WEBVTT - Nvidia Fails to Stoke AI Trade 0:00:02.520 --> 0:00:13.760 Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg 0:00:13.840 --> 0:00:17.920 Surveillance Podcast. Catch us live weekdays at seven am Eastern 0:00:18.200 --> 0:00:21.240 on Apple car Play or Android Auto with the Bloomberg 0:00:21.320 --> 0:00:24.840 Business app. Listen on demand wherever you get your podcasts, 0:00:25.280 --> 0:00:27.200 or watch us live on YouTube. 0:00:27.560 --> 0:00:33.120 There is no other grind in engineering like Annapolis in 0:00:33.360 --> 0:00:38.400 the fire Holes program. There of nuclear power school or 0:00:38.440 --> 0:00:43.680 applied engineering and technology. Ted Mortonsons survived this. He's out 0:00:43.720 --> 0:00:46.800 at Baird right now and joins us on. Ted, what 0:00:46.840 --> 0:00:50.920 was it like your first day at our Naval Academy? 0:00:51.360 --> 0:00:52.159 It was brutal. 0:00:52.360 --> 0:00:56.279 I mean I would say, you know, I look back 0:00:56.320 --> 0:00:57.960 and I try to figure out how I got through 0:00:58.040 --> 0:01:01.480 four years of that, going to going to class through Saturday. 0:01:02.280 --> 0:01:04.880 It was a real challenge. And I wasn't the smartest 0:01:05.520 --> 0:01:06.440 attach in the group. 0:01:06.680 --> 0:01:10.520 That's what Stravina said. He did pretty good leaving the Navy. 0:01:10.560 --> 0:01:13.039 Where did you serve in the US Navy for this nation? 0:01:14.080 --> 0:01:19.280 I flew for thirteen years really kind of the surveillance 0:01:19.480 --> 0:01:22.319 ani submarine. What the Pights are doing right now in 0:01:22.360 --> 0:01:27.720 the Straits of harm moves so grape flying pretty much 0:01:27.760 --> 0:01:28.520 all over the world. 0:01:28.600 --> 0:01:30.480 We'd love to get you back on. We'd love to 0:01:30.480 --> 0:01:32.560 get you back on to talk about that. Sometimes I 0:01:32.560 --> 0:01:35.960 guess right now we'll be forced to do technology. You 0:01:36.000 --> 0:01:38.199 look at Nvidia and a lot of the research notes 0:01:38.200 --> 0:01:41.760 today say, look, it's all concentrated in two three five 0:01:42.000 --> 0:01:46.759 vendors as well. How bad does Google? How bad does Microsoft? 0:01:47.000 --> 0:01:49.720 How bad does some company? I don't know, how bad 0:01:49.760 --> 0:01:51.720 do they not want to use? In Nvidia? 0:01:53.320 --> 0:01:56.680 There's a huge Navidia attacks on once you you know 0:01:56.880 --> 0:02:01.120 they have this whole system approach where you're buying essentially 0:02:01.280 --> 0:02:04.080 everything in a box and it's all in the video 0:02:04.200 --> 0:02:10.520 generated through architectures. Not only does that represent a price tax, 0:02:11.000 --> 0:02:14.160 but it also represents a fair degree of lock in. 0:02:15.200 --> 0:02:17.040 And I think if you look at where Google and 0:02:17.160 --> 0:02:22.640 specifically Amazon with trying to do their own Silicon in inference, 0:02:24.160 --> 0:02:27.520 they just don't want this lock in. And that's one 0:02:27.520 --> 0:02:29.680 of the reasons why you're seeing all this other co 0:02:29.840 --> 0:02:34.360 development on silicon going on through broad common others. 0:02:35.280 --> 0:02:37.320 Ted, what do you make and what's the conversation you're 0:02:37.320 --> 0:02:41.120 having with your clients about software and the AI threat 0:02:41.200 --> 0:02:43.880 to software? It becomes such a dominant theme just over 0:02:43.919 --> 0:02:46.840 the last three four weeks here what's the conversation you're having. 0:02:47.880 --> 0:02:50.000 It's for adults only. 0:02:50.040 --> 0:02:54.000 To be totally honest with you, I cover all of techs, 0:02:54.000 --> 0:02:57.000 so I see it, you know, from a not a 0:02:57.080 --> 0:03:02.040 siloed approach, but the whole tech eco structure. And if 0:03:02.040 --> 0:03:06.840 you look at the IGV, which is you know, pretty 0:03:06.880 --> 0:03:10.079 much of a software index, it's down twenty four percent 0:03:10.400 --> 0:03:13.720 year to date and basically in two months. This has 0:03:14.080 --> 0:03:18.240 absolutely annihilated attribution for a lot of my big big 0:03:18.280 --> 0:03:22.880 pms Number one, they can't get out. Number two. This 0:03:23.120 --> 0:03:26.799 pivot and Jensen alluded to it last night on the 0:03:26.919 --> 0:03:31.280 videos call. The move to agentic or agents has just 0:03:31.560 --> 0:03:36.000 exploded exponentially, and that's the adjective he used in the 0:03:36.080 --> 0:03:39.720 last two months. And this is affecting all of software. 0:03:39.840 --> 0:03:44.040 It's a if you look what's happening with Entropic and 0:03:44.080 --> 0:03:47.200 I would do work on Opus four point five and 0:03:47.280 --> 0:03:51.720 even with chat GPT on their codex offering, you now 0:03:51.760 --> 0:03:55.280 can code an agent by not being a developer, by 0:03:55.440 --> 0:03:59.200 just either talking into your laptop or typing in and 0:03:59.240 --> 0:04:03.760 getting an agent. So agents are absolutely exploding out there. 0:04:04.120 --> 0:04:07.760 And when you explode agents, you need a tremendous amount 0:04:07.800 --> 0:04:10.920 of compute in the video's right in the in the 0:04:10.960 --> 0:04:13.600 middle of that, and you need a lot of memory 0:04:13.640 --> 0:04:16.400 and we're short on memory. So this has been a 0:04:16.440 --> 0:04:20.840 pivot that I haven't seen in three decades of Nope. 0:04:20.640 --> 0:04:22.479 I agree with you. I've never seen anything like it. 0:04:22.520 --> 0:04:25.080 And I guess the question for a lot of investors 0:04:25.200 --> 0:04:28.120 is just pick a name. A Salesforce dot Com doesn't 0:04:28.160 --> 0:04:31.600 get any more embedded than that. I mean, if you're 0:04:31.640 --> 0:04:35.120 a salesperson anywhere in any business, Salesforce dot com is 0:04:35.120 --> 0:04:38.839 your buddy. Is Salesforce dot Com at risk? Just to 0:04:38.880 --> 0:04:39.960 pick a name? 0:04:41.440 --> 0:04:41.800 I think? 0:04:42.240 --> 0:04:45.440 And I listened to that call last night, and you know, 0:04:45.960 --> 0:04:48.839 the large camp companies most likely will make it over 0:04:48.920 --> 0:04:54.159 the chasm on transitioning from a SAS model. And Jensen 0:04:54.200 --> 0:04:57.760 was pretty funny last night. He basically said software is changing, 0:04:57.839 --> 0:05:00.240 and you know, Navidia has a huge sw for a 0:05:00.320 --> 0:05:04.479 component that nobody really talks about, and it's these Kuda 0:05:04.560 --> 0:05:10.200 libraries are very disruptive on traditional SAX. So he called 0:05:10.240 --> 0:05:14.680 software as a service a pre recorded software where eight 0:05:14.839 --> 0:05:17.600 or Agentic or what he's working on on Kuda libraries 0:05:17.680 --> 0:05:21.920 is real time. Wow, that's a big, big statement. And 0:05:22.000 --> 0:05:25.040 where my clients are having trouble is they can't model 0:05:25.080 --> 0:05:28.960 these companies. In the new world, it was easy to 0:05:29.000 --> 0:05:33.640 model like a CRM on SaaS revenue because it was reoccurring. 0:05:33.720 --> 0:05:37.239 Right now you introduced an agent, which is assumption views, 0:05:37.440 --> 0:05:39.920 and nobody can get to free cash flow. So how 0:05:39.960 --> 0:05:41.680 do you put a multiple on free cash flow? 0:05:41.720 --> 0:05:43.599 You can't model. 0:05:43.520 --> 0:05:47.000 Ted Morn said, rob Ship's got a rob Shift has 0:05:47.040 --> 0:05:49.800 got a question, and that is simply, are they setting 0:05:49.880 --> 0:05:53.000 us up for revenue increases out there? I'm doing this 0:05:53.120 --> 0:05:56.200 or that for twenty dollars a month and it's great, 0:05:56.360 --> 0:05:58.560 And is it going to be like twelve months from now? Oh, 0:05:58.600 --> 0:06:01.280 I'm sorry, we've just lifted to fifty dollars a month. 0:06:01.360 --> 0:06:02.960 Is that where all this is heading? 0:06:04.760 --> 0:06:05.159 I don't. 0:06:05.920 --> 0:06:09.640 I personally think that Navidia is going to use technology innovation. 0:06:10.320 --> 0:06:12.719 This reuben cycle that they have in front of them 0:06:13.240 --> 0:06:18.880 is staggerly good. You can reduce a token costs, you know, 0:06:19.000 --> 0:06:22.440 the cost of per token by ten x and that's 0:06:22.440 --> 0:06:25.880 a paradigm shift on system design. I think they're just 0:06:25.960 --> 0:06:30.520 going for massive share across training and inference, and yes, 0:06:30.839 --> 0:06:34.360 you know they'll charge a premium for availability and functionality. 0:06:34.800 --> 0:06:36.800 But I don't think they're out to gouge anybody. I 0:06:36.800 --> 0:06:41.840 think they're out to basically rule the THEAI infrastructure world globally. 0:06:42.360 --> 0:06:45.200 Ted, thanks so much, greatly appreciated this morning. He's a Baird. 0:06:47.000 --> 0:06:51.200 Stay with us. More from Bloomberg Surveillance coming up after this. 0:06:58.440 --> 0:07:01.720 You're listening to The bloombergs our Villain's podcast. Catch us 0:07:01.760 --> 0:07:04.640 Live weekday afternoons from seven to ten am. E's durn 0:07:04.800 --> 0:07:08.760 Listen on Applecarplay and Android Otto with the Bloomberg Business app, 0:07:08.920 --> 0:07:10.640 or watch US live on YouTube. 0:07:10.960 --> 0:07:14.720 John Bilton lizsu He's had a global multi asset strategy 0:07:15.120 --> 0:07:18.480 at JP Morgan Asset Management. My good friend John Farroh 0:07:18.640 --> 0:07:21.600 is adamant that all annual market outlooks should be written 0:07:21.680 --> 0:07:26.000 March thirty first, because there's something always wacko that happens. 0:07:26.080 --> 0:07:29.240 Q one. Clearly, the tech pullback is there. How does 0:07:29.360 --> 0:07:34.560 JP Morgan reallocate for the tech tobaccle we're living right now? 0:07:35.320 --> 0:07:37.160 Well, I think we've got to actually ask is it 0:07:37.200 --> 0:07:39.880 a tech debarcle or is it something which actually the 0:07:39.880 --> 0:07:41.680 market is doing what it should do, which is it's 0:07:41.760 --> 0:07:45.240 actually looking at what's happening at disruption at the stock level. 0:07:45.840 --> 0:07:47.680 One of the things that you know, colleagues of might 0:07:47.760 --> 0:07:50.040 often say is, remember this is a market of stocks. 0:07:50.040 --> 0:07:52.200 It's not a single entity. It's not a stock market, 0:07:52.320 --> 0:07:54.080 and I think we often forget that. What we've seen 0:07:54.200 --> 0:07:57.680 is huge rotation. We've seen, i think an episode in 0:07:57.720 --> 0:08:02.200 the tech trade which is suddenly a realization that this 0:08:02.280 --> 0:08:06.080 disruption that tech is causing generally actually they're going to 0:08:06.320 --> 0:08:08.040 do some of that to their own sector as well. 0:08:08.640 --> 0:08:10.520 And as a result, I think the market is struggling 0:08:10.600 --> 0:08:12.600 or attempting to reprice that. But if we actually look 0:08:12.600 --> 0:08:16.040 at the sector overall, and remember we allocate off top down, 0:08:16.080 --> 0:08:18.520 not at the stock level. In my particular line of business, 0:08:18.920 --> 0:08:21.480 actually tech and comm services are down one to two 0:08:21.480 --> 0:08:24.960 percent this year as sectors, after having risen one hundred 0:08:25.000 --> 0:08:27.679 and twenty and sixty percent, respectively in the last five 0:08:28.160 --> 0:08:31.160 So yes, we see single names, you know, getting hit 0:08:31.240 --> 0:08:34.400 quite hard as their business models are being questioned. That 0:08:34.480 --> 0:08:37.400 the overall tech trade, we think is actually becoming a 0:08:37.440 --> 0:08:41.000 little bit more resilient if anything, because you're getting this 0:08:41.080 --> 0:08:44.440 pricing differentiation happening, which is what the stock market's supposed 0:08:44.440 --> 0:08:44.880 to be doing. 0:08:45.040 --> 0:08:48.600 So from the sector level, the asset allocation level. Have 0:08:48.760 --> 0:08:52.240 you increased, decreased, or kept your tech exposure the same here? 0:08:52.480 --> 0:08:55.480 So we continue to like holding tech and comm services 0:08:56.320 --> 0:08:58.160 for a couple of reasons. I think first and foremost, 0:08:58.240 --> 0:09:00.480 if we actually look at the revue when you hit 0:09:00.600 --> 0:09:03.640 that might come through software. We took a look at 0:09:03.679 --> 0:09:05.840 that and we said, okay, if we took that sector 0:09:05.840 --> 0:09:08.680 and we took some of these worst case scenarios in 0:09:08.760 --> 0:09:12.520 terms of the losses around revenue from software, what would 0:09:12.520 --> 0:09:15.920 that do to the overall revenue for the sectors? It 0:09:15.960 --> 0:09:18.560 would take it down five six percent. Markets pricing at 0:09:18.559 --> 0:09:21.199 around about three times that level, So we think, if anything, 0:09:21.440 --> 0:09:23.120 actually it's cheapened up a long way. And the second 0:09:23.160 --> 0:09:24.920 thing I'd point out, if we take the MAG six 0:09:25.160 --> 0:09:27.719 or MAG seven I'm sorry, and we look at their 0:09:27.840 --> 0:09:30.960 valuation relative to the rest of the market, it's below 0:09:31.240 --> 0:09:33.160 the trough that it was out on Liberation Day, the 0:09:33.240 --> 0:09:35.880 last time we had a big market turmoil event. So 0:09:35.920 --> 0:09:39.520 if anything relative to its average valuation to the rest 0:09:39.559 --> 0:09:41.840 of the market, it's looking pretty cheap at the moment. 0:09:42.360 --> 0:09:46.079 How about us versus rest of the world, Because you know, 0:09:46.120 --> 0:09:48.680 we're patting ourselves on the shoulder on the back last 0:09:48.720 --> 0:09:51.080 year with the US SMP and the NASDAG, but Boil 0:09:51.160 --> 0:09:54.280 lots of markets outside of the US did appreciably better, 0:09:54.600 --> 0:09:58.000 and that's continuing into this year. How do you think 0:09:58.040 --> 0:09:59.600 about US versus the rest of the world? 0:10:00.000 --> 0:10:02.480 For me, it's as much as anything else, a currency story. Okay, 0:10:02.640 --> 0:10:06.040 If I'm a European based investor and I bought a 0:10:06.480 --> 0:10:10.080 Global sixty forty priced in dollars, I did about three 0:10:10.080 --> 0:10:12.520 percent last year. If I talked to someone based here 0:10:12.520 --> 0:10:15.079 in the US, of course they haven't had that currency translation, 0:10:15.320 --> 0:10:18.400 They've done about seventeen percent on the same portfolio. That 0:10:18.720 --> 0:10:21.920 dollar hit is being significant, and I think, you know, 0:10:21.960 --> 0:10:24.240 if people talk a lot about this whole Cell America idea, 0:10:24.320 --> 0:10:26.480 we just don't see it in the data. What we 0:10:26.640 --> 0:10:29.880 do see is a repricing downwards gradually of the US dollar, 0:10:29.880 --> 0:10:31.320 and we think it's got a little bit further to go. 0:10:31.520 --> 0:10:33.760 So I think we're getting two things going on. First 0:10:33.760 --> 0:10:36.640 and foremost, stimulus light we've not seen before coming through 0:10:36.679 --> 0:10:38.800 in Europe at long last, a bit more to come 0:10:38.840 --> 0:10:41.600 in China and Japan as well, which supports the growth 0:10:41.600 --> 0:10:45.360 in those regions. But secondly, we've got the dollar gradually weakening, 0:10:45.559 --> 0:10:49.400 which of course accentuates interested in having that international exposure. 0:10:49.600 --> 0:10:51.240 John Bilton with us. We're going to come back and 0:10:51.280 --> 0:10:54.360 really take advantage of his twisted education here to talk 0:10:54.400 --> 0:10:59.280 about others. AI uproar and had a global ALTESI strategy 0:10:59.280 --> 0:11:03.439 at Jpmore Asset Management features up six. Nice green to 0:11:03.480 --> 0:11:05.320 the screen right now, there's been a lift to the 0:11:05.360 --> 0:11:08.160 market after all. Of course, back and forth on Nvidia. 0:11:08.559 --> 0:11:10.880 Young eys will join us in the nine o'clock hour. 0:11:11.440 --> 0:11:15.200 The conversations on Nvidia today, Paul have has been absolutely spectacular. 0:11:15.320 --> 0:11:17.840 Yeah, I mean again, a solid quarter. It's a beatn 0:11:17.920 --> 0:11:19.680 raise as the tech kids like to talk about. 0:11:19.840 --> 0:11:20.240 It's good. 0:11:21.360 --> 0:11:23.360 Is it on the magnitude that we've seen in the past. No, 0:11:23.480 --> 0:11:26.120 but I mean the larger law, the law of large 0:11:26.160 --> 0:11:28.640 numbers that nothing else would make that kind of difficult 0:11:28.640 --> 0:11:28.760 to do. 0:11:28.920 --> 0:11:31.360 Well, we'll have to see here. I mean it is 0:11:31.480 --> 0:11:33.800 eight thirty and it's you know, in an hour we'll 0:11:33.800 --> 0:11:36.720 open the market as well. Let me get this up 0:11:36.800 --> 0:11:39.320 right now. Yeah, and now sweet ahead, it is now, 0:11:39.360 --> 0:11:43.000 but you know, claims come in below and a revision 0:11:43.080 --> 0:11:45.200 is two hundred and eight thousand. I mean I'm sorry, 0:11:45.240 --> 0:11:48.800 it's what we're hearing across the board. I mean, the 0:11:48.880 --> 0:11:53.000 labor market just hasn't cracked and at the same time 0:11:53.120 --> 0:11:54.880 the struggle of so many Americans. 0:11:55.000 --> 0:11:55.800 Yep, absolutely so. 0:11:55.840 --> 0:11:58.720 Again, the initial jobasclaims came into two hundred and twelve 0:11:58.800 --> 0:12:02.560 thousand concent as was two hundred and sixteen thousand. Last 0:12:02.600 --> 0:12:05.280 period was revised a little bit higher to two hundred 0:12:05.280 --> 0:12:05.800 and eight thousand. 0:12:05.840 --> 0:12:07.480 So there you go. Talk so much of this AI 0:12:07.559 --> 0:12:11.640 debate that we're having, and what great informed conversations is 0:12:11.720 --> 0:12:16.880 about this strange word productivity, which comes down to efficiency. 0:12:17.600 --> 0:12:20.959 John Bilton of JP Morgan is exquisite on this. He's 0:12:21.000 --> 0:12:24.160 got legit chemistry chops out of the United Kingdom and 0:12:24.240 --> 0:12:26.760 enjoyed a tour of duty on the Charles at River. 0:12:26.880 --> 0:12:33.640 It solos MIT. So in chemistry, the iconic nineteenth century shift, 0:12:33.679 --> 0:12:37.600 including the statue of Faraday on the River Thames, is 0:12:37.640 --> 0:12:42.320 to move from batch chemistry to flow chemistry and pipes. 0:12:42.720 --> 0:12:46.640 The world changed. We went from medieval Sir Isaac Newton 0:12:46.760 --> 0:12:51.280 alchemy to like DuPont and other gen C other giant 0:12:51.320 --> 0:12:54.240 chemistry companies. Then you go over to MIT where you 0:12:54.320 --> 0:12:59.560 learn productivity with the troops there. How does AI become 0:12:59.679 --> 0:13:02.920 a process where we win down the road. 0:13:03.960 --> 0:13:06.200 So you're talking the Haber process of course, which takes 0:13:06.200 --> 0:13:08.320 me right back to my undergrad days. But how do 0:13:08.320 --> 0:13:12.440 we think about productivity? Stock and flow is incredibly important 0:13:12.480 --> 0:13:15.040 in Eliot any I knew you were. 0:13:14.920 --> 0:13:17.680 Going here, and I set them up for this discuss 0:13:17.800 --> 0:13:19.000 the So. 0:13:19.960 --> 0:13:23.040 What allows either to be more efficient? What allows the 0:13:23.040 --> 0:13:25.560 flow to be more efficient is a better idea of 0:13:25.600 --> 0:13:30.040 what the dynamics and the data are describing that flow. 0:13:30.480 --> 0:13:33.439 And that's something which AI can do. What it doesn't 0:13:33.480 --> 0:13:37.520 do is make the decisions around how to influence how 0:13:37.520 --> 0:13:39.560 that flow is going through. That's what a human being does. 0:13:39.960 --> 0:13:42.439 But where AI, I think has something which we can 0:13:42.480 --> 0:13:45.640 really lean into is that ability to help us quickly 0:13:45.720 --> 0:13:48.840 pass through data and understand the problem. Seting it doesn't 0:13:49.679 --> 0:13:53.560 mean that suddenly it educates us, but it informs us, 0:13:53.559 --> 0:13:55.040 and I think that's an important subtlety. 0:13:56.000 --> 0:13:59.760 No good. If you're helping Jennie Diamond right in your 0:13:59.800 --> 0:14:01.200 love and we know that are you're going to get 0:14:01.240 --> 0:14:04.319 two paragraphs in it this year. The stock is the 0:14:04.360 --> 0:14:07.760 water in the bathtub, I would suggest, and this is 0:14:07.800 --> 0:14:11.000 all the heritage of my family that we will see 0:14:11.040 --> 0:14:15.360 the water in the bathtub clearer and better with all 0:14:15.400 --> 0:14:18.280 this innovation. Do you agree with some of that idea? 0:14:18.400 --> 0:14:20.280 I would agree with that. I'd also agree that what 0:14:20.320 --> 0:14:22.240 you can do is you can optimize how it flows. 0:14:22.240 --> 0:14:23.760 So if you've got the plug out of the bath, 0:14:23.800 --> 0:14:25.600 you've got the tap running into the bath. That's the 0:14:25.800 --> 0:14:29.240 classic old stock and flow view of the economy. You're 0:14:29.360 --> 0:14:32.560 able to see both what's in the bathtub much better. 0:14:33.000 --> 0:14:35.600 You're also able to see an optimal way to have 0:14:35.680 --> 0:14:38.320 it flow through the bathtub. And I think that's if 0:14:38.320 --> 0:14:39.960 we want to use an analogy, that to me is 0:14:40.000 --> 0:14:41.960 what productivity is about. And that's where AI can be 0:14:42.000 --> 0:14:45.360 a helpful tool. It doesn't replace the person stood there 0:14:45.440 --> 0:14:47.720 looking at and this is beef I have with the 0:14:47.800 --> 0:14:49.720 some of the moves we've seen in software, the idea 0:14:49.760 --> 0:14:51.920 that all of a sudden AI can do everything. 0:14:52.320 --> 0:14:52.560 We know. 0:14:52.640 --> 0:14:55.920 AI has its limitations in its prone to hallucination. It 0:14:55.960 --> 0:14:59.400 requires that interface, but it can create a clearer picture 0:15:00.080 --> 0:15:02.520 in combination with that human expertise, and that, to me 0:15:03.000 --> 0:15:06.920 is why we're seeing this interesting situation two hundred and 0:15:06.960 --> 0:15:10.760 ten thousand on Jobless claims a few minutes ago below expectations. 0:15:11.600 --> 0:15:14.240 Yet we're not seeing wage pressure and that's because jobs 0:15:14.240 --> 0:15:18.080 are becoming more productive using the AI inputs. 0:15:18.640 --> 0:15:20.480 Can you come back the second week in March. Paul 0:15:20.520 --> 0:15:24.480 wants us to do thermodynamics. Can we do some entreprise 0:15:25.120 --> 0:15:28.480 Jennie Diamonds. People are listening to this right now. How 0:15:28.520 --> 0:15:33.320 do we get a bathtub? The letter folks, that was 0:15:33.400 --> 0:15:40.800 a clinic on the chemistry dynamics, the nineteenth century models 0:15:40.840 --> 0:15:43.640 that we're all struggling with here as we look forward 0:15:44.040 --> 0:15:47.200 to twenty and thirty and beyond. John Bilton with a 0:15:47.240 --> 0:15:51.400 clinic their global Manta asset strategy. JP Morgan, he is 0:15:51.920 --> 0:15:57.560 a chemist. Stay with us. More from Bloomberg Surveillance coming 0:15:57.640 --> 0:15:58.640 up after this. 0:16:05.880 --> 0:16:09.480 You're listening to the Bloomberg Surveillance podcast. Catch us live 0:16:09.520 --> 0:16:12.680 weekday afternoons from seven to ten am Eastern. Listen on 0:16:12.760 --> 0:16:16.440 Applecarplay and Android Auto with the Bloomberg Business app, or 0:16:16.600 --> 0:16:18.080 watch us live on YouTube. 0:16:18.280 --> 0:16:21.760 True madis of course, with equity and strategy at met Life, 0:16:22.120 --> 0:16:25.080 pulling in all of his first class economics at ubs 0:16:25.440 --> 0:16:28.720 over the years, writes a blistering short note today from 0:16:28.760 --> 0:16:33.080 MetLife clients on AI in your job. We're thrilled that 0:16:33.120 --> 0:16:37.160 dru Madis could join us this morning. Our chief market strategist, Drew, 0:16:37.200 --> 0:16:40.360 thank you for this note. It's almost calming what Angelo 0:16:40.480 --> 0:16:43.040 said there at the back end. Paul, I didn't understand 0:16:43.040 --> 0:16:46.200 a word of it, Drew. I mean, just to cut 0:16:46.240 --> 0:16:50.240 to the chase. There's this fear out there off of 0:16:50.320 --> 0:16:55.120 a briefing from Sutrini, which is getting a lot of criticism. AI. 0:16:55.280 --> 0:16:59.160 Can you fold it into our macroeconomics. Can you fold 0:16:59.160 --> 0:17:02.960 it into our guest of it of core economic data 0:17:03.400 --> 0:17:05.240 out one year or five years? 0:17:07.119 --> 0:17:09.719 Well, I think you can, and I think you know. 0:17:09.840 --> 0:17:12.640 Just to dispel a few things, one is like, this 0:17:12.720 --> 0:17:15.840 is not the AI jobs apocalypse. You know, we are 0:17:15.840 --> 0:17:18.760 thinking about this the wrong way. When I came into 0:17:18.760 --> 0:17:20.560 work today, I've got fifty things I want to do, 0:17:21.160 --> 0:17:24.440 and if AI can help me do thirty of them, right, 0:17:24.560 --> 0:17:26.840 my constraint is still how many people I have working 0:17:27.040 --> 0:17:29.280 for me and with me who can kind of engage 0:17:29.280 --> 0:17:32.280 with me and discuss things with me, And how much 0:17:32.320 --> 0:17:33.560 technology I have available? 0:17:33.680 --> 0:17:35.480 Right, And that's anyone anywhere. 0:17:36.880 --> 0:17:40.520 If I somehow use AI to discover fifty new things 0:17:40.560 --> 0:17:44.159 about the universe or my job, right, I'm going to 0:17:44.320 --> 0:17:47.399 get one hundred new questions from that knowledge, right that 0:17:47.560 --> 0:17:49.359 I then have to answer. And then when I answer 0:17:49.320 --> 0:17:50.960 those one hundred, I have a thousand I have to 0:17:51.000 --> 0:17:55.600 answer off of those. And so you know, we're competitive species, right, 0:17:55.680 --> 0:17:57.080 and so like you know, I work at a firm 0:17:57.119 --> 0:17:59.360 that competes with other firms and everyone else does too, 0:18:00.240 --> 0:18:02.399 and you're trying to make your firm win, right, and 0:18:02.440 --> 0:18:05.400 so you're going to be constantly pushing for that knowledge 0:18:05.480 --> 0:18:08.359 they kind of be useful and then learn the next thing. 0:18:08.800 --> 0:18:11.439 And the best way to do that is obviously, you know, 0:18:11.880 --> 0:18:14.720 technology and then people, and the people was a key 0:18:14.760 --> 0:18:17.119 part of it. I think it's actually kind of you know, 0:18:17.240 --> 0:18:19.560 I came from a liberal arts background, and I think, 0:18:19.640 --> 0:18:21.600 you know, those kids who chose liberal arts are going 0:18:21.680 --> 0:18:23.280 to be really happy in the coming future. 0:18:24.280 --> 0:18:26.840 Drew, what do you say to a shareholder and I 0:18:26.840 --> 0:18:29.240 don't know Salesforce dot Com or any of these other 0:18:29.720 --> 0:18:33.080 software company or software as a service companies that Senior 0:18:33.119 --> 0:18:37.080 stock's really beaten down over the last several months, and 0:18:37.160 --> 0:18:39.720 yet their fundamentals are great, their earnings are great, the 0:18:39.800 --> 0:18:41.800 cash flows great. Everybody loves software. 0:18:42.000 --> 0:18:43.280 What do you say to those shareholders. 0:18:44.800 --> 0:18:45.679 You know, I don't know. 0:18:45.760 --> 0:18:48.239 I don't so I don't follow equity, so I'll say that, 0:18:48.280 --> 0:18:50.800 and I don't certainly don't follow individual companies. But what 0:18:50.880 --> 0:18:52.320 I will say is that there is a bit of 0:18:52.359 --> 0:18:54.960 a panic motif that anyone who's bought a house knows 0:18:54.960 --> 0:18:56.639 that you buy a house and then someone shows up 0:18:56.640 --> 0:18:59.000 at your house, they knock on your door and they're like, oh, 0:18:59.040 --> 0:19:00.639 I used to work for the people who own this 0:19:00.680 --> 0:19:03.399 house before you know you bought it. And if you 0:19:03.440 --> 0:19:05.760 don't change this one thing really quickly, your whole house 0:19:05.800 --> 0:19:08.240 will burn down. You all die, right, And then a 0:19:08.280 --> 0:19:11.000 lot of people end up hiring that contractor to do 0:19:11.000 --> 0:19:14.359 whatever useless piece of work it is. And it's just 0:19:15.320 --> 0:19:17.399 it's not to say that everything that's happening is useless, 0:19:17.400 --> 0:19:19.480 but I think that there's first of all, got to 0:19:19.480 --> 0:19:26.080 be a recognition that the pace is important and you 0:19:26.119 --> 0:19:28.200 don't want to be left behind. But you also don't 0:19:28.240 --> 0:19:30.240 want to be pressured into kind of moving before you're 0:19:30.240 --> 0:19:34.200 reading right, And there's nothing wrong with thinking about things 0:19:34.240 --> 0:19:36.240 and how to kind of use technology in the best 0:19:36.280 --> 0:19:37.320 way for your company. 0:19:38.040 --> 0:19:39.960 And I do think, you know, I think in terms 0:19:39.960 --> 0:19:40.800 of using AI. 0:19:41.320 --> 0:19:42.960 You know, one of the main constraints is going to 0:19:43.000 --> 0:19:47.680 be the organizational structures of companies rather than finding things 0:19:47.680 --> 0:19:52.480 for AI to do or you know, I just think 0:19:52.520 --> 0:19:54.639 there's a lot more benefit to kind of expanding the 0:19:54.680 --> 0:19:57.439 knowledge base, and people are ignoring that part and the 0:19:57.480 --> 0:20:00.760 fact that the more knowledge each company has, the more 0:20:00.800 --> 0:20:04.520 competitive they are going to be, and the more wealth 0:20:04.560 --> 0:20:07.480 they will generate for the economy, the more productive the 0:20:07.480 --> 0:20:09.040 economy will be, and the higher the growth rate in 0:20:09.080 --> 0:20:12.240 the economy will be. And that doesn't happen without. 0:20:11.960 --> 0:20:17.600 People drew what's the overall kind of backdrop here as 0:20:17.640 --> 0:20:19.720 we think about tariffs. 0:20:19.920 --> 0:20:21.080 We kind of put that the rest. 0:20:21.080 --> 0:20:23.280 It seemed like the market had at least come to 0:20:23.320 --> 0:20:25.640 groups with the kind of the tariff regime. That kind 0:20:25.640 --> 0:20:27.639 of changed in the last couple of weeks with the 0:20:27.680 --> 0:20:31.360 Supreme Court ruling and President Trump's response to that. Now 0:20:31.440 --> 0:20:33.639 I guess as investors we all have to think about 0:20:34.240 --> 0:20:37.320 tariffs again. Is that impacted kind of your outlook for 0:20:37.760 --> 0:20:38.520 the markets here? 0:20:41.119 --> 0:20:43.560 It hasn't, because, you know, we were kind of back 0:20:43.600 --> 0:20:46.040 at the same tariff rate, and you know, we kind 0:20:46.040 --> 0:20:47.560 of felt like we were living in a period of 0:20:47.640 --> 0:20:49.720 uncertainty and so that hasn't changed at all. 0:20:51.160 --> 0:20:51.359 You know. 0:20:52.240 --> 0:20:54.640 That being said, if you stay at a consistent level 0:20:54.640 --> 0:20:58.760 of uncertainty, that uncertainty becomes a feature, right, and so 0:20:58.880 --> 0:21:00.919 you can actually almost be in the plan for it. 0:21:01.760 --> 0:21:05.440 And so the more consistent things are in the universe, 0:21:05.760 --> 0:21:08.280 the easier they are to kind of forecast everything else. 0:21:09.200 --> 0:21:14.680 And that consistency can also be achieved with consistently uncertain true. 0:21:15.320 --> 0:21:17.440 To bring it back to the market strategy. Right now, 0:21:17.440 --> 0:21:19.879 we haven't even had a correction a lot of inks 0:21:19.920 --> 0:21:22.080 in the market. Maybe we can say there's a flatness 0:21:22.119 --> 0:21:27.280 inequities out here on a portfolio basis, people retirees looking 0:21:27.359 --> 0:21:30.000 at two years, three years, five years, Do you make 0:21:30.040 --> 0:21:33.359