1 00:00:00,080 --> 00:00:06,760 Speaker 1: Bloomberg Audio Studios, Podcasts, radio News. 2 00:00:11,600 --> 00:00:15,440 Speaker 2: This is the Bloomberg Surveillance Podcast. I'm Jonathan Ferrow, along 3 00:00:15,440 --> 00:00:18,360 Speaker 2: with Lisa Bromwitz and am Marie Hordern. Join us each 4 00:00:18,480 --> 00:00:21,360 Speaker 2: day for insight from the best in markets, economics, and 5 00:00:21,400 --> 00:00:24,720 Speaker 2: geopolitics from our global headquarters in New York City. We 6 00:00:24,760 --> 00:00:27,400 Speaker 2: are live on Bloomberg Television weekday mornings from six to 7 00:00:27,480 --> 00:00:31,000 Speaker 2: nine am Eastern. Subscribe to the podcast on Apple, Spotify, 8 00:00:31,200 --> 00:00:33,479 Speaker 2: or anywhere else you listen, and as always on the 9 00:00:33,479 --> 00:00:37,040 Speaker 2: Bloomberg Terminal and the Bloomberg Business app. Joining us now 10 00:00:37,080 --> 00:00:39,839 Speaker 2: to discuss is the former Kansas City Fed President Esther. 11 00:00:39,920 --> 00:00:42,479 Speaker 2: George Esther, Welcome back to the program. I remember your 12 00:00:42,520 --> 00:00:45,519 Speaker 2: descent in twenty nineteen. I remember your descent. I think 13 00:00:45,520 --> 00:00:47,760 Speaker 2: it was in twenty twenty two. You've got some experience. 14 00:00:47,800 --> 00:00:50,880 Speaker 2: Can you describe for us what it's like entering the room, 15 00:00:51,120 --> 00:00:53,440 Speaker 2: the committee has a conversation and you say, you know what, 16 00:00:53,800 --> 00:00:55,760 Speaker 2: I disagree, I think we should be going in a 17 00:00:55,760 --> 00:00:56,480 Speaker 2: different direction. 18 00:00:58,400 --> 00:01:02,240 Speaker 1: Well, it is and parcel of decision making in a 19 00:01:02,320 --> 00:01:07,959 Speaker 1: large committee, in my view, and you approach those conversations, 20 00:01:08,000 --> 00:01:11,720 Speaker 1: those decisions in a way that I think is respectful 21 00:01:11,760 --> 00:01:14,280 Speaker 1: of what you're hearing around the table, that you've taken 22 00:01:14,280 --> 00:01:18,840 Speaker 1: into account, agree with the chairman. You want to acknowledge 23 00:01:18,880 --> 00:01:22,720 Speaker 1: that you are listening and understand what the arguments are. 24 00:01:22,760 --> 00:01:26,280 Speaker 1: But at the end of the day, decision making is difficult, 25 00:01:26,319 --> 00:01:29,679 Speaker 1: and I would argue it is particularly difficult in times 26 00:01:29,800 --> 00:01:33,120 Speaker 1: when the read of the data is not so clear 27 00:01:33,240 --> 00:01:36,800 Speaker 1: across the table, and I always felt it was as 28 00:01:36,880 --> 00:01:40,840 Speaker 1: much an obligation to the public to express. 29 00:01:40,360 --> 00:01:42,640 Speaker 3: Those views, to be. 30 00:01:42,680 --> 00:01:45,760 Speaker 1: Respectful again of what you've heard, but at the end 31 00:01:45,800 --> 00:01:49,240 Speaker 1: of the day, to really voice how you see the 32 00:01:49,280 --> 00:01:51,680 Speaker 1: economy and the appropriate stance of policy. 33 00:01:51,920 --> 00:01:54,880 Speaker 4: We saw a pretty big divide represented by the views 34 00:01:55,040 --> 00:01:59,440 Speaker 4: of FED Governor Member Chris Waller as well as FED 35 00:01:59,520 --> 00:02:02,160 Speaker 4: chair Jap Powell. Both have a very different view of 36 00:02:02,160 --> 00:02:04,880 Speaker 4: the labor market, and John's been really good about accentuating 37 00:02:04,880 --> 00:02:06,720 Speaker 4: the point that we only have two months of data. 38 00:02:07,280 --> 00:02:10,480 Speaker 4: Do we have enough time to really bridge that gap 39 00:02:10,520 --> 00:02:13,800 Speaker 4: between the two men to really understand whether this labor 40 00:02:13,840 --> 00:02:17,240 Speaker 4: market truly is stable and solid or whether there are cracks. 41 00:02:19,040 --> 00:02:22,520 Speaker 1: Well, I heard earlier a comment on your program that 42 00:02:22,600 --> 00:02:25,440 Speaker 1: talked about each time you finish up one meeting and 43 00:02:25,520 --> 00:02:27,680 Speaker 1: think you have plenty of time to see the data 44 00:02:27,760 --> 00:02:29,320 Speaker 1: for the next that. 45 00:02:29,360 --> 00:02:30,600 Speaker 5: Is never conclusive. 46 00:02:30,760 --> 00:02:33,840 Speaker 1: You will always face uncertainty around what the data is 47 00:02:33,880 --> 00:02:37,120 Speaker 1: telling you and whether the trends you're relying on are 48 00:02:37,160 --> 00:02:40,240 Speaker 1: about to shift or whether they will continue. And so 49 00:02:40,400 --> 00:02:42,480 Speaker 1: that of course is going to be the focus in 50 00:02:42,520 --> 00:02:47,080 Speaker 1: bringing these two views to some kind of consensus. I'd 51 00:02:47,080 --> 00:02:51,840 Speaker 1: be surprised if two months resolves that, but obviously both 52 00:02:52,000 --> 00:02:56,959 Speaker 1: we'll be looking very carefully to try to reconcile how 53 00:02:56,960 --> 00:02:58,960 Speaker 1: the economy's unfolding by that time. 54 00:02:59,280 --> 00:03:01,640 Speaker 4: Is your sense there's quite a bit of disagreement on 55 00:03:01,720 --> 00:03:04,079 Speaker 4: the ending point, because certainly on Wall Street there's a 56 00:03:04,080 --> 00:03:06,800 Speaker 4: great deal of uncertainty about whether the neutral rate is 57 00:03:06,840 --> 00:03:09,320 Speaker 4: something closer to four percent or whether it's closer to 58 00:03:09,360 --> 00:03:11,840 Speaker 4: three percent. Do you get the sense that there's that 59 00:03:12,040 --> 00:03:15,320 Speaker 4: type of disagreement just among FED members. 60 00:03:16,240 --> 00:03:21,440 Speaker 1: Well, at some level, Lisa, It is absolutely the issue 61 00:03:21,639 --> 00:03:26,640 Speaker 1: at hand, because when you are trying to specify your policy, 62 00:03:26,760 --> 00:03:30,080 Speaker 1: when you're trying to describe it, particularly after a time 63 00:03:30,639 --> 00:03:34,400 Speaker 1: when you brought down rates by one hundred basis points, 64 00:03:34,880 --> 00:03:38,120 Speaker 1: trying to calibrate around what is an equilibrium, what we 65 00:03:38,160 --> 00:03:41,600 Speaker 1: should we be expecting that the endgame is and so 66 00:03:41,680 --> 00:03:44,440 Speaker 1: you see that in a long run sense in the 67 00:03:44,480 --> 00:03:48,120 Speaker 1: dot plots. But of course, for any given stage in 68 00:03:48,160 --> 00:03:51,360 Speaker 1: the economic cycle, you'd be very hard pressed to know 69 00:03:51,440 --> 00:03:54,640 Speaker 1: exactly what you're looking for. So that I think, at 70 00:03:54,680 --> 00:03:56,680 Speaker 1: the end of the day is really the question is 71 00:03:56,720 --> 00:04:00,560 Speaker 1: this mildly restricted policy? Is it restrictive? Is it not 72 00:04:00,640 --> 00:04:04,240 Speaker 1: restrictive at all relative to the outcomes we're getting? Is 73 00:04:04,840 --> 00:04:07,200 Speaker 1: at the heart of what the committee is debating. 74 00:04:07,440 --> 00:04:09,800 Speaker 2: There seems to be disagreements on both sides of the 75 00:04:09,840 --> 00:04:12,160 Speaker 2: mandate as the not just on the inflation story, but 76 00:04:12,200 --> 00:04:15,600 Speaker 2: also on the labor market. We have payrolls tomorrow. We've 77 00:04:15,640 --> 00:04:17,720 Speaker 2: heard from Governor Waller. He was pretty explicit. He came 78 00:04:17,760 --> 00:04:19,360 Speaker 2: on this program and said the same thing. He thinks 79 00:04:19,360 --> 00:04:21,480 Speaker 2: the labor market is on the edge. That was like 80 00:04:21,560 --> 00:04:24,000 Speaker 2: day and night compared to what we heard from Chairman 81 00:04:24,080 --> 00:04:26,520 Speaker 2: Pow yesterday when he talked about the labor market and 82 00:04:26,600 --> 00:04:29,960 Speaker 2: the Committee continues to call it solid. Can we get 83 00:04:30,000 --> 00:04:32,279 Speaker 2: your opinion how you view the labor market at the 84 00:04:32,279 --> 00:04:34,719 Speaker 2: moment and whether you'd characterize it as solid. 85 00:04:36,240 --> 00:04:38,760 Speaker 1: Well, I think this is a labor market that's shifting 86 00:04:39,480 --> 00:04:44,080 Speaker 1: and obviously in a macro sense. This is a committee 87 00:04:44,080 --> 00:04:46,760 Speaker 1: that is making macro policy has to rely on a 88 00:04:46,760 --> 00:04:49,120 Speaker 1: macro number, which the chairman said is going to be 89 00:04:49,200 --> 00:04:53,000 Speaker 1: the unemployment rate. So in that sense, they have explained 90 00:04:53,040 --> 00:04:57,159 Speaker 1: clearly in a broad sense, what they're looking at as 91 00:04:57,240 --> 00:05:01,760 Speaker 1: things move around. Though underneath the of that unemployment rate, 92 00:05:02,320 --> 00:05:04,719 Speaker 1: I think you have to be mindful that the Fed's 93 00:05:04,839 --> 00:05:10,400 Speaker 1: reaction to that cannot be a direct response. In other words, 94 00:05:10,440 --> 00:05:12,920 Speaker 1: if you're going to lower rates thinking you will arrest, 95 00:05:13,600 --> 00:05:16,600 Speaker 1: the changes that are going on under the covers not 96 00:05:16,839 --> 00:05:19,520 Speaker 1: likely to happen. And so in a time when your 97 00:05:19,560 --> 00:05:23,000 Speaker 1: backdrop is coming off of high inflation trying to get 98 00:05:23,080 --> 00:05:28,000 Speaker 1: back to that two percent target, it creates this weight 99 00:05:28,200 --> 00:05:30,680 Speaker 1: and see it creates a real sense of having to 100 00:05:30,720 --> 00:05:34,800 Speaker 1: have conviction around the next move in your policy rate 101 00:05:34,920 --> 00:05:36,839 Speaker 1: to know what you are responding to. 102 00:05:37,440 --> 00:05:39,320 Speaker 2: Esther, thanks for sharing some of your experience with us 103 00:05:39,320 --> 00:05:41,400 Speaker 2: this morning. We appreciate it as the judge that the 104 00:05:41,400 --> 00:05:55,039 Speaker 2: former Kansas City FED president to extend the conversation. Jason Furman, 105 00:05:55,120 --> 00:05:58,000 Speaker 2: the former economic advisor to President Obama, joins us now 106 00:05:58,040 --> 00:06:00,760 Speaker 2: for more. Jason, welcome back to the program. The data 107 00:06:00,800 --> 00:06:03,800 Speaker 2: seems to be okay. The Utning's from Corporate America better 108 00:06:03,839 --> 00:06:05,640 Speaker 2: than good. We're a few months into this process, and 109 00:06:05,640 --> 00:06:07,279 Speaker 2: I just wonder, from your point of view, Jason, whether 110 00:06:07,320 --> 00:06:09,479 Speaker 2: you believe it's premature to sound the or clear. 111 00:06:11,520 --> 00:06:13,640 Speaker 5: I don't think the data is that terrific. 112 00:06:14,040 --> 00:06:16,159 Speaker 6: In the first half of this year, the economy grew 113 00:06:16,160 --> 00:06:19,240 Speaker 6: at a one point two percent annual rate, that is 114 00:06:19,320 --> 00:06:22,880 Speaker 6: way below where we should be. Core inflation was a 115 00:06:22,960 --> 00:06:26,839 Speaker 6: three point zero percent annual rate. That's way above where 116 00:06:26,880 --> 00:06:29,640 Speaker 6: we should be. So no, it's not a catastrophe by 117 00:06:29,680 --> 00:06:33,479 Speaker 6: any stretch of the imagination. But you know, there's more 118 00:06:33,520 --> 00:06:36,440 Speaker 6: than a hint of stagflation in the numbers we saw 119 00:06:36,480 --> 00:06:37,680 Speaker 6: in the first half of this year. 120 00:06:37,760 --> 00:06:39,279 Speaker 5: Looking at it together, it. 121 00:06:39,360 --> 00:06:41,600 Speaker 4: Was something Jason that Bob Michael was talking about. The 122 00:06:41,680 --> 00:06:44,360 Speaker 4: key question for a lot of people is how big 123 00:06:44,440 --> 00:06:46,880 Speaker 4: is the stag and how big is the flation? What 124 00:06:46,920 --> 00:06:50,400 Speaker 4: are you looking for to determine the answer to that question. 125 00:06:51,640 --> 00:06:55,040 Speaker 6: Look, one of the confusing signals here is the disconnect 126 00:06:55,080 --> 00:06:57,640 Speaker 6: between GDP growth, which has been weak. It was even 127 00:06:57,680 --> 00:06:59,600 Speaker 6: negative in the first corridor, although some of that I 128 00:06:59,600 --> 00:07:03,599 Speaker 6: think was furious measurement issue, and the job market, which 129 00:07:03,839 --> 00:07:06,919 Speaker 6: if you look at the unemployment rate, which Jay Powell 130 00:07:07,000 --> 00:07:12,520 Speaker 6: rightly emphasized yesterday, has held up quite well. And you know, 131 00:07:12,600 --> 00:07:16,200 Speaker 6: you see consumers cutting their spending back but continuing to 132 00:07:16,240 --> 00:07:19,760 Speaker 6: get jobs, continuing to get raises, and that on the 133 00:07:19,800 --> 00:07:24,240 Speaker 6: stag side of the ledger is making things even more unclear. 134 00:07:24,720 --> 00:07:27,200 Speaker 4: Well on the flation side of things right now, there's 135 00:07:27,200 --> 00:07:30,240 Speaker 4: a question about the trickle out effects of the tariffs, 136 00:07:30,240 --> 00:07:33,440 Speaker 4: whether we've seen the ramifications yet. A lot of economists 137 00:07:33,480 --> 00:07:36,040 Speaker 4: have been saying, wait until the third quarter, wait into 138 00:07:36,080 --> 00:07:39,880 Speaker 4: the fourth quarter, and see exactly how companies really managed 139 00:07:39,880 --> 00:07:42,200 Speaker 4: through this. Who do you think is a good example, 140 00:07:42,280 --> 00:07:43,800 Speaker 4: or is there an industry that you think is a 141 00:07:43,800 --> 00:07:46,200 Speaker 4: good example that might have given us an early look 142 00:07:46,480 --> 00:07:50,080 Speaker 4: at how this trickles out and what consumer receptivity is 143 00:07:50,120 --> 00:07:51,840 Speaker 4: to absorbing those price increases. 144 00:07:52,760 --> 00:07:56,120 Speaker 6: Look, some of the lowest margin businesses like toys, you 145 00:07:56,160 --> 00:07:59,280 Speaker 6: see that passed on very quickly. At the other end 146 00:07:59,280 --> 00:08:02,440 Speaker 6: of the spectrum, cars where you have the President telling 147 00:08:02,440 --> 00:08:06,360 Speaker 6: them not to raise prices, their prices are very visible. 148 00:08:06,680 --> 00:08:08,160 Speaker 5: They've been reluctant to do it. 149 00:08:08,400 --> 00:08:10,640 Speaker 6: But it's not like General Motors is going to continue 150 00:08:10,640 --> 00:08:14,360 Speaker 6: to sell cars at a loss indefinitely. They're eventually going 151 00:08:14,400 --> 00:08:16,240 Speaker 6: to have to raise those prices. 152 00:08:16,760 --> 00:08:19,400 Speaker 2: Jason, do you see this being offset by what's developing 153 00:08:19,400 --> 00:08:22,320 Speaker 2: in services inflation at the moment? How are you reading 154 00:08:22,520 --> 00:08:24,320 Speaker 2: what's happening in one side versus the other? 155 00:08:26,040 --> 00:08:28,400 Speaker 6: I mean, services is continuing to come down, but we 156 00:08:28,480 --> 00:08:30,640 Speaker 6: sort of always thought that was going to happen. That 157 00:08:30,800 --> 00:08:33,000 Speaker 6: was our path to two percent. That was the part 158 00:08:33,040 --> 00:08:36,440 Speaker 6: we were counting on. The problem is that the goods 159 00:08:36,440 --> 00:08:40,560 Speaker 6: deflation has reversed, and now we have goods inflation again. 160 00:08:41,000 --> 00:08:43,240 Speaker 6: And so one of those I take for granted doesn't 161 00:08:43,240 --> 00:08:45,440 Speaker 6: seem to me like the news. The other one the 162 00:08:45,480 --> 00:08:49,280 Speaker 6: good side. That's the unpleasant surprise here. Now, the idea 163 00:08:49,320 --> 00:08:51,959 Speaker 6: that it's transitory is not at all crazy. I think 164 00:08:52,000 --> 00:08:54,600 Speaker 6: there's even a very good chance it's true. But if 165 00:08:54,600 --> 00:08:56,840 Speaker 6: you're the Fed, do you want to bet everything on 166 00:08:56,880 --> 00:08:59,960 Speaker 6: a very good chance when you're definitely not sure? 167 00:09:00,240 --> 00:09:01,760 Speaker 2: With that in mind, do you think two months of 168 00:09:01,840 --> 00:09:04,840 Speaker 2: dankster is enough danta to draw any conclusions before you 169 00:09:04,880 --> 00:09:05,560 Speaker 2: make a decision. 170 00:09:06,960 --> 00:09:07,640 Speaker 5: I mean, you. 171 00:09:07,640 --> 00:09:09,920 Speaker 6: Always think the two months from now everything's going to 172 00:09:09,920 --> 00:09:12,360 Speaker 6: be clear, and then two months from now everything is 173 00:09:12,400 --> 00:09:15,439 Speaker 6: still muddy, so it's going to be money two months 174 00:09:15,480 --> 00:09:19,080 Speaker 6: from now, they're going to be getting conflicting data, but yeah, 175 00:09:19,200 --> 00:09:22,200 Speaker 6: maybe it'll be a tiny bit clearer than it is now. 176 00:09:22,640 --> 00:09:24,520 Speaker 4: I keep going back to the way that John opened 177 00:09:24,520 --> 00:09:26,920 Speaker 4: the show, which was Jay Who, and it raises the 178 00:09:27,000 --> 00:09:29,840 Speaker 4: question implicitly about how relevant the FED is at a 179 00:09:29,880 --> 00:09:32,959 Speaker 4: time of massive technological explosion, and we're seeing that in 180 00:09:33,000 --> 00:09:36,319 Speaker 4: the tech earnings. I mean, how much does the advancement, 181 00:09:36,400 --> 00:09:39,240 Speaker 4: the investment coming from some of the tech giants in 182 00:09:39,240 --> 00:09:42,480 Speaker 4: the United States overwhelm some of this discussion has certainly 183 00:09:42,520 --> 00:09:45,880 Speaker 4: overwhelmed the negative consequences from the tariffs, so a lot 184 00:09:45,880 --> 00:09:46,960 Speaker 4: of people had expected. 185 00:09:48,120 --> 00:09:49,320 Speaker 5: It depends what you're talking about. 186 00:09:49,800 --> 00:09:52,680 Speaker 6: If you're talking about the stock market, Yeah, a lot 187 00:09:52,720 --> 00:09:55,199 Speaker 6: of what's going on in the numerator, which is earnings, 188 00:09:55,320 --> 00:09:56,680 Speaker 6: rather than the denominator. 189 00:09:56,720 --> 00:09:59,520 Speaker 5: The discount rate is what matters right now. 190 00:10:00,040 --> 00:10:03,320 Speaker 6: If you're talking about GDP, we're not seeing a lot 191 00:10:03,320 --> 00:10:05,800 Speaker 6: of tech at least in the supply side. Frankly, we're 192 00:10:05,800 --> 00:10:08,079 Speaker 6: actually seeing it more on the demand side right now, 193 00:10:08,559 --> 00:10:12,359 Speaker 6: and so if anything, it might be inflationary. Upfront productivity 194 00:10:12,400 --> 00:10:15,360 Speaker 6: growth is basically right on the track we thought it 195 00:10:15,400 --> 00:10:20,440 Speaker 6: would be prior to the pandemic. So tech is helping 196 00:10:20,440 --> 00:10:23,959 Speaker 6: the stock market quite a lot. I'm optimistic and hopeful 197 00:10:23,960 --> 00:10:27,120 Speaker 6: it will help GDP, but right now it is not 198 00:10:27,160 --> 00:10:30,040 Speaker 6: having any real material impact. 199 00:10:30,120 --> 00:10:32,480 Speaker 2: There, Jason, that's a strong fund of point. We'll leave 200 00:10:32,480 --> 00:10:34,559 Speaker 2: it there, Thank you, sir, Jason Furman. That at the 201 00:10:34,600 --> 00:10:47,920 Speaker 2: Harvard Kennedy School, Gagi Chantry with blankcropt writing, AI and 202 00:10:48,000 --> 00:10:51,120 Speaker 2: Tech continues to lead here pushing back on the broadening 203 00:10:51,120 --> 00:10:55,120 Speaker 2: out narrative yet again, as underpinned by strong beats from METSA, Microsoft, 204 00:10:55,440 --> 00:10:58,080 Speaker 2: and Google. Gagie joint is now for more Gaki, good. 205 00:10:57,920 --> 00:10:59,040 Speaker 7: Monic, Hi, good morning. 206 00:10:59,120 --> 00:11:01,760 Speaker 2: Just phenomenal beats from these companies. How difficult is it 207 00:11:01,800 --> 00:11:04,040 Speaker 2: to leave the US behind and just pile into this 208 00:11:04,120 --> 00:11:07,559 Speaker 2: europe trade, pile into this everything else tride you now. 209 00:11:07,559 --> 00:11:10,160 Speaker 7: One of the things that we've been talking to clients 210 00:11:10,200 --> 00:11:13,319 Speaker 7: about is the need for diversification, but at the same 211 00:11:13,400 --> 00:11:18,000 Speaker 7: time not giving up on the US dec AI theme. 212 00:11:18,600 --> 00:11:22,360 Speaker 7: And I think to the extent that investors have not 213 00:11:22,640 --> 00:11:27,840 Speaker 7: had any international exposure or massively underweight. For those investors, 214 00:11:27,920 --> 00:11:32,079 Speaker 7: having some exposure to quality international names does make sense. 215 00:11:32,600 --> 00:11:36,800 Speaker 7: But so important, as was made evident by yesterday's earnings. 216 00:11:37,720 --> 00:11:40,720 Speaker 7: What you need in your portfolio is parts of the 217 00:11:40,720 --> 00:11:45,079 Speaker 7: equity market that are continuing to have revenue growth, continuing 218 00:11:45,120 --> 00:11:47,840 Speaker 7: to throw out amazing amounts of free cash flow. And Chathan, 219 00:11:47,880 --> 00:11:50,600 Speaker 7: I think you made that point earlier that we're finally 220 00:11:50,720 --> 00:11:55,079 Speaker 7: getting an ROI on all of the capex that has 221 00:11:55,120 --> 00:11:57,720 Speaker 7: gone in over the last year, and we're seeing the 222 00:11:57,760 --> 00:12:03,680 Speaker 7: world's largest companies grow growing revenue at the high double digits, 223 00:12:03,720 --> 00:12:05,200 Speaker 7: which is amazing. 224 00:12:04,960 --> 00:12:07,160 Speaker 2: In some ways. The least interesting thing about this week 225 00:12:07,240 --> 00:12:09,320 Speaker 2: is Tariff's at the trade deadline. Now, if you'd ask 226 00:12:09,400 --> 00:12:12,040 Speaker 2: me that on hyproback in July, whether that would be 227 00:12:12,080 --> 00:12:14,520 Speaker 2: the case July ninth, going into that deadline, I would 228 00:12:14,520 --> 00:12:16,880 Speaker 2: have said, well, you're talking about tariff is like the story. 229 00:12:17,080 --> 00:12:19,120 Speaker 2: Do you think that's going to reassert itself in a 230 00:12:19,160 --> 00:12:19,720 Speaker 2: month's account. 231 00:12:20,200 --> 00:12:22,320 Speaker 7: I think we're all and I know I follow your show. 232 00:12:22,400 --> 00:12:26,079 Speaker 7: You're focusing in it as well. Obviously, some of the 233 00:12:26,120 --> 00:12:31,480 Speaker 7: headlines yesterday around copper, around India tariffs, those idiosyncratic stories 234 00:12:31,559 --> 00:12:35,200 Speaker 7: are going to drive certain markets and eventually in time, 235 00:12:35,480 --> 00:12:38,520 Speaker 7: when we realize what the landing zone of tariffs will be, 236 00:12:38,640 --> 00:12:41,880 Speaker 7: whether that's closer to a fifteen percent or a twenty percent, 237 00:12:42,320 --> 00:12:45,760 Speaker 7: Eventually we will see that feed through, and we're already 238 00:12:45,880 --> 00:12:48,920 Speaker 7: kind of seeing that in goods inflation, certain components of 239 00:12:48,960 --> 00:12:51,600 Speaker 7: goods inflation. So it will appear, it won't disappear. It 240 00:12:51,640 --> 00:12:54,360 Speaker 7: will appear in data, and it will appear in margins, 241 00:12:54,440 --> 00:12:58,520 Speaker 7: or it will appear in certain foreign companies reducing their prices. 242 00:12:59,320 --> 00:13:02,439 Speaker 7: But of right now, I think the bigger theme is 243 00:13:02,600 --> 00:13:06,160 Speaker 7: the two things. Number one, the ROI on Capex coming 244 00:13:06,200 --> 00:13:09,160 Speaker 7: through and large cap deck really a large cap deck 245 00:13:09,240 --> 00:13:12,800 Speaker 7: and AI really being the story that's going to propel 246 00:13:12,960 --> 00:13:16,559 Speaker 7: us exceptionalism forward. And I think the second one, which 247 00:13:17,000 --> 00:13:20,360 Speaker 7: is also less exciting this morning, which is that the Fed, 248 00:13:20,920 --> 00:13:24,560 Speaker 7: while I think they're both quite hawkish, they're still telling 249 00:13:24,640 --> 00:13:27,800 Speaker 7: us in their own way that if things wobble, especially 250 00:13:27,840 --> 00:13:31,480 Speaker 7: in the unemployment rate front, they are here to start 251 00:13:31,520 --> 00:13:33,760 Speaker 7: cutting rates. And I think that's something else that the 252 00:13:34,240 --> 00:13:36,160 Speaker 7: market will eventually care about as well. 253 00:13:36,200 --> 00:13:39,040 Speaker 4: When you put these stories together, there's sort of this 254 00:13:39,559 --> 00:13:42,160 Speaker 4: big question underputting the market. What are we going to 255 00:13:42,160 --> 00:13:45,080 Speaker 4: get the trickling out of some of the benefits that 256 00:13:45,120 --> 00:13:48,120 Speaker 4: the hyperscalers are experiencing to the rest of the market. 257 00:13:48,120 --> 00:13:49,720 Speaker 4: When are you going to see a broadening out where 258 00:13:49,960 --> 00:13:53,200 Speaker 4: their leadership isn't just a ballast amid a storm, but 259 00:13:53,320 --> 00:13:56,920 Speaker 4: really something that is driving gains an efficiency and profitability 260 00:13:56,960 --> 00:14:00,400 Speaker 4: across corporate America. How far away from that away? 261 00:14:01,320 --> 00:14:04,000 Speaker 7: So, I think depending on what people mean when they 262 00:14:04,080 --> 00:14:07,640 Speaker 7: mean broadening out, I would argue you're seeing some and 263 00:14:07,679 --> 00:14:10,400 Speaker 7: then at the same time you're obviously continuing to see 264 00:14:10,400 --> 00:14:14,280 Speaker 7: the largest companies throughout the largest revenue growth. So when 265 00:14:14,320 --> 00:14:16,599 Speaker 7: I say there is some amount of broadening out, I 266 00:14:16,640 --> 00:14:19,360 Speaker 7: would say when you look at something like financials, when 267 00:14:19,400 --> 00:14:22,120 Speaker 7: you look at different sectors or sub sectors within the 268 00:14:22,160 --> 00:14:25,800 Speaker 7: equity market, this year, you are seeing more of those 269 00:14:25,920 --> 00:14:29,520 Speaker 7: sectors being in positive territory. That could be called one 270 00:14:29,800 --> 00:14:31,920 Speaker 7: that could be one way of thinking about broadening. But 271 00:14:32,040 --> 00:14:36,040 Speaker 7: at the same time, obviously you have the largest hyperscalers 272 00:14:36,080 --> 00:14:38,960 Speaker 7: being the largest revenue growers, and I think that that 273 00:14:39,160 --> 00:14:42,880 Speaker 7: probably pushes back against the broadening out narrative. I think 274 00:14:42,880 --> 00:14:45,960 Speaker 7: the theme is clear. It is one of moving away 275 00:14:46,040 --> 00:14:51,920 Speaker 7: from small cap, unprofitable companies to large cap quality companies. 276 00:14:52,160 --> 00:14:54,680 Speaker 7: And that's what we've been talking about and many you know, 277 00:14:54,720 --> 00:14:56,720 Speaker 7: you guys have been having a lot of people on 278 00:14:56,760 --> 00:14:59,920 Speaker 7: your show. They've talked about that theme of large cap. 279 00:15:00,480 --> 00:15:03,520 Speaker 7: Perhaps it doesn't feel as comfortable to talk about it 280 00:15:03,520 --> 00:15:06,280 Speaker 7: it being also talked about it last year, but it's 281 00:15:06,320 --> 00:15:09,040 Speaker 7: still working and it will continue to work. I think 282 00:15:09,080 --> 00:15:12,240 Speaker 7: the theme going forward for the next six month is 283 00:15:12,320 --> 00:15:16,920 Speaker 7: finding pockets of diversification in your portfolio. In addition to 284 00:15:16,960 --> 00:15:20,120 Speaker 7: this AI and tech trade, international plays a role there. 285 00:15:20,440 --> 00:15:24,600 Speaker 7: Fixed income plays a role there, assets like inflation link bonds, gold, 286 00:15:24,760 --> 00:15:28,600 Speaker 7: and certainly market neutral strategies that aren't giving you too 287 00:15:28,640 --> 00:15:31,000 Speaker 7: much beta but at the same time giving you alpha 288 00:15:31,080 --> 00:15:31,520 Speaker 7: makes sense. 289 00:15:31,600 --> 00:15:34,640 Speaker 4: International plays role and John was alluding to this earlier. 290 00:15:35,040 --> 00:15:38,240 Speaker 4: There was this belief that international was going to outperform 291 00:15:38,280 --> 00:15:40,400 Speaker 4: the US earlier this year, and it did, and a 292 00:15:40,400 --> 00:15:42,200 Speaker 4: lot of it was pegged the dollar, and when we 293 00:15:42,240 --> 00:15:45,800 Speaker 4: saw the weakening, there's been a huge and violent about face. 294 00:15:46,040 --> 00:15:47,960 Speaker 4: Do you think that there is staying power where the 295 00:15:48,000 --> 00:15:50,080 Speaker 4: first half was the rest of the world and the 296 00:15:50,080 --> 00:15:52,680 Speaker 4: second half is back to US exceptionalism. 297 00:15:53,640 --> 00:15:57,400 Speaker 7: I think that a lot of that violent move that 298 00:15:57,480 --> 00:16:01,840 Speaker 7: you mentioned was very much around the underperformance, and obviously 299 00:16:01,880 --> 00:16:05,560 Speaker 7: with July, with the dollar coming back, rallying back has 300 00:16:05,680 --> 00:16:08,040 Speaker 7: led to a little bit of that reversal. I think 301 00:16:08,040 --> 00:16:10,600 Speaker 7: the path forward a big part of that story will 302 00:16:10,600 --> 00:16:14,280 Speaker 7: be what happens with the dollar. Frankly, what we're seeing 303 00:16:14,320 --> 00:16:17,480 Speaker 7: in flows and what we're seeing when we pull our 304 00:16:17,560 --> 00:16:22,560 Speaker 7: investors and our clients is a recognition of the need 305 00:16:22,680 --> 00:16:27,720 Speaker 7: to diversify away from a large gap because that's all 306 00:16:27,760 --> 00:16:30,720 Speaker 7: they have, not because it's not going to generate returns, 307 00:16:31,000 --> 00:16:33,640 Speaker 7: but because there is a need for getting that value 308 00:16:33,720 --> 00:16:38,560 Speaker 7: component into portfolios and getting that from international to the extent, 309 00:16:38,720 --> 00:16:43,280 Speaker 7: not just US investors, but global investors continue to move 310 00:16:43,440 --> 00:16:46,760 Speaker 7: away from US into going back to their home countries. 311 00:16:47,000 --> 00:16:49,600 Speaker 7: So we look at European investors and APAC investors, and 312 00:16:49,640 --> 00:16:52,960 Speaker 7: many of those investors are just being a little bit 313 00:16:53,040 --> 00:16:56,120 Speaker 7: more diversified away from the US. To the extent that happens, 314 00:16:56,720 --> 00:16:59,720 Speaker 7: I think that the international story can certainly have some legs, 315 00:16:59,760 --> 00:17:03,760 Speaker 7: but not at the expense of US large cap quality 316 00:17:03,800 --> 00:17:04,200 Speaker 7: and growth. 317 00:17:04,320 --> 00:17:06,520 Speaker 2: Let's just say, on the US, when you set diversify, 318 00:17:06,640 --> 00:17:08,960 Speaker 2: you set diversify the equity. So if I'm in the 319 00:17:09,040 --> 00:17:11,760 Speaker 2: US right now, I diversify my equity exposure to the 320 00:17:11,760 --> 00:17:14,520 Speaker 2: international story. Given where we are right now with the dollar, 321 00:17:14,760 --> 00:17:16,400 Speaker 2: is that something I need to currency hedge? 322 00:17:16,920 --> 00:17:19,080 Speaker 7: You know, that's an interesting question, like a lot of 323 00:17:19,440 --> 00:17:21,919 Speaker 7: right now. The view for our firm is still that 324 00:17:22,000 --> 00:17:25,200 Speaker 7: the dollar can continue to depreciate. Usually, what we've seen 325 00:17:25,480 --> 00:17:30,080 Speaker 7: is that the dollar depreciations happen in these long cycles. 326 00:17:30,119 --> 00:17:32,520 Speaker 7: It's not just for one month or a week. It 327 00:17:32,600 --> 00:17:35,679 Speaker 7: happens over many months, eighteen to twenty four months, and 328 00:17:35,720 --> 00:17:38,560 Speaker 7: we're just in the beginning of that. In that case, 329 00:17:38,680 --> 00:17:42,399 Speaker 7: obviously you want some of those foreign exposures. You want 330 00:17:42,440 --> 00:17:44,800 Speaker 7: that exposure to some of the you know em as 331 00:17:44,840 --> 00:17:49,199 Speaker 7: well as DM currencies. Fixed income, though, is another story, 332 00:17:49,320 --> 00:17:52,199 Speaker 7: right So, usually what we've seen our clients do is 333 00:17:52,320 --> 00:17:57,520 Speaker 7: in fixed income allegations not necessarily taking the FCS risk, 334 00:17:57,680 --> 00:18:03,040 Speaker 7: actually hedging it back into US for that enhanced yield. 335 00:18:03,160 --> 00:18:06,440 Speaker 7: And that's something that you know, some of our portfolio managers, 336 00:18:06,560 --> 00:18:10,000 Speaker 7: especially in fixed income with products like bink, are doing 337 00:18:10,080 --> 00:18:14,640 Speaker 7: taking advantage of the hedged costs for European and other 338 00:18:14,760 --> 00:18:16,120 Speaker 7: areas credit markets. 339 00:18:16,160 --> 00:18:18,040 Speaker 2: Gaky appreciate it. It's got to see you. Thanks for 340 00:18:18,040 --> 00:18:30,040 Speaker 2: breaking it down, Gagy Chuntry there of Black Crook, what 341 00:18:30,160 --> 00:18:33,040 Speaker 2: pic of life Shed Partners has a neutral racing on Apple. 342 00:18:33,359 --> 00:18:35,320 Speaker 2: He came out in front in the last few months 343 00:18:35,400 --> 00:18:37,280 Speaker 2: or so, and so the tech gig I should also 344 00:18:37,400 --> 00:18:40,600 Speaker 2: consider a new CEO. What joins us now for more Well, 345 00:18:40,640 --> 00:18:42,840 Speaker 2: welcome back to the program. Let's talk about what you're 346 00:18:42,840 --> 00:18:45,160 Speaker 2: expecting from Apple later on this afternoon. 347 00:18:46,200 --> 00:18:48,000 Speaker 8: Well, first, Jonathan, I just want to comment on your 348 00:18:48,080 --> 00:18:51,480 Speaker 8: last segment. The two things about those high moving stocks 349 00:18:51,720 --> 00:18:54,879 Speaker 8: is that they're investing in AI and that's really the 350 00:18:54,920 --> 00:18:57,200 Speaker 8: issue that we have with Apple in terms of the quarter. 351 00:18:58,160 --> 00:19:00,639 Speaker 8: You know, look there's a pull forward right and had 352 00:19:00,640 --> 00:19:03,160 Speaker 8: to announced tariffs. I think people went out and bought 353 00:19:03,240 --> 00:19:06,120 Speaker 8: iPhones ahead of the time. We've already seen this commentary 354 00:19:06,600 --> 00:19:09,440 Speaker 8: out of the major distribution channel for Apple, which is 355 00:19:09,480 --> 00:19:12,399 Speaker 8: the wireless operators for Verizon AT and T T Mobile 356 00:19:12,440 --> 00:19:14,720 Speaker 8: and others. So you are going to see a pull 357 00:19:14,800 --> 00:19:18,240 Speaker 8: forward of iPhone revenue this quarter. So then the question, 358 00:19:18,400 --> 00:19:20,919 Speaker 8: as it always is for Apple, is you know, what 359 00:19:21,040 --> 00:19:23,399 Speaker 8: is the guidance for next quarter? But again that's that 360 00:19:23,680 --> 00:19:26,760 Speaker 8: focuses on I think, you know the near term where 361 00:19:26,800 --> 00:19:30,119 Speaker 8: what investors are really wanting a note to know about 362 00:19:30,400 --> 00:19:32,560 Speaker 8: is what is the AI strategy for this company for 363 00:19:32,640 --> 00:19:35,400 Speaker 8: the long term because clearly the companies that are succeeding 364 00:19:35,840 --> 00:19:39,640 Speaker 8: in the markets today and seeing investor dollars flow into them. 365 00:19:39,920 --> 00:19:42,119 Speaker 8: Are those that have a clear AI strategy. 366 00:19:42,440 --> 00:19:44,880 Speaker 4: Well, this just points to the idea that we might 367 00:19:44,960 --> 00:19:48,520 Speaker 4: see their expense costs go down because they've lost a 368 00:19:48,520 --> 00:19:53,000 Speaker 4: couple of pretty high profile AI technicians and strategists to 369 00:19:53,040 --> 00:19:56,320 Speaker 4: the likes of Meta, which is offering one hundred million 370 00:19:56,359 --> 00:19:59,200 Speaker 4: dollar payouts. I just wonder how important it's going to 371 00:19:59,240 --> 00:20:02,240 Speaker 4: be for investors to see spending by Apple, to see 372 00:20:02,240 --> 00:20:04,600 Speaker 4: that they are working on getting back some of that 373 00:20:04,720 --> 00:20:06,840 Speaker 4: promise from this latest technology. 374 00:20:07,520 --> 00:20:09,080 Speaker 3: I mean, there's two lines of spending. 375 00:20:09,160 --> 00:20:12,119 Speaker 8: You have capital investment, where they're investing in the stuff 376 00:20:12,119 --> 00:20:15,520 Speaker 8: that supports in LLM. It's probably too late for Apple 377 00:20:15,600 --> 00:20:17,879 Speaker 8: to do that now. But there's another line of spending, 378 00:20:17,960 --> 00:20:20,960 Speaker 8: and that's R and D which is over thirty billion 379 00:20:21,000 --> 00:20:23,760 Speaker 8: dollars a year that the company invests. In the old days, 380 00:20:23,920 --> 00:20:26,720 Speaker 8: when they would have analysts on that would ask tough questions, 381 00:20:26,720 --> 00:20:29,440 Speaker 8: you would have people ask and say like, hey, where 382 00:20:29,440 --> 00:20:31,840 Speaker 8: are you spending the thirty billion? There'd be some response 383 00:20:31,920 --> 00:20:34,400 Speaker 8: in terms of the mix of R and D investment 384 00:20:34,480 --> 00:20:36,920 Speaker 8: in new products versus old products, and there'd be some 385 00:20:37,000 --> 00:20:39,760 Speaker 8: indication to give investors some hope that there would be 386 00:20:39,840 --> 00:20:43,040 Speaker 8: new products or services incoming. Then we know what happened, right, 387 00:20:43,200 --> 00:20:45,880 Speaker 8: Things like Project Titan that would have gotten them into 388 00:20:45,920 --> 00:20:49,600 Speaker 8: autonomy were killed, and we saw other products products that 389 00:20:49,840 --> 00:20:52,639 Speaker 8: came to market like the Vision pro that really didn't 390 00:20:52,640 --> 00:20:55,919 Speaker 8: find a market opportunity. So I think hopefully we have 391 00:20:56,000 --> 00:20:59,000 Speaker 8: some analysts on the call tonight during that Q and 392 00:20:59,040 --> 00:21:02,000 Speaker 8: A session that will ask about where are you investing 393 00:21:02,040 --> 00:21:03,679 Speaker 8: that thirty billion in R and D, what are some 394 00:21:03,760 --> 00:21:05,719 Speaker 8: of the new products we can invest in? What is 395 00:21:05,760 --> 00:21:08,000 Speaker 8: the AI strategy for the company going forward? 396 00:21:08,119 --> 00:21:09,760 Speaker 4: Well, you've mentioned this a couple of times, so we 397 00:21:09,840 --> 00:21:11,720 Speaker 4: have to go there. You think that the analyst community 398 00:21:11,720 --> 00:21:13,480 Speaker 4: hasn't done a good enough job holding the feet to 399 00:21:13,480 --> 00:21:16,240 Speaker 4: the fire of Apple at a time when it seems 400 00:21:16,280 --> 00:21:18,720 Speaker 4: like maybe some of their strategies were overly complacent. 401 00:21:19,960 --> 00:21:22,080 Speaker 3: I think it's a problem with earnings calls in general. 402 00:21:22,119 --> 00:21:24,119 Speaker 3: These days. We do, at lea Shay, we do a 403 00:21:24,160 --> 00:21:25,679 Speaker 3: quarterly review of this. 404 00:21:25,760 --> 00:21:28,360 Speaker 8: We count the number of times analysts get on call 405 00:21:28,400 --> 00:21:30,159 Speaker 8: and say great quarter, guys. I saw I heard it 406 00:21:30,240 --> 00:21:32,280 Speaker 8: last night on another call again for a company that 407 00:21:32,760 --> 00:21:35,320 Speaker 8: had a one million dollars in revenue, and an analyst 408 00:21:35,359 --> 00:21:39,000 Speaker 8: was congratulating them on a great quarter. And they do 409 00:21:39,040 --> 00:21:41,400 Speaker 8: that because they get on the calls right, and then 410 00:21:41,480 --> 00:21:43,240 Speaker 8: when they get on the calls, they don't ask the 411 00:21:43,280 --> 00:21:47,159 Speaker 8: tough questions that management need to be asked that investors 412 00:21:47,200 --> 00:21:49,080 Speaker 8: want to here to figure out what that long term 413 00:21:49,119 --> 00:21:49,760 Speaker 8: strategy is. 414 00:21:49,920 --> 00:21:50,959 Speaker 3: It's very frustrating. 415 00:21:51,280 --> 00:21:53,760 Speaker 2: Well, I see this with journalists too. How do we 416 00:21:53,800 --> 00:21:54,280 Speaker 2: fix it? 417 00:21:56,000 --> 00:21:58,560 Speaker 8: I mean, investors themselves have to put pressure on there. 418 00:21:58,760 --> 00:22:03,080 Speaker 8: I certainly never want for incremental regulation, but I think 419 00:22:03,119 --> 00:22:05,560 Speaker 8: the investors, the people that actually own the stock, need 420 00:22:05,600 --> 00:22:08,639 Speaker 8: to start pressuring the companies or you know, look to 421 00:22:08,720 --> 00:22:11,880 Speaker 8: us or others to provide. Maybe Bloomberg should start doing 422 00:22:11,880 --> 00:22:16,560 Speaker 8: their own quarterly review like we do, evaluating which analysts 423 00:22:16,600 --> 00:22:18,840 Speaker 8: are getting on the call, which have buy ratings versus 424 00:22:18,840 --> 00:22:20,080 Speaker 8: holds or sells. 425 00:22:20,160 --> 00:22:22,080 Speaker 3: For asking questions on these calls, Well. 426 00:22:21,920 --> 00:22:24,000 Speaker 2: Apple was an odd one. It's probably the most well 427 00:22:24,040 --> 00:22:27,199 Speaker 2: researched company on the planet. There's only three cells on it. 428 00:22:27,240 --> 00:22:29,080 Speaker 2: And to your point, it's a company in a difficult 429 00:22:29,080 --> 00:22:32,680 Speaker 2: spot that should face some difficult questions later on this afternoon, 430 00:22:32,720 --> 00:22:35,239 Speaker 2: and well maybe won't. The issue that I have with 431 00:22:35,280 --> 00:22:36,679 Speaker 2: some of the balls is they often come on the 432 00:22:36,680 --> 00:22:39,359 Speaker 2: program and talk about the same thing over and over again. 433 00:22:39,720 --> 00:22:42,080 Speaker 2: They'll talk about growth that's coming further down the line. 434 00:22:42,119 --> 00:22:44,720 Speaker 2: They'll talk about an upgrade cycle that doesn't seem to 435 00:22:44,720 --> 00:22:47,600 Speaker 2: be happening. Well, when do they capitulate on that? At 436 00:22:47,600 --> 00:22:49,080 Speaker 2: what point do you think they have to? 437 00:22:50,280 --> 00:22:52,720 Speaker 8: I mean, to me, that's just laughable, right, I mean, 438 00:22:52,880 --> 00:22:56,439 Speaker 8: you're exactly right, John. I mean, it's the five percent 439 00:22:56,520 --> 00:22:59,280 Speaker 8: growth that it doesn't happen next quarter in the guidance, 440 00:22:59,440 --> 00:23:00,879 Speaker 8: So they just say, oh, it's going to come the 441 00:23:00,960 --> 00:23:02,840 Speaker 8: quarter after that or the quarter after that. But I 442 00:23:02,880 --> 00:23:06,280 Speaker 8: think again, look at look at Apple's performance relative to 443 00:23:06,320 --> 00:23:09,080 Speaker 8: the mag seven. You know, it's it still has a 444 00:23:09,160 --> 00:23:11,600 Speaker 8: multiple that's a premium, right, It's still a good brand 445 00:23:11,640 --> 00:23:14,359 Speaker 8: in the market. There's still an opportunity I think for 446 00:23:14,440 --> 00:23:17,440 Speaker 8: them to get out of this if they get more 447 00:23:17,480 --> 00:23:20,680 Speaker 8: focused on products and developing, you know, some type of 448 00:23:21,040 --> 00:23:25,040 Speaker 8: AI strategy. I've suggested that may require a change in 449 00:23:25,240 --> 00:23:28,720 Speaker 8: the management, a change in the CEO specifically. There's others 450 00:23:28,800 --> 00:23:30,840 Speaker 8: that think that they can be they can do it 451 00:23:31,040 --> 00:23:33,280 Speaker 8: with the existing CEO and just give them another year. 452 00:23:33,720 --> 00:23:36,520 Speaker 8: But the problem with that is a year from now, 453 00:23:36,640 --> 00:23:38,520 Speaker 8: what is the market going to look like? You know, 454 00:23:38,840 --> 00:23:40,639 Speaker 8: what products are going to be in the market that 455 00:23:40,680 --> 00:23:44,639 Speaker 8: are already disrupting Apple. The pace of innovation because of 456 00:23:44,760 --> 00:23:48,920 Speaker 8: AI is faster than anything we've ever seen. Everyone agrees 457 00:23:49,160 --> 00:23:51,959 Speaker 8: right more or less, that AI is going to be 458 00:23:52,200 --> 00:23:55,080 Speaker 8: something that's have a bigger impact on our economy than 459 00:23:55,160 --> 00:23:57,640 Speaker 8: even the Internet did. And yet you know, we're still 460 00:23:57,640 --> 00:24:00,399 Speaker 8: not getting the questions asked of them and terms of 461 00:24:00,640 --> 00:24:01,560 Speaker 8: you know, what's. 462 00:24:01,359 --> 00:24:02,080 Speaker 3: Going on with AI? 463 00:24:02,440 --> 00:24:04,680 Speaker 8: Why do I when I still use Siri today, why 464 00:24:04,760 --> 00:24:06,600 Speaker 8: does it still work the same it did? 465 00:24:06,800 --> 00:24:07,920 Speaker 3: You know three years ago? 466 00:24:07,960 --> 00:24:10,320 Speaker 8: It's seemingly to me when I can pick up chat 467 00:24:10,359 --> 00:24:13,320 Speaker 8: ept press their audio button and it works great. 468 00:24:14,119 --> 00:24:14,320 Speaker 2: Well. 469 00:24:14,320 --> 00:24:16,720 Speaker 4: Before I let you go, I'd love to hear your 470 00:24:16,720 --> 00:24:21,040 Speaker 4: take on China and India and the manufacturing pathway for Apple. 471 00:24:21,080 --> 00:24:23,120 Speaker 4: How much visibility do you think they're going to give? 472 00:24:23,480 --> 00:24:27,240 Speaker 4: Will people be making iPhones in New Jersey? 473 00:24:28,160 --> 00:24:30,919 Speaker 8: I mean, there was some excitement about some shift of 474 00:24:30,960 --> 00:24:33,520 Speaker 8: manufacturing to India, but there's there's been a great book 475 00:24:33,560 --> 00:24:36,200 Speaker 8: I forget the name of the author, but that came 476 00:24:36,240 --> 00:24:40,320 Speaker 8: out recently talking about how Apple has moved manufacturing to 477 00:24:40,480 --> 00:24:45,160 Speaker 8: China has enabled that country to be a manufacturing powerhouse 478 00:24:45,680 --> 00:24:48,880 Speaker 8: and the difficulty that exist in trying to move that, 479 00:24:49,280 --> 00:24:52,119 Speaker 8: you know, to other countries, whether it's India, the United. 480 00:24:51,880 --> 00:24:52,800 Speaker 3: States or elsewhere. 481 00:24:52,840 --> 00:24:56,520 Speaker 8: So obviously that remains there's always these like existential or 482 00:24:56,880 --> 00:25:01,040 Speaker 8: you know, existing risks, whether it's manufacturer in China. The 483 00:25:01,119 --> 00:25:04,439 Speaker 8: twenty billion dollar plus that Google pays them for search, 484 00:25:04,480 --> 00:25:07,159 Speaker 8: which is obviously under scrutiny of the government because it 485 00:25:07,200 --> 00:25:09,800 Speaker 8: was it was used as a way to keep Apple 486 00:25:09,880 --> 00:25:13,399 Speaker 8: out of search. There are these big ticket items in 487 00:25:13,520 --> 00:25:16,240 Speaker 8: terms of events that can certainly you know, still happen. 488 00:25:16,560 --> 00:25:18,639 Speaker 8: That's not a way to invest on these break ticket 489 00:25:18,680 --> 00:25:20,760 Speaker 8: items that you know that may or may not happen. 490 00:25:22,160 --> 00:25:24,440 Speaker 8: We should be focused on at least where the AI 491 00:25:24,480 --> 00:25:26,800 Speaker 8: strategy is. And look, you're right, like, you know, I 492 00:25:26,800 --> 00:25:28,840 Speaker 8: don't know what they can update us on in China. 493 00:25:28,960 --> 00:25:31,600 Speaker 8: How quickly they could get out of China. It's doubtful 494 00:25:31,600 --> 00:25:35,959 Speaker 8: they would have anything that would make the market, you know, 495 00:25:36,160 --> 00:25:38,240 Speaker 8: the concerns go away that all of a sudden, you're 496 00:25:38,240 --> 00:25:40,600 Speaker 8: going to move this amount of volume out of China 497 00:25:40,640 --> 00:25:41,560 Speaker 8: back to a different market. 498 00:25:41,720 --> 00:25:42,720 Speaker 2: Well, I appreciate your time. 499 00:25:42,840 --> 00:25:44,080 Speaker 3: Well PI sec of Lifshed. 500 00:25:44,960 --> 00:25:48,520 Speaker 2: This is the Bloomberg Seventans podcast bringing you the best 501 00:25:48,520 --> 00:25:51,600 Speaker 2: in markets, economics, and Giet politics. You can watch the 502 00:25:51,640 --> 00:25:54,639 Speaker 2: show live on Bloomberg TV weekday mornings from six am 503 00:25:54,760 --> 00:25:58,760 Speaker 2: to nine am Eastern. Subscribe to the podcast on Apple, Spotify, 504 00:25:58,880 --> 00:26:01,119 Speaker 2: or anywhere else you listen, and as always, on the 505 00:26:01,119 --> 00:26:03,480 Speaker 2: Bloomberg Terminal and the Bloomberg Business own