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Speaker 2: We are fortunate, we get lucky. We've got a great
Speaker 2: set of conversations today, but.
Speaker 3: We don't know the news flow. Here's the news flow.
Speaker 2: Bank of England they leave raids, they say interest rates
Speaker 2: quote likely to be reduced further, they do not talk
Speaker 2: about Liverpool's a defensive strategy. Bank of England sees inflation
Speaker 2: at one point eight percent Q one twenty twenty eight.
Speaker 3: None of that matters. What matters is and.
Speaker 2: This is particularly for the United States crew listening this morning.
Speaker 2: It was a five to four vote joining as Senior
Speaker 2: Vice president descent at a missoo. Jordan Rochester joins us
Speaker 2: this morning. Jordan, let's rip up the script and you
Speaker 2: can do this because you're encyclopedic.
Speaker 3: Do Americans have to get used to a Bank of
Speaker 3: England descent with the upset over our new chairman?
Speaker 4: No, I don't think they're going to be upset at all.
Speaker 4: The Bank of England is doing what Donald Trump would
Speaker 4: like his own Center Act to do, which is they're
Speaker 4: slowly cutting interest rates. And the annoying part about the
Speaker 4: banking is how slow it's kind of been in the
Speaker 4: past few months. There's a little bit of a political
Speaker 4: problem the budgets that we've had from Rachel Reeves. The
Speaker 4: Chancellor had raised inflation in twenty twenty four when she
Speaker 4: gave that budget, so last year we had sticky inflation.
Speaker 4: A good half percent of the inflation the UK had
Speaker 4: came from her tax raising measures.
Speaker 5: It's now flipped the other way.
Speaker 4: The Chancellor learned her lesson and in the budget she's
Speaker 4: cut taxes in certain areas. So the banking is looking
Speaker 4: at a more dubbish outlook. Inflation is going to hit
Speaker 4: their target pretty much by the spring into the summer,
Speaker 4: and in our view, we're going to get more rate
Speaker 4: cuts from them today.
Speaker 2: We didn't get it from said would we be better
Speaker 2: in the United States? Were they more fractious Central Bank,
Speaker 2: Federal Open Market Committee where we see Bailey and Catherine
Speaker 2: Mann of City Group in brandeis where we see certain
Speaker 2: presidents and governors at the Fed descent more and more visibly.
Speaker 5: I see what you mean. It's going to happen, I think.
Speaker 4: And the new administration with Kevin Walsh coming in if
Speaker 4: he gets confirmed, of course, the banking is very we're very,
Speaker 4: very used to it.
Speaker 5: All.
Speaker 4: The individual members of Embassy are encouraged to have their
Speaker 4: own different views and in the sort of minutes we
Speaker 4: got today all their different views as to where rates
Speaker 4: should go and how quickly are all there from each member.
Speaker 4: That's something they took on from Ben Bernanke's review just
Speaker 4: last year. They implemented those changes to be more transparent
Speaker 4: where at the Fed, You're right, it's been much less
Speaker 4: of ascent.
Speaker 5: Descent are kind of a sort of red sort of.
Speaker 4: Headline on Bloomberg terminals and when we get them, but
Speaker 4: we've already started to get them with Stephen Myron and
Speaker 4: other and Waller, So I think under wall should have tricked.
Speaker 4: The hard part for him will be he might want
Speaker 4: to cut rates, but maybe the regional governers don't.
Speaker 6: So Jordan, when you talk to clients, what do they
Speaker 6: feel like the trade is in the fixed income space?
Speaker 6: In twenty twenty six, we've got the bank giving and
Speaker 6: likely to continue to cut rags here the FED presumably
Speaker 6: will continue to cut rates here.
Speaker 7: What's the trade in twenty.
Speaker 4: Six I think the trade here is to kind of
Speaker 4: take the opposite sort of stances to what we've got
Speaker 4: into some spaces of last year. So in US rates
Speaker 4: it was all about how far they could go in
Speaker 4: terms of the neutral rate being three percent. The long
Speaker 4: term dots are therefore we should receive, which is going
Speaker 4: long US rates on the back of that, that's now
Speaker 4: turning the labor market data in the US it should
Speaker 4: pick up.
Speaker 5: We've already got the.
Speaker 4: Growth data storming higher in the data surprises of the US.
Speaker 4: Look at the ism manufacturing this past week. So I
Speaker 4: think the trade is actually to bet on a US
Speaker 4: rebound in growth and therefore in the labor markets as well,
Speaker 4: and were higher interest rates in the US to come.
Speaker 6: So it's interesting here we can starting to see that
Speaker 6: a little bit in the US yield curve. Jordan, the
Speaker 6: twos and tens, you know you've got sixty seventy basis
Speaker 6: points of steepening. What is that telling you there?
Speaker 4: Well, the steepness comes partially from the front end being
Speaker 4: quite anchored to the dots. There's still just shy of
Speaker 4: two cuts priced him for this year. The long end's
Speaker 4: been driven by what's going on with the one big
Speaker 4: beautiful bill, the fiscal stillness that we're getting, and also
Speaker 4: not just from America but from Japan, from Germany and
Speaker 4: other parts of the world.
Speaker 5: Everyone's increasing them out there issuing this year.
Speaker 4: It's just very difficult for long end yields not to
Speaker 4: go higher when you've got the issuance coming out the
Speaker 4: way it is and the growth picking upt the same time.
Speaker 4: I'm not sure why interest rates should fall. Then you've got,
Speaker 4: on top of that, Kevin Walsh's view on the balance sheet,
Speaker 4: which is all about reducing the size of it, which
Speaker 4: is active.
Speaker 5: Sales of US treasuries.
Speaker 4: If he was to do so, that would put further
Speaker 4: pressure on yields as well.
Speaker 6: Did have it in the European Union here there was
Speaker 6: about earlier last year where boy Germany was talking about
Speaker 6: really stepping up spending on defense and other parts of
Speaker 6: its economy. Maybe a little fall on from some other
Speaker 6: parts of Europe. That is that still the feel there
Speaker 6: or what's the thought about europ right here?
Speaker 4: It's still a feel. The problem is is it in
Speaker 4: the price? Is it a stale narrative? Could things turn
Speaker 4: against us? While we've started to get a similar story
Speaker 4: in European data surprises. We had a very strong German
Speaker 4: factory orders this morning, for example, thirteen percent of year
Speaker 4: to date. What we've been waiting for, We've been waiting
Speaker 4: to see if this huge defense order through companies like
Speaker 4: Lion Mattau for further tanks, drones, planes, etc.
Speaker 5: Would it feed through to the data. And what about the.
Speaker 4: Infrastructure spending as well, which is five hundred billion euros
Speaker 4: over twelve years.
Speaker 5: Yes it is, I think, is the answer from the
Speaker 5: data so far.
Speaker 4: If that carries on the market could revise up its
Speaker 4: ECB assumptions and we're talking about hikes being possible really
Speaker 4: not this year but next year.
Speaker 3: Wow Bloomberg surveillance.
Speaker 2: So as we continue with Jordan Rochester of Missoul, wonderful
Speaker 2: team working with Dominic Constant and Stephen Mershudo among others, we.
Speaker 3: Welcome all of you across the nation. Good morning on
Speaker 3: the Pacific RAM.
Speaker 2: Good evening, i should say, on Spotify it's a podcast.
Speaker 2: Thank you so much for your attention out on the
Speaker 2: Pacific RAM and of course on YouTube podcast as well. Jordan,
Speaker 2: I look at where we are and once again, I
Speaker 2: sit down. I got got bit dog with a sixty
Speaker 2: nine handle, which gets my attention, but far more Jordan Rochester,
Speaker 2: I got a dollar that just won't strengthen. I mean,
Speaker 2: I got a ninety seven point eight dx y I
Speaker 2: got yen. Excuse me, I got yen backed up to
Speaker 2: one fifty seven weaker yen and all what. I just
Speaker 2: don't see the catalysts to get into a new leg
Speaker 2: of dollar weakness.
Speaker 4: Yeah, I think the FX space is one of the
Speaker 4: most difficult sectors to have a strong conviction on. You
Speaker 4: onist out there talking about a weeker dollar on the
Speaker 4: debasement trade. I subscribe to that, which is, I do
Speaker 4: see the sort of real assets outperforming due to the
Speaker 4: fiscal and monetary policy we're talking about.
Speaker 5: But that's real assets. We'm talking about gold and silver,
Speaker 5: and is bitcoin real? Who knows. But when it comes
Speaker 5: to when it comes to the.
Speaker 4: FX space, which is eure overs the dollar, the dollar
Speaker 4: versus the yen, the correlations that we're used to, that
Speaker 4: the frameworks that we use to try and understand how
Speaker 4: do we make money from this? The broken liberation? They
Speaker 4: completely changed it. Donald Trump told basically all the European
Speaker 4: investors through other words, of course, to hedge their exposures more.
Speaker 4: And so we're having much more dollar selling in foreign exchange, forwards, swaps, options.
Speaker 5: However you want to do it.
Speaker 4: But what I think is going to happen is the
Speaker 4: dollar is going to rebound in February and we're getting
Speaker 4: that dollary in's heading hire into this election. This weekend,
Speaker 4: we're having euro dollar four cables falling against the pound.
Speaker 4: Why because while I talked about US data surprises rebounding
Speaker 4: thanks to the FIST and monetary policy kicking in bigger picture,
Speaker 4: I do think the dollar weekens Tom Why global growth?
Speaker 5: Where's the recession coming from? I don't see it.
Speaker 4: And when you have a global rebound as I think
Speaker 4: we're going to have, typically that's an environment where the
Speaker 4: dollar underperforms and risk assets do well. So in the
Speaker 4: second half this year we could be looking at your
Speaker 4: dollar one twenty two quite easily.
Speaker 2: I mean, wow, your meetings are tense. He goes into
Speaker 2: a room with like twelve people. Yeah, and nobody's taken notes,
Speaker 2: so just listening. They got their digital lie pads out
Speaker 2: taking Rochester no ites.
Speaker 3: What's the number one question you get right now? Jordan Rochester.
Speaker 5: Will the Bank Japan hike in April or not?
Speaker 4: I think is one of the most common questions, and
Speaker 4: it's one of those ones where it's really up to
Speaker 4: dollar yen as to whether they will hike or not.
Speaker 4: If we look at the pricing, it's twenty basis points price,
Speaker 4: so it's eighty percent probability it's going to happen according
Speaker 4: to the market.
Speaker 5: We thought for a long time.
Speaker 4: July was going to be the base case, but it
Speaker 4: does each seem that expectations, expectations are shifting forward. And
Speaker 4: you want to learn I'd learned some new Japanese phrase
Speaker 4: whilst I was in Tokyo last week. If you want
Speaker 4: to hear it, go.
Speaker 5: More commercial and let's make money.
Speaker 3: Let's me.
Speaker 7: There we go.
Speaker 6: I mean you got to get out of the office
Speaker 6: and go see clients a run in the world. That's
Speaker 6: what you pick up here. And Jordan, how closely are
Speaker 6: European investors following the I guess the upcoming confirmation hearings
Speaker 6: of mister Warsh and what it may mean for US
Speaker 6: physical policy here? How critical is that to kind of
Speaker 6: twenty twenty six views for a lot of your clients.
Speaker 5: I think for a lot of them. I think it's done.
Speaker 4: Whether Mkowski or Tillis holds it up in the Banking
Speaker 4: Senate Committee is kind of for the Wall Street Post
Speaker 4: to talk about Wall Street Journal. But I don't think
Speaker 4: that it's going to really matter to markets too much
Speaker 4: because most people just think eventually the case will probably
Speaker 4: be dropped in some way and it will just go through.
Speaker 4: I think if Powell hangs on or not is more
Speaker 4: of a crucial question for markets rather than will walk
Speaker 4: thank you.
Speaker 2: So much, thank you, thank you, thank you. Frame that
Speaker 2: out Jordan Rochester. What happens if he leaves, What happens
Speaker 2: if he stays.
Speaker 4: Well, if he stays, he's probably got the attention of
Speaker 4: the room, probably more than Kevin Walsh possible, because he's
Speaker 4: built the connections of all the other governments. And if
Speaker 4: Powell's arguing against the idea of cutting interest rates when
Speaker 4: it comes to the June meeting when wash takes over,
Speaker 4: that's where you could see a descent for the first time.
Speaker 5: I think since Volker, you have to go back to
Speaker 5: Volka for.
Speaker 4: When you last had the Federal Reserve chair have a
Speaker 4: descent go against them.
Speaker 5: Now.
Speaker 4: If Powell bows out, that means that's another seat that
Speaker 4: Trump can nominate somebody for. And then we start and
Speaker 4: if Lisa Cook's Supreme Court hearing doesn't go her way,
Speaker 4: then we're talking about a board that's highly governed by
Speaker 4: Trump appointees, and then things could get more interesting.
Speaker 2: Jordan Rochester, thank you so much, greatly appreciated this morning
Speaker 2: with Miszoo fascinating. Stay with us more from Bloomberg's coming
Speaker 2: up after this.
Speaker 1: You're listening to the Bloomberg Surveillance Podcast. Catch us live
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Speaker 2: Danielize with this is Wedbush, of course, coming off the
Speaker 2: glory of a Baron's cover showed. Were you surprised by
Speaker 2: the Baron's article like they had like a float chart
Speaker 2: of all your business interests?
Speaker 3: Are you on speaking terms with Wedbush? Compliance?
Speaker 8: Of course?
Speaker 9: Look, I mean it's one like look I understand like
Speaker 9: the nature of like when you expand opportunities outside just
Speaker 9: traditional analysts, it's something where like you know you're breaking
Speaker 9: new ground, right, but it's something like if I chew
Speaker 9: gum webbush news.
Speaker 7: And the reality is is that I.
Speaker 9: Get the criticism, but look, it's something like for twenty
Speaker 9: five years being bullsh in tech, being bullsh and AI revolution.
Speaker 9: It's led to obviously other opportunities, but it's something where
Speaker 9: you know, it's I get the crisis.
Speaker 2: I want to go back to first principles here. There
Speaker 2: was a there's a couple of courses we took on
Speaker 2: network effect, on Metcalf's law, on ethernet study here, and
Speaker 2: the answers that devolved into spectacular profits for a very
Speaker 2: few Michael Mobison just being iconic on this early work
Speaker 2: as well. It's still in play right when I look
Speaker 2: at Google's profit machine, it's about Metcalf's law. They're playing
Speaker 2: a different rule book and we don't understand it exactly.
Speaker 7: I mean.
Speaker 9: And that's why, to further your point, if you look
Speaker 9: at the cloud growth forty eight percent, you look at Capex,
Speaker 9: now that's basically going to be you're.
Speaker 7: Really almost doubling.
Speaker 9: This just shows that these companies they see the modernization path.
Speaker 9: It's happening now. Just investors beg why would you not
Speaker 9: slow up? Because they have to accelerate because of the
Speaker 9: arms race, that's playing out. So when you look at
Speaker 9: earning season the last few weeks, it's further validated that
Speaker 9: this is not a bubble. This is an AI revolution.
Speaker 9: The monization's just started. And it's my view like to
Speaker 9: view it that software and it's essentially what I'll call
Speaker 9: an arm and getting like environment for software. And I
Speaker 9: think this is going to be viewed as I think
Speaker 9: a time where software names have gotten so over sold.
Speaker 9: I'd have to go back twenty five years, maybe two
Speaker 9: or three times they've ever seen a moment like this.
Speaker 6: So how do you respond to the concern that some
Speaker 6: people have that AI posts a fundamental threat to certain
Speaker 6: aspects of software, specialized software, application software.
Speaker 9: Look, I think on the edges down the road, is
Speaker 9: it a headwind? Yeah, But then on the other hand,
Speaker 9: like for a salesforce service now fro an Adobe for
Speaker 9: large and work that you could argue that AI is
Speaker 9: actually a talent, but they just haven't seen the modernization
Speaker 9: yet because it's ultimately the use cases are going to
Speaker 9: be well by software and pallunteer being the first one
Speaker 9: you say, snowflake, mango or our necks in line. And
Speaker 9: I just think the view that software is done that
Speaker 9: you're gonna have companies you're that are gonna go away
Speaker 9: from a salesforce toward a clod or an anthropic model.
Speaker 9: Is just it's it's somewhere between ridiculous to fictional or whatever.
Speaker 2: Are you seeing the major software companies, let's pick on MSFT.
Speaker 2: Are they having conversations at Redman to say we're down
Speaker 2: twenty six percent? Do we take depth to buy back
Speaker 2: shares and other creative I mean are they are.
Speaker 3: They do they want to be opportunistic? Given this AI frenzy?
Speaker 9: Well, look, I think this is going to create a
Speaker 9: massive m and a cycle in software because to Tom's pointing,
Speaker 9: like if you look at the cash flow both on
Speaker 9: the on the pe side as well as in the
Speaker 9: strategic and you look now where the where these software
Speaker 9: comings right, if you think about maintenance ar are you
Speaker 9: to basically would have to assume that numbers come down
Speaker 9: twenty five percent the next three years not to buy
Speaker 9: the sector.
Speaker 2: Danives with this folks worldwide or thrilled day of min
Speaker 2: robbers shipping with us later the best in conversation on technology.
Speaker 3: Okay, you know where I am on Tesla.
Speaker 2: You and I sit up in the food court over cheesus,
Speaker 2: I have cheese its Isaay has something.
Speaker 7: Great a bullish scar you were wearing too.
Speaker 2: Okay, but yeah, But the bottom line, Dan ives, is
Speaker 2: there going to take Tesla taking out two vehicles, something
Speaker 2: new's going to happen. They're going to run it into
Speaker 2: x AI whatever the hell that is, and they're going
Speaker 2: to fund it through starlink. Are things in space going
Speaker 2: to make this accounting work?
Speaker 9: Well, it's my view that Tesla and SpaceX eventually merge,
Speaker 9: I guay. So this is x An, XAI, XAI space.
Speaker 2: Is there going to be a legitimate red herring? Is
Speaker 2: there going to be a legitimate process or is just
Speaker 2: musk blather?
Speaker 9: No, it's I think it's Jim and Pat. I think
Speaker 9: this is all step by step in terms of what's
Speaker 9: going to happen.
Speaker 7: I think the reality is okay, Like, why would Must.
Speaker 9: Do this because essentially when you look at XAI, that's
Speaker 9: so much of the AI technology now that's within SpaceX,
Speaker 9: SpaceX basically being the vehicle that obviously gets you to space.
Speaker 9: It's must view where this he's basically creating his own ecosystem.
Speaker 9: You do about circular financing and everything else. He's internally
Speaker 9: building this what I would argue is probably going to
Speaker 9: be the biggest AI company in the world.
Speaker 6: Is this whole new thing, this SpaceX slash xai, is
Speaker 6: that gonna go public this year?
Speaker 9: Well yeah, I mean I think it's one that would
Speaker 9: make a ton of sense for SpaceX to go public.
Speaker 9: Then you think about Xai being a key component to that.
Speaker 9: I think then the other the thing for investors is
Speaker 9: trying to figure out how does this affect Tesla and
Speaker 9: when does that cross pollination start.
Speaker 3: Okay, bitcoin is sixty nine thousand.
Speaker 2: We haven't broken down below, but everybody's paying attention sixty
Speaker 2: nine five hundred. The fancy people at cryptos say, where's
Speaker 2: the underlying where's the underlying on the combination of SpaceX,
Speaker 2: XAI and Tesla, what's the underlying free cash flow generation?
Speaker 9: I mean you look, it's my view, autonomous and robotics
Speaker 9: alone for Tesla numbers today. If you've got free cashow,
Speaker 9: free cash flow will be up five six acts the
Speaker 9: next four or five years.
Speaker 7: Just basing that. Then when you actually will, if you.
Speaker 9: Actually combine it all, you're essentially looking at something where
Speaker 9: they could when you think about the longer term model,
Speaker 9: they would generate free cash flow potentia on par with
Speaker 9: any of these.
Speaker 3: So you're saying, Paul's got any questions. This is my
Speaker 3: last one.
Speaker 2: Called Alexis, get out the surveillance cork and put it
Speaker 2: in my mouth. When I've done with this question, you
Speaker 2: got a red herring out right now. Basically there's no
Speaker 2: profit model and it's an innovation hope five years out
Speaker 2: is that weix struction.
Speaker 9: I mean Xai, let's say a billion dollars a month
Speaker 9: or whatever that they're burning. So you but tom My
Speaker 9: view is like, it's no different than the one hundred
Speaker 9: ey five billion that Google's in a spending cap backs
Speaker 9: or Microsoft's doing cap backs right now. You are betting
Speaker 9: on the next two, three, four, five years. Now, does
Speaker 9: that is you have? Do you have to be a believer?
Speaker 9: And does that impact the near term in terms of
Speaker 9: these names?
Speaker 7: Of course?
Speaker 9: But the view from an investor perspective, it's my view
Speaker 9: is that we're in a fourth and ducal revolution. We're
Speaker 9: in year three of a ten year buildout.
Speaker 6: We've had some great reporting from Bloomberg News on Elon
Speaker 6: Musk and SpaceX and Xai and this merger here, and
Speaker 6: I think two themes out there. The bulls are saying, hey,
Speaker 6: you're putting together the great SpaceX with the arguably the
Speaker 6: leading AI company.
Speaker 10: Put those two together, what a great story.
Speaker 6: Others might say, wait, it kind of feels like SpaceX
Speaker 6: is bailing out XAI or vice versa. Do we But
Speaker 6: we don't know because we don't know any numbers there.
Speaker 7: Do we know? We don't.
Speaker 9: I mean, obviously the burn you which which we know
Speaker 9: is probably you know, about billion a month. But for SpaceX,
Speaker 9: they're getting the AI technology from Xai so that they
Speaker 9: ultimately need. If you think about this being what i'll
Speaker 9: call it AI play, it was the first step then,
Speaker 9: but they eventually go down the aisle with Tesla.
Speaker 2: Okay, just just published moments ago. We did this in
Speaker 2: real time, folks. We'll make it up as we go,
Speaker 2: Dan Eyes. So this was Bush Robert Schiffman, who'll be
Speaker 2: with us in the next hour, publishes moments ago. This
Speaker 2: is on the credit on the build out of Google
Speaker 2: on AI Alphabet now AI Capex poster child.
Speaker 3: But risk is low.
Speaker 2: He looks at one hundred and twenty seven billion cash balance,
Speaker 2: and again, Dan Eyes, I go back to these things
Speaker 2: are profit machine like do you say the KPEX is
Speaker 2: almost a rounding error spread out over two three five years.
Speaker 9: Every hour you're spending in cap backs, you're basically going
Speaker 9: to generate forty fifty percent freak ask for in every
Speaker 9: hour that you're investing in CA.
Speaker 7: I mean, if you if you go through the numbers,
Speaker 7: and that's why it's my.
Speaker 9: View, you're going to continue to put as much into
Speaker 9: this given the cash flow machine that you've seen Alphabet produce.
Speaker 9: Would I believe Microsoft is going to produce? And I
Speaker 9: think so many other tech companies that are going down
Speaker 9: this path and they have no choice but to go
Speaker 9: down the path despite maybe like stocks this week.
Speaker 7: Or whatever over the last week, this paragraph.
Speaker 3: Below is Oracle.
Speaker 2: Do you say you've envisioned the Ellisons that gotta at
Speaker 2: some point jettison Oracle because they don't have the EBITTA
Speaker 2: fund all those hopes.
Speaker 9: But I think that's why they did the forty five
Speaker 9: to fifty billion. They laid it out in terms of
Speaker 9: the transparency of how they're going to raise the capitol.
Speaker 9: And I just continue to say, investors, Okay, let's say
Speaker 9: Oracle never touched.
Speaker 7: Open Ai the three hundred billion. They didn't touch any
Speaker 7: of these deals.
Speaker 9: Okay, So you're saying, would you spend thirty billion forty
Speaker 9: billion in the hopes that you could get five six
Speaker 9: hundred billion over the next four or five years. Any
Speaker 9: company in the world is going to take that.
Speaker 3: Now. That's why like Oracle stock.
Speaker 9: Being so such an overhang on this. The math of
Speaker 9: it is, this is essentially giving them the opportunity to
Speaker 9: change the trajector they're coming become a huge player when
Speaker 9: it comes to you know, the four to five trillion
Speaker 9: that's going to be spent.
Speaker 7: That's why they're doing it.
Speaker 6: Give us some of the solve here in software stocks,
Speaker 6: what are your top picks here?
Speaker 3: On the weakness look, I.
Speaker 9: Think the one that is the most over sold relative
Speaker 9: to the install base, free cast flow and where they
Speaker 9: sit is Salesforce. Okay, am I saying, like has Bloom
Speaker 9: come off to Rose and benioven Salesforce? Is this disruptive
Speaker 9: to the business model? Yes, But to say that the
Speaker 9: stock right now is basically trading in almost you have
Speaker 9: to assume that this is a structurally broken company, which
Speaker 9: is not. And then I'd say cybersecurity looking name my
Speaker 9: crowd striking. Then on the hypersceptive look, if you look
Speaker 9: at the If you look at the selloff on Microsoft here,
Speaker 9: I think it's one of the most head scratching sell
Speaker 9: offs that I've seen my twenty sh How.
Speaker 3: Do they respond to that? That's what I want to know.
Speaker 3: And they're gonna have their CFO has got to be
Speaker 3: who's their CFI? I don't even know? Are you their CFO?
Speaker 10: No?
Speaker 9: Again, it's it's one where to me, they're going to
Speaker 9: have to do something significant here to make a statement
Speaker 9: to the market about their stock and about their confidence.
Speaker 9: And I think, look, and I think it's ultimately Amyhood.
Speaker 9: What does Amy Hoods say to Adella? Are you kidding me?
Speaker 9: But Amy Hood, in my opinion, not just in tech,
Speaker 9: but across I think I think just across any major
Speaker 9: public company is probably top five CFO out there. So
Speaker 9: Amyhood's not someone that's just gonna sit here and watch
Speaker 9: this and do nothing.
Speaker 3: Wait a minute, she went to duke exact problem exactly.
Speaker 6: So what is the conversation you're having with clients?
Speaker 3: Is it? Is it panic?
Speaker 6: Is it I'm selling now and off I'll think about
Speaker 6: it later.
Speaker 9: It's I mean, I'm hearing from clients I haven't heard
Speaker 9: from in a decade, seven years, ten years, because my
Speaker 9: mind is like they're that panicked or nervous not to
Speaker 9: explain some of these selloffs trying to say something that
Speaker 9: they're missing. And my whole point is like booking covering
Speaker 9: that's going back to late nineties, like we've been through
Speaker 9: times where like whether the it's bubble burst, you know,
Speaker 9: financial crisis. This is one is a massive it's a
Speaker 9: structural sell off and software that's unlike anything in terms
Speaker 9: of just core structure that I've ever seen, Like.
Speaker 2: Okay, in ninety days when Microsoft does Q two, so
Speaker 2: like you know, ending March thirty and your wait, thirty
Speaker 2: days or forty days, they're gonna come out with the report.
Speaker 2: It's the same old, same old cash generation, the.
Speaker 9: Same or and I take accelerated relative to what they got.
Speaker 9: I think the only reason this st sold off so
Speaker 9: dramatically it's because not all the cap backs is being
Speaker 9: allocad the azure, which that's what investors want to see.
Speaker 9: And then it was kind of splitting hairs as you're
Speaker 9: not having a foreign front of it. And from a
Speaker 9: growth perspective, it's at thirty eight thirty nine percent, but
Speaker 9: I think that is like missing the overall point the
Speaker 9: enterprise AI revolution goes through Redmond.
Speaker 7: That's in their core backyard.
Speaker 6: So what's the what's the message you have today, which
Speaker 6: is hey ride this out or or try to pick.
Speaker 7: Winners and losers.
Speaker 6: What's the message?
Speaker 9: The messages the winners you buy them table pound their levels.
Speaker 7: Because it's my view, just like last year we had
Speaker 7: Deep Seat.
Speaker 9: And Liberation Day and maybe some other sort of you know, geopolitical,
Speaker 9: you'll have these moments four or five times in a year.
Speaker 9: This is not the end of the AI trade. This
Speaker 9: is not a bubble that's burst thing. You remember, the
Speaker 9: bears will come out and the usual. To me, it's
Speaker 9: like look at her season, look at structure, looking montization
Speaker 9: and looking that's that's the reality. But look like when
Speaker 9: out in a restaurant last night and the chef comes
Speaker 9: out and ask about if he should be buying intact
Speaker 9: it's which actually happened.
Speaker 7: It's definitely no, it happened. It happened at an.
Speaker 9: Awesome Italian restaurant that would actually be a very keen
Speaker 9: style of Sweeney styles.
Speaker 7: But look when that happens, it shows I got.
Speaker 2: Fifty seven seconds because Michael Barnet's this timer he's gonna
Speaker 2: have a tantrum.
Speaker 3: I'm looking at Apple just for you.
Speaker 2: I did a log charge of Apple Computer and the
Speaker 2: bottom line, folks, is in April of this year, the
Speaker 2: world says, shut up, it's gonna die. It's going to
Speaker 2: be terrible. And Dan I said, you know, one hundred
Speaker 2: and eighty out to two hundred and eighty as well
Speaker 2: on a long term trend, it's trading just below trend line.
Speaker 3: I mean there's room to move to the upside. What
Speaker 3: will be that catalyst? Look at the stock.
Speaker 9: Movement the last two three weeks right against the broader
Speaker 9: you know tech saf To me, it's just look what
Speaker 9: Google's yesterday.
Speaker 7: AI is now coming to Coopertina. That's gonna be huge.
Speaker 9: I think investors are underestimating what that is going to
Speaker 9: mean about monization four Apple, and I think that is
Speaker 9: ultimately what it comes down to. You are not factoring
Speaker 9: in any premium to AI that goes through Coopatino and
Speaker 9: what ultimately is the two point five billion iOS device.
Speaker 2: It's like clockwork Saturday, I have to go to an
Speaker 2: Apple store because one of the cherubs on MG my
Speaker 2: phone is dead.
Speaker 3: That's the reality.
Speaker 2: Paul Yep I mean it's just, you know, it's endless
Speaker 2: like read by Toys. Dane ives go away. Thank you
Speaker 2: so much with Webers. Congratulations on your cover Barons.
Speaker 7: Thanks stay with us.
Speaker 2: More from Bloomberg Surveillance coming up after this.
Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live
Speaker 1: weekday afternoons from seven to ten am Eastern Listen on
Speaker 1: Applecarplay and Android Auto with the Bloomberg Business app, or
Speaker 1: watch us live on YouTube.
Speaker 2: I want to show where this was Brown University, and
Speaker 2: of course your book on Civics absolutely definitive across the
Speaker 2: education of America, Professor Schuller. I want to look at ICE.
Speaker 2: So we had a small matter on September eleventh of
Speaker 2: two thousand and one. We had legislation a bit of
Speaker 2: a month's later two thousand and two, and in two
Speaker 2: thousand and three we merged customs in some justice department.
Speaker 2: I ins thing together, and I guess we named it ice.
Speaker 2: When did ICE morph from those two original jurisdictions institutions?
Speaker 2: I should say, when did it morph into what we
Speaker 2: observe today?
Speaker 11: Well, I mean Tommy Wright to sort of point out
Speaker 11: things also like the Coastguard. When I mean, basically, the
Speaker 11: whole idea is sort of internal security against external forces.
Speaker 8: That's really what ICE was not ICE, Sorry, I see
Speaker 8: when I'm doing it.
Speaker 11: What homeland security was supposed to do. And the justification
Speaker 11: for homeo security was communication. That there were people who
Speaker 11: thought that the two thousand and one tragedy was a
Speaker 11: failure of communication across independent agencies that didn't talk to
Speaker 11: each other. And so if you are in the same
Speaker 11: cabinet department led by a single secretary, you're going to
Speaker 11: talk to each other and you're be better coordinated and
Speaker 11: that would make the country safer.
Speaker 8: That was the rationale.
Speaker 11: And so this is what it was always supposed to be,
Speaker 11: internal security, but against external forces. So the question is
Speaker 11: do you think people who have been living here for
Speaker 11: ten years or fifteen years are the external enemy?
Speaker 8: And that's what the tru administration is arguing.
Speaker 2: My oldest cash flow, I mean Shanghai, having a beverage
Speaker 2: of my choice at the Peace Hotel with cash flow
Speaker 2: and Wendy, he's explaining to me the police state of China,
Speaker 2: like the three or four levels of police officers on
Speaker 2: the streets of Shanghai or wherever have we become China
Speaker 2: with our domestic enforcement.
Speaker 8: I don't think across the country we've become China. But
Speaker 8: I think if you're living.
Speaker 11: In cities where you used to walk down the street
Speaker 11: and there were police officers that you knew, your local
Speaker 11: town or your local county, and maybe a state e
Speaker 11: as we call them in Rhode Island on the highway.
Speaker 8: You accepted that that's part of what you expected.
Speaker 11: You don't expect to mass people with, you know, machine
Speaker 11: guns on the street that can stop you and ask.
Speaker 8: You who you are.
Speaker 11: And I think that is what has really rattled the
Speaker 11: American voter, the independence some Republicans in polling and all
Speaker 11: Democrats thinking I don't want to live in a country where.
Speaker 8: This is possible.
Speaker 11: Certainly, the United States government has had surveillance powers over
Speaker 11: the last twenty years that are extraordinary.
Speaker 8: Ben Franklin would.
Speaker 11: Be absolutely appalled at the extent to which this government
Speaker 11: can survey any citizen for any reason, but to stop
Speaker 11: physically people dragging out of cars ask for identification.
Speaker 8: That is not the kind of country America wants to
Speaker 8: live in. Sixty three percent of.
Speaker 11: America says we don't want this, and so this is
Speaker 11: an interesting thing going into the midterms. Tom In twenty eighteen,
Speaker 11: it was about Trump, the person Trump. You know, we
Speaker 11: don't like Trump. We like Trump, but this is different.
Speaker 11: This election is about policy. This election about how the
Speaker 11: policy of the trumpministration are affecting your daily life and
Speaker 11: your sense of security. And I think that's really where
Speaker 11: the sort of presence of Ice and the way they
Speaker 11: look with the masks and sort of all the videos
Speaker 11: we've seen this is scary. It's scary to people. But
Speaker 11: we're not yet China, are Russia?
Speaker 8: For that matter?
Speaker 6: What is the political I guess pushback that the administration
Speaker 6: is getting now as it relates to homeland security. We've
Speaker 6: seen President Trump ordered a partial pullback in Minneapolis. How
Speaker 6: are they viewing it these days in DC?
Speaker 8: Well, I think you can see from some of the
Speaker 8: comments that the President's made.
Speaker 11: And we'll hear more from the president and that interview,
Speaker 11: it's already been leaked before the Super Bowl, a traditional
Speaker 11: presidential interview. But what we're seeing is I think a
Speaker 11: difficulty in the White House, Right, are you going to
Speaker 11: be Stephen Miller and Steve Bannon or are you going
Speaker 11: to be Tom Holman?
Speaker 2: Like?
Speaker 8: Who are you going to be?
Speaker 11: And what are your policies now, mister President, And he
Speaker 11: has really sort of swung to the right, and I
Speaker 11: think now he recognizes that this policy could cost him
Speaker 11: not just the House, but the Senate as well, and
Speaker 11: he doesn't want to be president with a completely democratic Congress.
Speaker 8: And that's the argument. I think more of the meremadera.
Speaker 11: Voices in the White House are saying to him, we
Speaker 11: can do this, we don't have to do it this way.
Speaker 7: Okay.
Speaker 2: So, Wendy Schiller, political advisor inside Baseball, Wendy Schiller, you're
Speaker 2: on the team trying to get Susan Collins re elected
Speaker 2: in Maine. What is your advice to Senator Collins?
Speaker 11: Well, Senator Collins has made an argument, I think to
Speaker 11: the President. I wasn't on the phone call, but I
Speaker 11: think this is the argument. I'm the chair of the
Speaker 11: Appropriations Committee. I can help you hold the Republican Senate.
Speaker 11: And if you don't get your your ice folks out
Speaker 11: of Maine, I'm going to lose this election.
Speaker 8: And if I lose this election.
Speaker 11: You can lose Ohio, you can lose North Carolina.
Speaker 8: I don't know. Texas is always a pipe.
Speaker 11: Dream for the Democrats as far as I'm concerned, but
Speaker 11: now they're making noises.
Speaker 8: So she's basically.
Speaker 11: Saying, miss as a president, I'm not just another senator
Speaker 11: running in Maine. I'm the lynchpin to your keeping the
Speaker 11: Republican Senate.
Speaker 8: And I think that's what.
Speaker 11: She has been saying to the White House. And she
Speaker 11: probably has to come out stronger against ICE, but getting
Speaker 11: them out of Maine is a pretty strong first.
Speaker 6: Step for her in reopening the government the mini shutdown,
Speaker 6: did the Democrats get what they wanted as it relates
Speaker 6: to homeland security and ICE agents.
Speaker 11: Well, they didn't get what they wanted necessarily to sort
Speaker 11: of you know.
Speaker 8: Now, Christine says they'll wear body.
Speaker 11: Cameras, But the idea of sort of the warrants and
Speaker 11: stopping people, I think that's still pretty murky. And we
Speaker 11: still got people in detention centers, and they're planning to
Speaker 11: build another detention center, for example in New Hampshire, and
Speaker 11: the governor didn't even know about it, the Republican governor
Speaker 11: in New Hampshire.
Speaker 8: So I think they.
Speaker 11: Still haven't decided, and that means the Democrats still have
Speaker 11: some fodder.
Speaker 8: But I tell you what that they did get.
Speaker 11: They got all the funding for research for science and
Speaker 11: health restored and increased, and they took away some of
Speaker 11: you know, the ability of the administration to cut that funding.
Speaker 11: That's a very big win for a lot of Democrats
Speaker 11: running in the House who want to say that they've
Speaker 11: helped their local communities.
Speaker 3: Just one final thing here.
Speaker 2: You mentioned sixty three percent against ice or whatever the
Speaker 2: coloring is that I believe tells me that thirty percent
Speaker 2: plus of Americans are really really happy with ice in
Speaker 2: these communities. What is the president's relationship right now with
Speaker 2: traditional die hard law and order It.
Speaker 3: Sound like Nixon? What is the mess?
Speaker 2: What is the relationship now of the president to law
Speaker 2: and order America?
Speaker 11: You know, Tom, I think the president has thirty four
Speaker 11: percent of this country.
Speaker 8: Period.
Speaker 11: They have been loyal since he first ran in twenty sixteen.
Speaker 8: They stayed loyal in twenty twenty.
Speaker 11: And they came back and stayed loyal in twenty twenty four.
Speaker 8: He's got thirty four percent. It's not enough to win
Speaker 8: obviously can't run for president.
Speaker 11: But it's not enough for the Republicans to keep the
Speaker 11: House in the Senate.
Speaker 8: Thirty four percent is not going to win you the day.
Speaker 11: So you know, he may have these folks, but you know,
Speaker 11: you can't win the elections with them, So that's the problem.
Speaker 11: He expanded his coalition and now that coalition has contracted significantly,
Speaker 11: and that is really a challenge for the GOP heading
Speaker 11: into the midterm.
Speaker 8: So this is this is where he is.
Speaker 11: And I would also say, law and order in your community,
Speaker 11: no robberies, assaults, murders, rapes, all the horrible things we
Speaker 11: think about is different, I think for Americans than grabbing
Speaker 11: people up the street and deporting them.
Speaker 8: I think they're different kinds of law and order, and
Speaker 8: I think that's where you're getting some of the differentiation
Speaker 8: within the.
Speaker 2: Publican Party twenty Shiller Brown hugely valuable. Thank you so much.
Speaker 2: Stay with us. More from Bloomberg Surveillance coming up after this.
Speaker 1: You are listening to the Bloomberg Surveillance podcast. Catch us
Speaker 1: live weekday afternoons from seven to ten am Eastern Listen
Speaker 1: on Applecarplay and Android Otto with the Bloomberg Business app,
Speaker 1: or watch us live on.
Speaker 3: YouTube with our newspapers.
Speaker 12: Alexis Christopher's all right, I'm going to start with a
Speaker 12: super Bowl story.
Speaker 10: We've been doing that.
Speaker 12: That's sort of been the theme for our listeners this week. Right,
Speaker 12: we've at least pulled one Super Bowl story for newspapers,
Speaker 12: and this one's from the New York Post.
Speaker 10: You knew what was going to happen sometime.
Speaker 12: We have our first AI related ad on the Super
Speaker 12: Bowl this year. It's Anthropics, So it's going to take
Speaker 12: a jab at its rival Open Ai in its first
Speaker 12: ever Super Bowl ad. It's blasting the company for introducing
Speaker 12: advertising to its chat GPT chatbot. It's something that Anthropic
Speaker 12: has promised to never do with its chatbot called Claude.
Speaker 12: Remember when Netflix said no ads ever ever? Yep, yeah,
Speaker 12: that went out the window.
Speaker 10: You're saying.
Speaker 12: So, so they're going to spend big time thirty second
Speaker 12: ad on this year's Super Bowl. We've talked about it
Speaker 12: more than eight million dollars and you know what that
Speaker 12: turns out to per second? Two hundred and sixty five
Speaker 12: thousand dollars per second.
Speaker 10: I did the matter?
Speaker 3: Oh look at you?
Speaker 10: Yeah, I can do that.
Speaker 12: So yeah, I mean so among other ads that we're
Speaker 12: going to be lots of celebrities in the Super Bowl
Speaker 12: ads is here.
Speaker 10: You're going to see some AI ads as well.
Speaker 5: Okay, all right?
Speaker 12: In the Washington Post today they're telling us what we've
Speaker 12: been getting wrong when it comes to exercise, and I think,
Speaker 12: if you're like me, you're gonna like this. It turns
Speaker 12: out taking the stairs can really do your body a
Speaker 12: world of good. So when given the choice between the escalator,
Speaker 12: like we have the the almost circular escalator here, one
Speaker 12: of the only in the world, or the stairs, take
Speaker 12: the stairs. Because the World Health Organization now is no
Speaker 12: longer specifying a minimum duration of moderate or vigorous aerobic activity,
Speaker 12: studies are showing even tiny, regular burst of efforts We're
Speaker 12: talking as short as thirty sex seconds can capture much
Speaker 12: of the health benefits of the gym.
Speaker 3: Whe'res ten thousand steps now?
Speaker 6: Are we still doing that?
Speaker 5: Are we?
Speaker 3: Yeah?
Speaker 10: On your Apple watch? Are you still doing that?
Speaker 3: I still try to do that.
Speaker 10: I mean, look, it's something's better than nothing.
Speaker 3: In this way. I mean I must froze to death.
Speaker 12: I still speak some people running I don't know, but wait,
Speaker 12: I like this one just to give people out there
Speaker 12: like myself some hope. Climbing two to three flights of
Speaker 12: stairs just a few times a day lowers the risk
Speaker 12: of dying by forty percent.
Speaker 10: Wow, do you need more incentives? Up the stairs.
Speaker 3: Where did they come up with having a bag of
Speaker 3: cheese its today? How much does that?
Speaker 1: Well?
Speaker 12: Maybe if you eat the jesuits while you're walking up
Speaker 12: the stairs, all right.
Speaker 10: And then this one, this is a fun one.
Speaker 12: So it's from the Hollywood Reporter about a Christie's auction
Speaker 12: next month with some iconic memorabilia. So this collection belonged
Speaker 12: to the late Indianapolis Colts owner Jim Ursay. And here
Speaker 12: are just a few of the items. Sylvester Stallone's handwritten
Speaker 12: script notebook from Rocky that's pretty cool, the volleyball that
Speaker 12: kept Tom Hanks company in the film cast Away Your Mother,
Speaker 12: Wilson Wilson very good. And Ringo Star's drumhead from the
Speaker 12: Beatles debut on The Ed Sullivan Show. And I've a
Speaker 12: quick story here. I interviewed Ringo years ago when I
Speaker 12: was at CBS when he was touring with his all
Speaker 12: star band, and we referred to the Beatles as his
Speaker 12: quote other band. I thought that was kind of cute.
Speaker 12: By the way, Ringo is still touring. He's got like
Speaker 12: twelve to twour days. This here, it's crazy. So look,
Speaker 12: I know you're gonna want to start bidding on this guys.
Speaker 12: It's going to start opening the online bids March third.
Speaker 12: They're expecting to make over forty million dollars from this collection.
Speaker 12: It's also free if you're in the city. It's free
Speaker 12: to the public. You can go look at the display
Speaker 12: at Christie's. I'm going to make some time to do that.
Speaker 2: Okay, very cool, Okay, thanks, any so, let's starve the newspapers.
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