: huge deal for Pennsylvania's working families. Gas under four bucks. 403 00:17:56,040 --> 00:17:57,600 Speaker 11: It makes a big difference. I was just a Pennsylvania 404 00:17:57,600 --> 00:17:59,919 Speaker 11: for three days. They talked about it. The second thing 405 00:17:59,920 --> 00:18:05,000 Speaker 11: is this enormous capital investment in AI and infrastructure, which 406 00:18:05,800 --> 00:18:09,359 Speaker 11: can have a significant deflationary impact and a huge increase 407 00:18:09,359 --> 00:18:11,760 Speaker 11: in productivity. So I think it's going to take a 408 00:18:11,760 --> 00:18:14,720 Speaker 11: while to sort that through, and I think Kevin's being 409 00:18:14,800 --> 00:18:17,960 Speaker 11: very wise in the federal I think we'll wait until 410 00:18:18,000 --> 00:18:20,080 Speaker 11: it has a little more insight into which way things 411 00:18:20,080 --> 00:18:23,240 Speaker 11: are headed. You made the point about a single voice. 412 00:18:23,920 --> 00:18:26,399 Speaker 11: I think Kevin will be an incredibly articulate voice. But 413 00:18:26,880 --> 00:18:30,480 Speaker 11: he talked and his hearing about family fights and the 414 00:18:30,520 --> 00:18:33,720 Speaker 11: idea that there's going to be a real open exchange 415 00:18:33,720 --> 00:18:36,240 Speaker 11: at the table with conflicting views on the table. He's 416 00:18:36,280 --> 00:18:38,240 Speaker 11: got some very strong views on the data and the 417 00:18:38,320 --> 00:18:40,680 Speaker 11: data models and how they need to be updated. So 418 00:18:40,800 --> 00:18:42,320 Speaker 11: I think it's gonna be a different feed than under 419 00:18:42,359 --> 00:18:45,720 Speaker 11: Alan Greenspan. But one more stuited for the moment is the. 420 00:18:45,680 --> 00:18:48,400 Speaker 4: Narrative that AI is just inflationary. Does that work with voters? 421 00:18:48,640 --> 00:18:51,080 Speaker 4: It might not be working with markets right now, but 422 00:18:51,080 --> 00:18:53,439 Speaker 4: does it work with voters? Well, listen with the. 423 00:18:53,480 --> 00:18:55,080 Speaker 11: Challenge and I see this every day is there's an 424 00:18:55,160 --> 00:18:59,080 Speaker 11: enormous amount of misinformation, and make no mistake, the Chinese 425 00:18:59,240 --> 00:19:01,320 Speaker 11: are behind a lot of that. Look at the hearings 426 00:19:01,359 --> 00:19:03,800 Speaker 11: that are being conducted in the House and the Senate. 427 00:19:03,840 --> 00:19:06,840 Speaker 11: There's been a lot of reporting on this. AI and 428 00:19:06,920 --> 00:19:09,920 Speaker 11: data centers in China have an eighty five percent popularity. 429 00:19:09,920 --> 00:19:12,160 Speaker 11: In America they have about a twenty percent. A lot 430 00:19:12,160 --> 00:19:15,520 Speaker 11: of that's based on misinformation. So one of the responsibilities 431 00:19:15,520 --> 00:19:17,720 Speaker 11: I think we have in the public realm is to 432 00:19:17,760 --> 00:19:24,080 Speaker 11: make sure people understand AIS offers enormous benefits enormous opportunity. 433 00:19:24,080 --> 00:19:25,879 Speaker 11: A lot of it still remains to be seen, and 434 00:19:25,920 --> 00:19:29,200 Speaker 11: it has huge risk, and it's our job to guide 435 00:19:29,880 --> 00:19:32,600 Speaker 11: this incredible moment of change in a way that lifts 436 00:19:32,640 --> 00:19:35,840 Speaker 11: all boats, make sure that we mitigate the downsides to it. 437 00:19:36,680 --> 00:19:38,879 Speaker 11: So it's too early to tell, I think, is the 438 00:19:38,920 --> 00:19:42,200 Speaker 11: short answer. There was all these predictions about huge job loss. 439 00:19:42,800 --> 00:19:46,760 Speaker 11: Certainly it'll be disruptive, but in Pennsylvania there's enormous growth 440 00:19:46,800 --> 00:19:49,640 Speaker 11: and these skilled labor electricians, welders, you can't get enough 441 00:19:49,640 --> 00:19:52,600 Speaker 11: of them. And the white collar job loss has not 442 00:19:52,680 --> 00:19:55,359 Speaker 11: materialized yet. So too early to tell in terms of 443 00:19:55,359 --> 00:19:56,680 Speaker 11: what the impact is going to be. But I think 444 00:19:56,760 --> 00:20:01,200 Speaker 11: because of the uncertainty, that'll hopefully lead to do you know, 445 00:20:01,320 --> 00:20:03,399 Speaker 11: careful decision making before we make any moves. 446 00:20:03,480 --> 00:20:06,520 Speaker 6: But center the job of couple lips that everyone was 447 00:20:06,520 --> 00:20:07,800 Speaker 6: worried about apocalyse. 448 00:20:07,840 --> 00:20:08,639 Speaker 11: How did you make that up? 449 00:20:08,720 --> 00:20:08,880 Speaker 5: Yeah? 450 00:20:08,960 --> 00:20:12,400 Speaker 6: No, no, that came from AI companies themselves, not China. 451 00:20:12,640 --> 00:20:14,639 Speaker 6: They were the ones that are saying that this is 452 00:20:14,640 --> 00:20:15,840 Speaker 6: going to more. 453 00:20:15,960 --> 00:20:19,840 Speaker 11: I think this go through every moment of profound change, 454 00:20:19,880 --> 00:20:23,600 Speaker 11: technological change in history. There's a doomer narrative, which I 455 00:20:23,600 --> 00:20:26,480 Speaker 11: think is very misplaced. I think it's scared a lot 456 00:20:26,520 --> 00:20:29,040 Speaker 11: of people, but I also think we shouldn't be too pollyanish. 457 00:20:29,160 --> 00:20:31,199 Speaker 11: This is a moment of a lot of change, and 458 00:20:31,240 --> 00:20:34,720 Speaker 11: we have to guide it. It has huge national security implications. 459 00:20:34,760 --> 00:20:36,960 Speaker 11: We have to we have to be in the lead 460 00:20:37,000 --> 00:20:41,919 Speaker 11: from a US perspective visa via China. It offers enormous 461 00:20:42,080 --> 00:20:46,200 Speaker 11: opportunity and life sciences and health, and on the productivity 462 00:20:46,359 --> 00:20:49,720 Speaker 11: and job front, I think we're learning a lot as 463 00:20:49,760 --> 00:20:53,800 Speaker 11: we go. Literally, the job creation that I'm seeing on 464 00:20:53,840 --> 00:20:56,600 Speaker 11: the ground from energy infrastructure, from data centers is just 465 00:20:57,119 --> 00:21:01,400 Speaker 11: absolutely remarkable. And and I lived through the I lived 466 00:21:01,400 --> 00:21:04,000 Speaker 11: through the Internet boom, and what we saw there there 467 00:21:04,040 --> 00:21:07,120 Speaker 11: were some of the same predictions that wasn't quite as consequential, 468 00:21:07,119 --> 00:21:09,359 Speaker 11: but there was predictions about how this would destroy certain 469 00:21:09,359 --> 00:21:13,360 Speaker 11: business models. That was true, but it also created all 470 00:21:13,400 --> 00:21:15,600 Speaker 11: sorts of new business models. I suspect we're going to 471 00:21:15,680 --> 00:21:18,280 Speaker 11: see that as people become more comfortable with all the 472 00:21:18,320 --> 00:21:21,080 Speaker 11: power that comes with AI, there's going to be new businesses, 473 00:21:21,080 --> 00:21:22,919 Speaker 11: a new job creation that it comes along with it, 474 00:21:22,960 --> 00:21:26,520 Speaker 11: in addition to people that build things, because people that 475 00:21:26,560 --> 00:21:29,480 Speaker 11: build things are in high demand. It's the great irony 476 00:21:29,920 --> 00:21:32,960 Speaker 11: of this moment of technological change, it's putting more and 477 00:21:33,000 --> 00:21:36,040 Speaker 11: more emphasis on people who can actually create the infrastructure 478 00:21:36,040 --> 00:21:36,440 Speaker 11: of the future. 479 00:21:36,560 --> 00:21:38,199 Speaker 2: So I'm a race pointing that this narrative has come 480 00:21:38,240 --> 00:21:41,360 Speaker 2: from the likes of anthropic what's in it for them? 481 00:21:41,440 --> 00:21:42,560 Speaker 2: What do you think is in it for them? 482 00:21:42,640 --> 00:21:46,359 Speaker 11: Well, I'm not going to speculate on motivations of any 483 00:21:46,359 --> 00:21:47,720 Speaker 11: particular player, but I think. 484 00:21:48,200 --> 00:21:51,720 Speaker 2: I need to interrogate the potential motivations though, of these 485 00:21:51,720 --> 00:21:54,280 Speaker 2: individuals that run very launch companies that can have launch 486 00:21:54,280 --> 00:21:55,560 Speaker 2: consequences for this economy. 487 00:21:55,680 --> 00:21:59,160 Speaker 11: Well, you could you could imagine, you could imagine efforts 488 00:21:59,200 --> 00:22:03,880 Speaker 11: to shape the regularatry landscape. Depending on what relative position 489 00:22:04,040 --> 00:22:08,440 Speaker 11: someone's in, you could imagine that by positioning yourself as 490 00:22:08,440 --> 00:22:12,440 Speaker 11: someone who's seeking to protect against the downside, there's benefit 491 00:22:12,480 --> 00:22:15,560 Speaker 11: from a strategic perspective, from a marketing perspective. So I'm 492 00:22:15,600 --> 00:22:18,560 Speaker 11: not going to pugne anybody's motives. I will say I 493 00:22:18,680 --> 00:22:22,359 Speaker 11: think I think a one sided story about AI is 494 00:22:23,080 --> 00:22:29,080 Speaker 11: really both misguided and really damaging to America's ability to 495 00:22:29,160 --> 00:22:31,280 Speaker 11: lead and compete. And that's not to say that we 496 00:22:31,320 --> 00:22:35,560 Speaker 11: shouldn't have a fully rich and honest conversation about all 497 00:22:35,600 --> 00:22:40,040 Speaker 11: the possibilities, but it offers enormous potential. And in the 498 00:22:40,080 --> 00:22:45,480 Speaker 11: history of humankind, these moments have created unbelievable prosperity. And 499 00:22:45,640 --> 00:22:47,760 Speaker 11: I think this is another But this may be, you know, 500 00:22:47,760 --> 00:22:49,760 Speaker 11: in all of our lifetime, is certainly the most consequential 501 00:22:49,840 --> 00:22:52,320 Speaker 11: thing that's happening, but it may be the most consequential 502 00:22:52,359 --> 00:22:55,440 Speaker 11: thing that's happened in humankind. I mean, this is amazing, 503 00:22:55,480 --> 00:22:56,359 Speaker 11: the pace of change. 504 00:22:56,440 --> 00:22:58,840 Speaker 6: I know you're a free market supporter. What do you 505 00:22:58,840 --> 00:23:01,760 Speaker 6: make of this administration weigh and taking equity stakes in 506 00:23:01,800 --> 00:23:03,000 Speaker 6: some of these AI companies. 507 00:23:03,280 --> 00:23:07,360 Speaker 11: Well, I think the you know, I'm a markets person, 508 00:23:07,440 --> 00:23:10,800 Speaker 11: a free market person, but I think we sort of 509 00:23:10,840 --> 00:23:12,919 Speaker 11: lost the narrative to some degree. And I saw that 510 00:23:13,040 --> 00:23:19,359 Speaker 11: particularly during COVID, when we were dependent on others for semiconductors, 511 00:23:19,400 --> 00:23:25,240 Speaker 11: for pharmaceuticals. We had let our commitment to markets essentially 512 00:23:25,280 --> 00:23:27,800 Speaker 11: make us dependent. And so I think that there are 513 00:23:27,880 --> 00:23:31,000 Speaker 11: certain industries, certain technologies, certain capabilities that we really do 514 00:23:31,640 --> 00:23:33,560 Speaker 11: need to have control of, need to have at home, 515 00:23:33,960 --> 00:23:38,080 Speaker 11: and so the government playing a role in ensuring that's 516 00:23:38,119 --> 00:23:41,760 Speaker 11: the case is I think is good makes sense, good 517 00:23:41,760 --> 00:23:44,360 Speaker 11: common sense. I think the problem is the slippery slope. 518 00:23:44,480 --> 00:23:46,640 Speaker 11: So you have to be very thoughtful about where those 519 00:23:46,640 --> 00:23:50,080 Speaker 11: lines are, what really is a necessity from a national 520 00:23:50,080 --> 00:23:54,600 Speaker 11: security perspective, and what is ultimately can be done in 521 00:23:54,600 --> 00:23:55,520 Speaker 11: contributing quickly. 522 00:23:55,560 --> 00:23:58,200 Speaker 6: They're talking about taking an equity stake when maybe anthropic, 523 00:23:58,640 --> 00:24:01,000 Speaker 6: but the d D has it supply chain risk. 524 00:24:01,320 --> 00:24:02,560 Speaker 5: How does this make any sense? 525 00:24:02,640 --> 00:24:06,760 Speaker 11: Well, you have a pace of change where new models 526 00:24:06,760 --> 00:24:10,399 Speaker 11: are being created that pose new challenges and new risks. 527 00:24:10,400 --> 00:24:13,639 Speaker 11: So I think the government is quite rightly wrestling in 528 00:24:13,640 --> 00:24:16,840 Speaker 11: the Trump administrations, wrestling with how to play a constructive 529 00:24:16,920 --> 00:24:20,240 Speaker 11: role in the safeguards at the same time not standing 530 00:24:20,240 --> 00:24:22,520 Speaker 11: in the way of this remarkable innovation which is so 531 00:24:22,600 --> 00:24:25,280 Speaker 11: critical to our future. So it's a balancing Actually it 532 00:24:25,320 --> 00:24:27,280 Speaker 11: takes a little bit while to get it right. The 533 00:24:27,320 --> 00:24:31,040 Speaker 11: thing I always say is we shouldn't be setting precedents 534 00:24:31,520 --> 00:24:33,960 Speaker 11: or putting any policies in place that we as Republicans 535 00:24:34,040 --> 00:24:36,840 Speaker 11: or Conservatives wouldn't be comfortable with the next team if 536 00:24:36,880 --> 00:24:39,159 Speaker 11: the next team isn't aligned ideologically. So we need to 537 00:24:39,200 --> 00:24:42,600 Speaker 11: think about this in nonpartisan a political terms. How should 538 00:24:42,600 --> 00:24:45,000 Speaker 11: the government engage in such a way to maintain leadership, 539 00:24:45,480 --> 00:24:49,520 Speaker 11: protect innovation, guard against the worst impulses with a healthy 540 00:24:49,560 --> 00:24:53,440 Speaker 11: recognition that Ronald Reagan's line about the scariest words that 541 00:24:53,480 --> 00:24:55,040 Speaker 11: you could ever hear is I'm here from the government. 542 00:24:55,080 --> 00:24:55,840 Speaker 5: I'm here to help you. 543 00:24:56,200 --> 00:24:59,720 Speaker 11: We need to recognize the government's probably not equipped to 544 00:24:59,720 --> 00:25:02,200 Speaker 11: get to actively engage in some of these topics. 545 00:25:02,320 --> 00:25:03,640 Speaker 2: Sent it's a one fund of word if you can. 546 00:25:03,800 --> 00:25:06,280 Speaker 2: We brought up Kevin Walsh new FED chat. What do 547 00:25:06,320 --> 00:25:08,600 Speaker 2: you think people are getting wrong about this guy? Because 548 00:25:08,640 --> 00:25:10,960 Speaker 2: the auditoring conclusions about what this FED will deliver in 549 00:25:11,000 --> 00:25:12,680 Speaker 2: the coming months. What do you think people are getting wrong? 550 00:25:13,359 --> 00:25:19,320 Speaker 11: Well, he is a very very gifted person and he 551 00:25:19,400 --> 00:25:22,520 Speaker 11: understands markets, but understands the FED. I think he has 552 00:25:22,840 --> 00:25:26,120 Speaker 11: a reformer's heart, a reformers instinct. So if you look 553 00:25:26,160 --> 00:25:27,800 Speaker 11: at the ideas that he's put for he's been talking 554 00:25:27,800 --> 00:25:30,800 Speaker 11: about this for years. He's I got a big vision 555 00:25:30,840 --> 00:25:33,000 Speaker 11: I think for the future FED. And he's also very 556 00:25:33,119 --> 00:25:36,120 Speaker 11: astute politically, So for example, the task forces that were 557 00:25:36,119 --> 00:25:39,760 Speaker 11: set up, I think is a mechanism for creating a 558 00:25:39,760 --> 00:25:42,000 Speaker 11: blueprint for the future, but also bringing people on board. 559 00:25:42,040 --> 00:25:44,800 Speaker 11: So reformer a change agent, but someone who's going to 560 00:25:44,800 --> 00:25:47,760 Speaker 11: do it with a lot of political agility and success. 561 00:25:47,800 --> 00:25:49,359 Speaker 2: Would I'd like to run one of those tasks, Foss. 562 00:25:50,560 --> 00:25:51,520 Speaker 5: I've got my hands for this. 563 00:25:51,640 --> 00:25:51,960 Speaker 7: He enough. 564 00:25:53,000 --> 00:25:56,560 Speaker 2: This is the Bloomberg's Events podcast, bringing you the best 565 00:25:56,560 --> 00:25:59,600 Speaker 2: in markets, economics, an gio politics. You can watch the 566 00:25:59,600 --> 00:26:02,879 Speaker 2: show on Bloomberg TV weekday mornings from six am to 567 00:26:03,000 --> 00:26:06,760 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 568 00:26:06,920 --> 00:26:09,159 Speaker 2: or anywhere else you listen, and as always, on the 569 00:26:09,160 --> 00:26:11,600 Speaker 2: Bloomberg Terminal and the Bloomberg Business app.