WEBVTT - Bloomberg Businessweek Weekend - August 29th, 2025 0:00:00.280 --> 0:00:10.480 Bloomberg Audio Studios, Podcasts, radio News. This is Bloomberg business 0:00:10.480 --> 0:00:14.360 Week Daily reporting from the magazine that helps global leaders 0:00:14.400 --> 0:00:18.320 stay ahead with insight on the people, companies, and trends 0:00:18.360 --> 0:00:23.319 shaping today's complex economy. Plus global business, finance and tech 0:00:23.400 --> 0:00:27.280 news as it happens. The Bloomberg Business Week Daily Podcast 0:00:27.600 --> 0:00:31.680 with Carol Masser and Tim Stenebek on Bloomberg Radio. 0:00:32.200 --> 0:00:35.840 Hi, everyone, Welcome to the Bloomberg Business Week Weekend Podcast. 0:00:36.080 --> 0:00:39.200 Carol is off this week, and let's be real, It's 0:00:39.240 --> 0:00:41.760 a week that's really been about two things. The question 0:00:41.800 --> 0:00:45.160 of FED independence after President Trump moved to oust Federal 0:00:45.159 --> 0:00:48.720 Reserve Governor Lisa Cook, which escalates his battle for more 0:00:48.720 --> 0:00:51.760 control of the US Central Bank. That's a story we 0:00:51.760 --> 0:00:55.800 were all over this past week. Also all over earnings 0:00:55.840 --> 0:00:58.800 from the world's most valuable company. It's the chip maker 0:00:58.840 --> 0:01:01.120 at the heart of the AI boom and at the 0:01:01.160 --> 0:01:04.479 center of the Trump administration's tariff war with China. Yes, 0:01:04.560 --> 0:01:07.399 we are, of course talking about in Nvidia. It wrapped 0:01:07.480 --> 0:01:10.000 up its earning season for US and gave a revenue 0:01:10.000 --> 0:01:13.560 forecast into its AI tech and its China revenue. More 0:01:13.600 --> 0:01:15.959 on the report as it was coming out in just 0:01:16.040 --> 0:01:19.080 a minute plus on the economy, taking stock of the 0:01:19.120 --> 0:01:21.800 consumer as tariff sink in with the CFO of the 0:01:21.840 --> 0:01:25.160 Mediterranean restaurant Kava. All of that to come, We begin 0:01:25.240 --> 0:01:27.960 with the most anticipated earnings report from this past week 0:01:28.000 --> 0:01:31.240 and perhaps even from the quarter, and that is in Nvidia. 0:01:31.720 --> 0:01:34.680 The company gave a tepid revenue forecast for the current period. 0:01:35.120 --> 0:01:38.399 It signals that growth is decelerating after a staggering two 0:01:38.480 --> 0:01:42.039 year boom in AI spending. For more, we leaned on 0:01:42.120 --> 0:01:46.280 Jay Goldberg, senior analysts for Semiconductors and Electronics with Seaport 0:01:46.319 --> 0:01:49.640 Research Partners, who joined us just as the numbers dropped. 0:01:49.760 --> 0:01:52.520 I'm Isabell Lee, and I joined Tim for the conversation 0:01:52.720 --> 0:01:55.520 with Jay Goldberg. Later on in the chat, we'll bring 0:01:55.520 --> 0:01:59.000 in Bloomberg News Big Tech team leader Sarah Fryar. 0:01:59.000 --> 0:02:02.040 And as a reminder, Jay is the only analyst tracked 0:02:02.080 --> 0:02:04.960 by Bloomberg who has a cell rating on in Nvidia. 0:02:05.160 --> 0:02:08.760 My thesis is that in Nvidia is good company, good products. 0:02:09.080 --> 0:02:12.160 They have this Blackwell ramp coming now, But I think 0:02:12.160 --> 0:02:13.840 it's it's just getting harder for them. It's gotten so 0:02:13.880 --> 0:02:16.200 big so quickly. I think it's getting harder and harder 0:02:16.200 --> 0:02:18.520 for them to outperform the sector. We've all gotten customed 0:02:18.520 --> 0:02:22.000 to the having these massive blowouts quarter after quarter, and 0:02:22.040 --> 0:02:23.040 it just couldn't continue. 0:02:23.120 --> 0:02:23.320 Right. 0:02:23.480 --> 0:02:26.840 This is by any normal company, this would be an 0:02:26.840 --> 0:02:29.400 okay quarter, right, but it's in Nvidia. We all have 0:02:29.440 --> 0:02:32.800 heightened expectations and it was just, I think, very difficult 0:02:32.800 --> 0:02:33.720 for them to live up to it. 0:02:34.400 --> 0:02:36.000 I feel like it's the outlook for a sales of 0:02:36.000 --> 0:02:38.400 fifty four billion plus or minus two percent that is 0:02:38.440 --> 0:02:41.560 fuzzy against estimates around fifty three point forty six billion. 0:02:41.919 --> 0:02:44.520 But in both cases, remember the wide range of analysts 0:02:44.520 --> 0:02:46.519 forecasts due to the unknowns of China, and I feel 0:02:46.560 --> 0:02:48.800 like this is what we've talked about tim, how there's 0:02:48.840 --> 0:02:51.919 such a broad range and it's hard to predict now, 0:02:52.080 --> 0:02:55.720 especially with China. But the all important forecast revenue fifty 0:02:55.760 --> 0:02:58.559 four billion dollars looks good compared with consensus. 0:02:58.960 --> 0:02:59.800 I think it's okay. 0:03:00.080 --> 0:03:03.120 I think that the China factor is interesting because like 0:03:03.160 --> 0:03:06.480 a year ago, if somebody or some country or some 0:03:06.600 --> 0:03:09.359 even some company wasn't able to take allocation of their 0:03:09.400 --> 0:03:11.440 chips for whatever reason, there would be a line out 0:03:11.440 --> 0:03:13.799 the door of other customers waiting to take those chips, 0:03:13.919 --> 0:03:16.560 and it doesn't seem to be that the line is 0:03:16.560 --> 0:03:18.959 that long anymore. Right, There's still there's still demand there, 0:03:19.160 --> 0:03:21.880 but it's not this sort of triple oversubscribed demand that 0:03:21.919 --> 0:03:23.240 they enjoyed a year ago. 0:03:24.240 --> 0:03:27.400 We're speaking of right now with Jay Goldberg, you senior 0:03:27.400 --> 0:03:31.880 analysts for Semiconductors and Electronics with Seaport Research Partners. So 0:03:32.200 --> 0:03:34.520 were you proven right this quarter that you're the only 0:03:34.560 --> 0:03:37.400 analyst tracked by Bloomberg that has accelerating on the terminal. 0:03:38.240 --> 0:03:39.920 I'll take I'll take the win. 0:03:40.120 --> 0:03:42.040 I'll take I'll take a lowercase W in this case. 0:03:42.120 --> 0:03:44.480 I mean, it's not trading out one hundred dollars yet. 0:03:45.000 --> 0:03:48.000 No, But I, like I said, my thesis has all 0:03:48.040 --> 0:03:49.920 along been that it's just getting harder for them to 0:03:50.040 --> 0:03:53.920 beat expectations. And I think this is exactly what happened 0:03:53.960 --> 0:03:54.760 to here. 0:03:54.800 --> 0:03:55.960 There's there's not much. 0:03:55.800 --> 0:03:58.760 Growth in data center. You know, you read all the 0:03:58.760 --> 0:04:01.080 other headlines. It seems like AI is taking over the world, 0:04:01.160 --> 0:04:04.360 But in reality, I think there's just it's we're going 0:04:04.400 --> 0:04:06.840 to need some time to digest the AI we already have, 0:04:07.400 --> 0:04:09.800 and I think it's natural that things slow down here. 0:04:09.840 --> 0:04:12.119 For in video who's been leading for so long? 0:04:12.320 --> 0:04:14.280 Is it a red flag to you in any way, Jay, 0:04:14.400 --> 0:04:17.520 that the company is authorizing this share buyback. Do growth 0:04:17.560 --> 0:04:19.400 companies do that or is that more of a sign 0:04:19.400 --> 0:04:21.760 of mature companies. 0:04:22.200 --> 0:04:23.600 It's a little bit of a red sign. 0:04:23.640 --> 0:04:25.320 I mean, it would seem to me that there's there's 0:04:25.360 --> 0:04:29.039 so much opportunity out there in AI, why why not 0:04:29.120 --> 0:04:33.360 spend that sixty billion dollars in furthering their growth? I mean, 0:04:33.400 --> 0:04:35.720 as a shareholder, I would appreciate it, but as an 0:04:35.720 --> 0:04:38.440 outside observer, I have to wonder couldn't they find other 0:04:38.480 --> 0:04:39.320 ways to deploy that? 0:04:39.839 --> 0:04:42.800 So you make the point that it's just hard to 0:04:42.839 --> 0:04:46.279 grow from here on out? How much of diversification is 0:04:46.360 --> 0:04:48.320 hinged on that? We know that forty percent of the 0:04:48.360 --> 0:04:52.880 revenue is from Microsoft, Meta Amazon, and I'm missing one. 0:04:53.279 --> 0:04:54.880 I can't I'm blanking on that name. 0:04:54.920 --> 0:04:59.240 But Vida now offers computers, networking gear, software services. 0:04:59.400 --> 0:05:00.360 Can we account on that? 0:05:00.720 --> 0:05:04.200 I think there's just it's it's good company, good products, 0:05:04.200 --> 0:05:06.599 But like this kind of exuberance seems to be getting 0:05:06.600 --> 0:05:09.600 the head of reality of the market. And I mean, 0:05:09.640 --> 0:05:12.159 I have to wonder you have all the hyperscalers spending 0:05:12.200 --> 0:05:15.440 these immense amounts of money half a trillion dollars among 0:05:15.480 --> 0:05:18.960 the six or seven of these companies, it's hard to 0:05:18.960 --> 0:05:22.960 see them getting a return on that anytime soon, right, 0:05:23.040 --> 0:05:24.360 you sort of look through it. I don't think they 0:05:24.400 --> 0:05:27.080 have a clear plan. They're building for something that's important, 0:05:27.080 --> 0:05:29.440 and AI is coming, but in terms of sort of 0:05:29.600 --> 0:05:32.440 hard dollars and cents, the ROI on that massive investment, 0:05:32.880 --> 0:05:36.440 it's not clear how they generate that. And so I 0:05:36.480 --> 0:05:38.640 think we're starting were to start asking more of those 0:05:38.720 --> 0:05:40.400 kinds of questions, what are we actually going to use 0:05:40.400 --> 0:05:41.080 all this AI for? 0:05:41.360 --> 0:05:44.160 I want to bring in Sarah Fryar. She's Bloomberg News 0:05:44.160 --> 0:05:47.839 Big Tech team leader. She joins us from San Francisco. 0:05:47.920 --> 0:05:51.240 This was the one we've all been waiting for, and 0:05:51.320 --> 0:05:54.640 finally it has arrived, Sarah. The company giving a tepid 0:05:54.760 --> 0:05:57.400 revenue forecast for the current period, it fuels concerns that 0:05:57.480 --> 0:06:01.320 a massive run up in AI spending slowing. How are 0:06:01.320 --> 0:06:04.080 you thinking about the coverage of this resport, especially in 0:06:04.080 --> 0:06:06.880 the context of the other big tech companies that we've 0:06:06.920 --> 0:06:09.400 heard from who have said, yeah, we are spending when 0:06:09.440 --> 0:06:11.360 it comes to AI infrastructure. 0:06:12.360 --> 0:06:13.840 Well, you know, I think we have to put it 0:06:13.880 --> 0:06:17.800 all in context because Nvidia is this in this space 0:06:17.839 --> 0:06:21.960 of having so much uncertainty around the China market, around 0:06:22.200 --> 0:06:27.040 the future of spend on data centers. The analysts who 0:06:27.240 --> 0:06:30.919 cover the company had like fifteen billion dollars in variants 0:06:31.000 --> 0:06:33.720 on what they expected the revenue outlook to be, whether 0:06:33.839 --> 0:06:36.240 or not they included China in their models, So a 0:06:36.240 --> 0:06:39.840 little bit of a grain of salt on that revenue 0:06:39.920 --> 0:06:44.760 number forecast. I think it's just it's just a company 0:06:44.760 --> 0:06:47.799 where people don't quite know what to make of their 0:06:48.040 --> 0:06:50.480 discussions with the Trump administration about what they are are 0:06:50.480 --> 0:06:53.080 not allowed to sell to China and whether to even 0:06:53.080 --> 0:06:55.479 include that in their models. And they did say that 0:06:55.520 --> 0:06:58.599 they didn't sell any of those eight twenty chips to 0:06:58.680 --> 0:07:02.800 China in the quarter, So I think it's there's that. 0:07:03.240 --> 0:07:06.640 So that doesn't necessarily indicate for us that the AI 0:07:06.720 --> 0:07:10.440 boom is over or anything like that. That said that, the 0:07:10.520 --> 0:07:16.920 training of models like we've seen this with Open AI, 0:07:17.200 --> 0:07:21.800 like the latest and greatest model is not as much 0:07:21.840 --> 0:07:24.360 of a leap from the prior, and you know, other 0:07:24.360 --> 0:07:28.320 companies are having similar issues. So the idea that AI 0:07:28.720 --> 0:07:32.440 largely engage models are just going to accelerate in smartness 0:07:32.520 --> 0:07:35.960 until we reach super intelligence. I mean that may not be, 0:07:36.240 --> 0:07:40.400 but there is real money going to building data centers 0:07:40.440 --> 0:07:43.120 metas building one the size of Manhattan and Louisiana like 0:07:43.160 --> 0:07:46.400 that is not over. That is very much still a 0:07:46.440 --> 0:07:49.400 part of what companies are investing in and doing. 0:07:50.080 --> 0:07:52.160 I want to bring back in Jay Goldberg, he's senior 0:07:52.200 --> 0:07:54.200 analysts at Seaport Research Partners. 0:07:54.840 --> 0:07:55.080 Jay. 0:07:55.120 --> 0:07:58.040 Aside from nvidiou struggles in China, the biggest impediment to 0:07:58.080 --> 0:08:00.800 growth seems to be also the available lidy of supply. 0:08:01.120 --> 0:08:03.200 Can you talk to us more about that. How Invidia 0:08:03.200 --> 0:08:05.920 doesn't own factories and relies on outsourced production. 0:08:07.600 --> 0:08:12.680 So yeah, in videos manufacturing is done at TSMC, and 0:08:13.000 --> 0:08:14.920 for a long time, last couple of years, that's been 0:08:14.960 --> 0:08:19.480 the big constraint on in Videa's capacity is what they 0:08:19.520 --> 0:08:22.520 can get out of TSMC, in particular the cook packaging, 0:08:22.600 --> 0:08:26.440 the advanced packaging that TSBT does. That's starting to ease 0:08:26.520 --> 0:08:28.720 up a little bit. TSMC is a great company. They've 0:08:28.720 --> 0:08:32.280 added a lot of a lot of capacity, but now 0:08:32.280 --> 0:08:34.560 we're starting to realize that the other big constraint on 0:08:35.120 --> 0:08:39.800 data center growth is electricity, right, There's just not enough electricity. 0:08:40.360 --> 0:08:43.320 With everyone wanting to open up gigawatts scale data centers 0:08:43.360 --> 0:08:46.480 for AI, the US grid just doesn't have enough of that. 0:08:46.520 --> 0:08:49.200 In fact, the only place that probably could even hope 0:08:49.200 --> 0:08:51.000 to cope with this is China, where there's sort of 0:08:51.040 --> 0:08:54.760 different regulatory frameworks around building new electrical capacity. So I 0:08:54.760 --> 0:08:58.120 think that's a big bottleneck here. I think there's also 0:08:58.160 --> 0:09:01.280 issues around Blackwell itself, Like you start to I've talked 0:09:01.320 --> 0:09:03.480 to people who are actually putting these systems in place. 0:09:04.320 --> 0:09:06.880 It feels very much like a first generation system. They've 0:09:06.880 --> 0:09:09.520 added a lot of a lot of new configuration to 0:09:09.559 --> 0:09:12.720 the racks and the servers that they've designed, and they're 0:09:12.760 --> 0:09:14.400 just not fully reliable yet. 0:09:15.200 --> 0:09:16.319 And there's a lot of. 0:09:16.240 --> 0:09:18.080 Complaints from people who have to, you know, go through 0:09:18.120 --> 0:09:20.440 all kinds of special tooling and get out special equipment 0:09:20.480 --> 0:09:23.079 in order just to make basic configurations here. So I 0:09:23.120 --> 0:09:26.640 think all of those are sort of constraining Blackwell to 0:09:26.720 --> 0:09:27.360 some demands. 0:09:27.559 --> 0:09:32.040 Point, are you updating your price target? Are you coming 0:09:32.080 --> 0:09:34.480 out with a note like what's the conclusion that you have? 0:09:34.760 --> 0:09:37.160 So I absolutely will come out a note. I don't 0:09:37.160 --> 0:09:39.560 think I can comment on my price target. But I 0:09:39.600 --> 0:09:42.040 see this as a lot of things moving in the 0:09:42.080 --> 0:09:44.360 direction that I've been talking about for a while now. 0:09:44.960 --> 0:09:46.680 You know, nothing in here makes me think I'm going 0:09:46.760 --> 0:09:47.600 to change my outlook. 0:09:47.679 --> 0:09:50.040 I want to bring back in Bloomberg News Big Tech 0:09:50.080 --> 0:09:52.920 team leader Sarah Fryar, who joins us from our San 0:09:52.960 --> 0:09:57.160 Francisco bureau. So, Sarah, you did a great job sort 0:09:57.200 --> 0:10:02.000 of contextualizing what else is happening from the customer perspective 0:10:02.559 --> 0:10:06.200 of Nvidia and the companies that have come out and said, yeah, 0:10:06.200 --> 0:10:08.559 we are still spending a lot of money on these 0:10:08.640 --> 0:10:12.920 data centers we are buying from Nvidia. Are you of 0:10:12.960 --> 0:10:17.760 the impression that there is there's we're reading too much 0:10:17.800 --> 0:10:20.800 into this idea of a broader slowdown when it comes 0:10:20.800 --> 0:10:21.160 to the. 0:10:21.080 --> 0:10:24.360 Tech Well, I think your analyst there did make a 0:10:24.400 --> 0:10:27.319 good point that a lot of these hyperscalers, although they 0:10:27.320 --> 0:10:30.719 are all in on investing in AI and and they 0:10:30.760 --> 0:10:35.120 have backing from their own investors on Wall Street to 0:10:35.400 --> 0:10:40.920 do that, they are showing that it's not really giving 0:10:40.960 --> 0:10:43.760 them a return on investment yet. So I think the 0:10:43.800 --> 0:10:46.560 big question in the next year or so is can 0:10:47.240 --> 0:10:50.560 you know the metas Google's Microsoft, Amazon, Can all of 0:10:50.600 --> 0:10:55.679 those who are spending on data centers show that, you know, 0:10:55.720 --> 0:10:59.000 not only is this build out going to help them 0:10:59.400 --> 0:11:02.360 win the the AI race and compete against each other, 0:11:02.640 --> 0:11:05.960 but will it actually lead to higher revenue? Will it 0:11:06.000 --> 0:11:09.840 actually lead to better profit over time? And so I 0:11:09.840 --> 0:11:11.960 think that that is that is really the you know, 0:11:12.080 --> 0:11:15.840 the thing that could slow down a lot of this investment. 0:11:16.760 --> 0:11:19.560 I think that there for now seems to be like 0:11:19.640 --> 0:11:23.960 a lot of excitement around building. But even you know, 0:11:24.000 --> 0:11:26.640 some executives have said, yeah, we may be overspending right now. 0:11:26.679 --> 0:11:31.400 We may be too excited about what the future will hold, 0:11:31.600 --> 0:11:33.960 and if we can't get to the point where you know, 0:11:34.000 --> 0:11:37.240 the technology just keeps getting better and better. And it 0:11:37.320 --> 0:11:41.880 is more about like taking what we have learned so 0:11:42.040 --> 0:11:45.400 far with these large language models and applying it to business, 0:11:45.440 --> 0:11:49.120 applying it to making our you know, internal processes better, 0:11:49.240 --> 0:11:53.760 making us more efficient using what AI has already accomplished. 0:11:54.440 --> 0:11:57.800 Then that would be different than than what would contribute 0:11:57.840 --> 0:11:59.720 to Nvidia's bottom line going forward. 0:12:00.520 --> 0:12:03.640 That's Bloomberg News Big Tech team leader Sarah Friar and 0:12:03.960 --> 0:12:08.760 Jake Goldberg, Senior analyst of Semiconductors and Electronics, with Seeport 0:12:08.880 --> 0:12:12.560 Research Partners. They helped us break down invidious earness results 0:12:12.640 --> 0:12:13.679 earlier this week. 0:12:14.000 --> 0:12:18.360 Coming up. Another story dominating this week fed Independence, That 0:12:18.480 --> 0:12:21.360 and more with Natasha Sirin from the Yale Budget Lab. 0:12:21.520 --> 0:12:23.960 I think that the Court has already signaled directionally that 0:12:24.040 --> 0:12:28.960 they really think protecting this institution and protecting its independence 0:12:29.080 --> 0:12:32.199 is immensely important, and I hope that that's what they 0:12:32.240 --> 0:12:33.080 continue to say. 0:12:33.120 --> 0:12:36.160 Is this particular legal case plays out in the courts. 0:12:36.200 --> 0:12:37.559 But the thing that I'm worried. 0:12:37.240 --> 0:12:41.360 About is the sort of institutional credibility and the view 0:12:41.520 --> 0:12:44.400 by the markets and by the public and by other 0:12:44.480 --> 0:12:48.040 countries and other investors that our central bank is independent 0:12:48.120 --> 0:12:49.760 for any type of politicization. 0:12:50.280 --> 0:12:52.560 That's kind of a genie that you can't put back 0:12:52.600 --> 0:12:53.160 in the bottle. 0:12:53.200 --> 0:12:56.280 It's something that's taken decades and generations to build. 0:12:56.840 --> 0:12:59.960 You're listening to Bloomberg BusinessWeek. This is Bloomberg. 0:13:04.120 --> 0:13:07.960 You're listening to the Bloomberg Business Week Daily Podcast. Catch 0:13:08.040 --> 0:13:10.719 us live weekday afternoons from two to five Easter and 0:13:10.920 --> 0:13:14.839 listen on Applecarplay and Android Atto with the Bloomberg Business app, 0:13:15.000 --> 0:13:17.600 or watch us live on YouTube. 0:13:18.520 --> 0:13:21.640 Independence at the US Stuttle Reserve is certainly in focus 0:13:21.679 --> 0:13:25.520 this week after President Trump's move to Federal Reserve Governor 0:13:25.600 --> 0:13:29.000 Lisa Cook takes political pressure on the Central Bank to 0:13:29.080 --> 0:13:32.319 new heights. The morning we recorded this, Cook filed a 0:13:32.400 --> 0:13:35.480 lawsuit suing President Trump over his attempt to fire her 0:13:35.520 --> 0:13:38.560 for alleged mortgage fraud, kicking off a historic fight over 0:13:38.600 --> 0:13:41.200 independence of the Central Bank. For more on the scope 0:13:41.200 --> 0:13:44.120 of presidential power to fire a FED governor and overall 0:13:44.160 --> 0:13:47.360 FED independence, we spoke to Natasha Sarin, co founder and 0:13:47.400 --> 0:13:50.120 president of the Yale Budget Lab. She's also a professor 0:13:50.200 --> 0:13:52.560 of law at Yale Law School and has an appointment 0:13:52.600 --> 0:13:55.400 in the Yale School of Management's Finance Department. She worked 0:13:55.400 --> 0:13:58.560 at the Treasury Department as Deputy Assistant Secretary for Economic 0:13:58.600 --> 0:14:02.280 Policy and as accouncilor to Treasury Secretary Jennet Yellen. I 0:14:02.280 --> 0:14:04.800 want to start with a referencing an opinion piece from 0:14:04.800 --> 0:14:08.560 Bill Dudley on the Bloomberg earlier today. He's former president 0:14:08.600 --> 0:14:10.319 of the Federal Reserve Bank of New York. He's out 0:14:10.320 --> 0:14:12.800 with a column today that says, up to now, he 0:14:13.000 --> 0:14:15.920 wasn't worried about the threat that President Trump poses to 0:14:15.920 --> 0:14:19.320 the Fed's independence. Now he writes, he's much more worried, 0:14:19.320 --> 0:14:22.240 and he thinks the markets should be too. Does the 0:14:22.240 --> 0:14:23.720 president's attack on the FED risk? 0:14:24.320 --> 0:14:24.480 Does? 0:14:24.640 --> 0:14:27.000 I mean, should we be worried about the president's attack 0:14:27.040 --> 0:14:27.400 on the Fed? 0:14:27.920 --> 0:14:28.480 He should be. 0:14:28.560 --> 0:14:31.880 And I agree moleheartedly with Bill. I think you're in 0:14:32.080 --> 0:14:36.600 such unchartered territory at the moment, because remember this is 0:14:36.640 --> 0:14:39.680 coming on the heels of many months of the administration 0:14:40.400 --> 0:14:43.800 arguing that the Federal Reserve should be cutting interest rates 0:14:43.840 --> 0:14:46.320 and accord with the political whims of the. 0:14:46.280 --> 0:14:49.320 Trump administration, rather than based on its. 0:14:49.240 --> 0:14:53.120 Very particular dual mandate, which is about inflation and it's 0:14:53.160 --> 0:14:55.800 about the labor market, and the fact that we have 0:14:55.880 --> 0:14:59.240 a central bank that's independent that cares about those two things, 0:14:59.320 --> 0:15:02.800 and those two things alone is a really significant source 0:15:02.840 --> 0:15:06.240 of our economics security. The way I know that is 0:15:06.280 --> 0:15:09.000 because we have experimented in the United States, as of 0:15:09.040 --> 0:15:12.880 other countries with federal reserves that become politicized. In this country. 0:15:12.880 --> 0:15:15.600 In the Nixon administration, we had Arthur Burns who was 0:15:15.600 --> 0:15:18.960 pushing for interest rates to help President Nixon get elected, 0:15:19.320 --> 0:15:22.760 and the result of that was runaway inflation that increased 0:15:22.760 --> 0:15:25.440 from three to thirteen percent over a two year period. 0:15:25.560 --> 0:15:28.600 So we do not want a central bank that functions 0:15:28.640 --> 0:15:32.200 based on short term political whims, and I'm really worried 0:15:32.240 --> 0:15:34.120 we're moving in exactly that direction. 0:15:34.880 --> 0:15:37.040 The FED said they will abide by what the Court decides, 0:15:37.040 --> 0:15:40.280 and President Trump yesterday also said he will abide by 0:15:40.320 --> 0:15:42.760 the same. But if the court decides that Lisa Cook 0:15:42.800 --> 0:15:45.440 can stay, are we pass a red line? Is the 0:15:45.520 --> 0:15:48.040 damage already done when it comes to the credibility of 0:15:48.040 --> 0:15:48.360 the FED? 0:15:50.040 --> 0:15:52.600 I hope that the answer to that question is no. 0:15:53.600 --> 0:15:56.320 And I really hope that what's important to note in. 0:15:56.240 --> 0:15:59.160 The context of the legal discussion here is that the 0:15:59.200 --> 0:16:01.960 Supreme Court has really gone out of its way in 0:16:02.000 --> 0:16:04.320 a case of that removal that had nothing to do 0:16:04.440 --> 0:16:07.520 with the Federal Reserve to signal that the Federal Reserve 0:16:07.720 --> 0:16:11.200 is special and that these types of positions, because it's 0:16:11.240 --> 0:16:15.200 a quasi private institution with a particularly important role in 0:16:15.240 --> 0:16:19.240 our economy, these types of positions are really only four 0:16:19.360 --> 0:16:23.520 cause removal positions, and frankly, four cause rises to a 0:16:23.600 --> 0:16:27.680 level and legal nomenclature that it's pretty hard to meet 0:16:27.720 --> 0:16:30.600 in the context of malfeasance. And so I think that 0:16:30.640 --> 0:16:33.760 the Court has already signaled directionally that they really think 0:16:33.840 --> 0:16:39.160 protecting this institution and protecting its independence is immensely important, 0:16:39.480 --> 0:16:41.800 and I hope that that's what they continue to say, 0:16:41.880 --> 0:16:44.360 is this particular legal case plays out. 0:16:44.200 --> 0:16:44.880 In the courts. 0:16:44.920 --> 0:16:47.640 But the thing that I'm worried about is the sort 0:16:47.640 --> 0:16:51.240 of institutional credibility and the view by the markets and 0:16:51.280 --> 0:16:54.720 by the public and by other countries and other investors 0:16:54.800 --> 0:16:58.479 that our central bank is independent for any type of politicization. 0:16:59.000 --> 0:17:01.400 That's kind of a that you can't put back in 0:17:01.440 --> 0:17:05.000 the bottle. It's something that's taken decades and generations to build, 0:17:05.560 --> 0:17:09.439 and I worry that it evaporates pretty quickly as a 0:17:09.480 --> 0:17:11.879 result of some of the types of attacks that we're seeing. 0:17:12.000 --> 0:17:15.000 So I'm hopeful that the judiciary is going to step 0:17:15.040 --> 0:17:18.320 in appropriately here, but I'm still really disheartened to see 0:17:18.440 --> 0:17:21.440 the types of attacks that you've been seed leveled at 0:17:21.440 --> 0:17:22.200 the Federal. 0:17:21.920 --> 0:17:22.800 Reserve of recon. 0:17:23.040 --> 0:17:26.840 So let's keep your law professor had on for a moment, Natasha, 0:17:26.920 --> 0:17:29.200 and talk a little bit about the definition of four 0:17:29.320 --> 0:17:32.640 cause in this context. You touched on it. But I'm 0:17:32.680 --> 0:17:36.479 curious if, let's say, the allegations about mortgage fraud end 0:17:36.560 --> 0:17:38.679 up and we haven't seen the evidence here that we 0:17:38.720 --> 0:17:42.560 don't have that yet. But when it happened, if it 0:17:42.600 --> 0:17:46.800 happened matters, I'm my understanding is intent matters as well. 0:17:47.520 --> 0:17:51.840 So from a perspective, from a legal perspective, why don't 0:17:51.880 --> 0:17:54.439 you think this would qualify as a four cause reason? 0:17:56.040 --> 0:17:59.440 I'm barred from an expert I on four cause removal 0:18:00.160 --> 0:18:02.960 if I looked at the specifics of this particular case, 0:18:03.000 --> 0:18:05.760 and nor frankly could we have at this point, because 0:18:05.880 --> 0:18:09.200 Lisa Cook hasn't been charged with any crime or anything. 0:18:09.520 --> 0:18:11.760 This is a set of allegations that have been leveled 0:18:12.600 --> 0:18:17.040 at her by the President and by the administration. What 0:18:17.160 --> 0:18:21.000 I can say is that in the particular context of 0:18:21.440 --> 0:18:25.040 removal with respect to the Federal Reserve, the Court has 0:18:25.080 --> 0:18:28.320 been pretty explicit that it thinks it's important, and you 0:18:28.560 --> 0:18:30.600 saw it in the statement that the Federal Reserve put 0:18:30.600 --> 0:18:34.000 out yesterday. These are Senate confirmed positions with very long 0:18:34.119 --> 0:18:39.359 terms that run cross administrations, precisely to try and insulate 0:18:39.560 --> 0:18:43.479 this institution from exactly the kind of political pressure that 0:18:43.520 --> 0:18:47.000 we're seeing levied against it. And this isn't just about mortgages, 0:18:47.080 --> 0:18:49.600 nor what has it been about the renovation of the 0:18:49.600 --> 0:18:52.560 Federal Reserve Building, which has taken a lot of airtime 0:18:52.600 --> 0:18:55.040 over the course of the last many months. It's very 0:18:55.080 --> 0:18:58.840 clear that what's happening here is really frustration with the 0:18:58.920 --> 0:19:02.480 direction of monetary policy, and that's really no place for 0:19:02.560 --> 0:19:06.560 the administration to be acting. In fact, it's frankly counterproductive 0:19:06.880 --> 0:19:10.119 to their goals of seeing interest rates come down and 0:19:10.160 --> 0:19:13.760 seeing economic strength be very significant in this country. 0:19:14.000 --> 0:19:16.400 Earlier this month, our team reported that the average US 0:19:16.480 --> 0:19:19.600 tariff rate will rise to fifteen point two percent if 0:19:19.680 --> 0:19:23.320 rates are implemented as announced. This is according to Bloomberg Economics. 0:19:23.320 --> 0:19:26.400 It's up from thirteen point three percent earlier and significantly 0:19:26.480 --> 0:19:29.040 higher than the two point three percent in twenty twenty 0:19:29.040 --> 0:19:33.119 four before President Trump took office. Just today the latest, 0:19:33.160 --> 0:19:36.040 the President opposed to fifty percent tariff on Indian goods 0:19:36.040 --> 0:19:38.800 to punish the country for buying Russian oil. That's the 0:19:38.880 --> 0:19:42.800 highest tariff in Asia. I'm wondering how you're looking at 0:19:42.800 --> 0:19:45.480 the frame relationship between the US and India and what's 0:19:45.480 --> 0:19:48.520 at stake more broadly when it comes to this tariff. 0:19:48.960 --> 0:19:52.320 Fortunately, what we should understand, and my colleagues the Budget 0:19:52.400 --> 0:19:55.439 lab are hard at work. By the way, updating our 0:19:55.600 --> 0:19:58.560 estimates with respect to what happens to the effective teriff 0:19:58.640 --> 0:20:00.760 rate and what happens to the type of revenue that 0:20:00.760 --> 0:20:01.120 we're going. 0:20:01.080 --> 0:20:02.520 To see coming into this country. 0:20:02.840 --> 0:20:05.919 But roughly speaking, you've seen about an eightfold increase in 0:20:05.960 --> 0:20:08.359 the average effect of teriff right over the course of 0:20:08.440 --> 0:20:12.040 the last eight months of this administration, bringing in about 0:20:12.080 --> 0:20:14.879 three trillion dollars of revenue into the country over the 0:20:14.920 --> 0:20:18.000 course of the next decade. Importantly, and this goes a 0:20:18.000 --> 0:20:20.760 bit to your point, Tim, it's never been super clear 0:20:20.840 --> 0:20:25.320 to me what exactly the objective is of this type 0:20:25.359 --> 0:20:28.600 of trade policy and where exactly it is that the 0:20:28.680 --> 0:20:32.200 administration is hoping to land, because part of what you've 0:20:32.200 --> 0:20:35.040 seen articulated is that this is really about sort of 0:20:35.160 --> 0:20:39.640 China and national security and being sure that our adversaries 0:20:39.640 --> 0:20:42.320 are held at bay. In that environment, you really are 0:20:42.480 --> 0:20:46.000 quite worried about the idea of alienating allies, and being 0:20:46.040 --> 0:20:49.159