00:00:00 Speaker 1: Bloomberg Audio Studios, podcasts, radio news. This is the Bloomberg Surveillance Podcast. Catch us live weekdays at seven am Eastern on Apple CarPlay or Android Auto with the Bloomberg Business App. Listen on demand wherever you get your podcasts, or watch us live on YouTube. 00:00:27 Speaker 2: We're advantage in particularly that we're not under the time pressure of the FEDERICIDESKF someone that's been a foundation of our thinking about our central bank and Bill's notes and bombs. Bob Michael joins US now CIO, head of gf I c. 00:00:43 Speaker 3: C Global Fixed Income, Currency and Commodities All. 00:00:50 Speaker 2: He attended every restaurant in the new building and they gave them matierarium JP Morgan Investment Management. Do you know what worst strategy is yet. 00:01:01 Speaker 3: Other than to set up task forces? It's not clear. 00:01:04 Speaker 2: Tom will it take. Based on the history of central bankers Powell, for example. 00:01:09 Speaker 3: We think his hand will be for sooner than he likes it. Clearly, by having the task force come back at year end, he wants to glide into twenty twenty seven without having to do much. But the markets move, the economy moves. The summers tend to be a crucible of intensity, so we think by the September meeting he's going to have a plan. 00:01:32 Speaker 2: I got to get I gotta get this, and it's too important. Paul's got a million smart questions. I'm assuming James Diamond hates task forces with a passion. What do you expect to get out of a task force plural from the FED? 00:01:47 Speaker 3: Well, it depends who's leading them and who's on them. I think they'll come back with very thoughtful ideas. In the end, you don't set up task forces unless you already know the answer. So he knows the answer. It's just a matter of seeing if he can pin it on the task force or just go ahead and say do it this way, runs it folks. 00:02:10 Speaker 2: So you've just heard there, absolutely perfect Tom. 00:02:13 Speaker 4: I don't want to say Bob is old here, but let's just say he's been around the block once or twice. Look at this note. The US bond market looks fair value. We expect a ten year US treasury to trade between four. 00:02:24 Speaker 5: And one eighth and four and five. 00:02:25 Speaker 2: Aays he's quoting fraction. 00:02:28 Speaker 4: I mean, who does that anymore? But Bob Michael talk to us about that ten year I mean, it feels like we are where we are, and that's kind of where the market feels pretty comfortable here. 00:02:39 Speaker 5: What do we do here with rates here? 00:02:42 Speaker 2: Where they are? 00:02:42 Speaker 3: Well, in two and a half months, we went from three ninety to too close to four seventy, and both of those proved to be extremes. We're somewhere in the middle. We're pricing in one possibly too FED rate hikes. I think four and five eighths covers you for two hikes. I think when you get down to four and in eighth probably you don't have enough yield in the market to cover you for a rate hiker two. So we're saying the bond market looks pretty good right now. It has a repricing. The FED if they come in and lean into growth and inflation pressures, they don't need to do a lot. Maybe one or two maintenance hikes join the other central banks, but that's about it. 00:03:26 Speaker 4: How much credit risk are you taking these days? 00:03:28 Speaker 3: We're taking a lot. We've had our investment quarterly. Last week we tried, as bond investors do, to poke holes in the economy and prove that either it's about to collapse or melt up in a fireball of growth and inflation, and instead what we saw is that businesses are rationally putting together capex plans. There's a lot going on. When we think about sovereigns away from the US, they're also thinking about investing. Everyone wants energy security, everyone wants defense of their borders. Everyone has to invest in AI. So these are things that will keep the underlying trend rate of the global economy going. 00:04:09 Speaker 4: Does that include emerging markets as well? 00:04:12 Speaker 2: Well? 00:04:12 Speaker 3: Emerging markets are the pleasant surprise of the year so far. Here is yet another shot that they survive. They survive the FEDS five hundred and twenty five basis point rate hikes never happened before, they survive COVID, and now they're surviving an oil shot. It's a little bit more nuanced. We had owned the energy exporters. We've now gone back to the importers. But when you look at the way China was able to cut imports of oil and repurpose how they get energy, it tells us that the emerging markets are maybe have developed faster than we want to give the term emerging markets credit for. 00:04:57 Speaker 2: Well, it's across America and worldwide. Bob Michael of g P Morgan here perspective from Bill's notes and bonds, of course, dragging it over to the equity markets as well, So I skimmed farole. Weekly Prospects comes out every Friday evening. I've got a pause with the beverage of my choice, Paul to read Faroli on a team. Okay, And I want to say, and I'm sorry, it's a pretty balanced view, and I'm hearing from you a balance view. Bill Ackman is out today with the retreat of a plus plus plus on Hyperscalers from a guy out of unit credit in Slovenia is well, there's all this heat, this ferment, this smoke and mirrors debate about AI. You guys are doing business in it. How are the bonds, the debt of AI hyperscalers being digested by the public. 00:05:45 Speaker 3: Well, so far they've been digested pretty well. I think we've all seen when a new technology revolution comes along, it's not all over in one or two years. It tends to run for a decade, and the first half of that decade is where the kapax gets invested in, the second half is where you get the payback. The hyperscalers have very pristine balance sheets, so the amount of debt that they're adding is hardly noticeable on their leverage metrics. 00:06:14 Speaker 2: Do you look at them as a trunch now, an initial gazillion dollar trunch, and then there'll be a second one into twenty seven and a third even Is it going to stagger forward twenty year, twenty year, twenty down the road. 00:06:27 Speaker 3: Well, you look at what some of them have raised, and you wonder where it is other than sitting in cash or some sort of short duration account, because they aren't fully spent yet. So yeah, it's possible they'll be back next year. I think they have to start spending what they've raised so far, and that takes some time. 00:06:48 Speaker 4: Hot do you think about all this technology debt coming to the marketplace, because this is these companies haven't historically been in your market raising capital, But it seems to have been well received so far. 00:07:01 Speaker 3: We're impressed because certainly you get worried that trillions of dollars of debt could overwhelm the market. When we look at the Bloomberg Aggregate bond index, it's forty trillion, so a couple trillion here is not a lot of money. It's maybe about five percent, and that couple trillion will come in over three or four years. We've also been impressed about how intelligent the hyperscalers have been. They've diversified across markets. They've issued some in Euros, some in Canada dollars, there will be some in Mexico Peso and some in Japanese yet. And then they've gone to some hybrid structures to finance the data centers. 00:07:42 Speaker 2: So JP Morgan gets five hundred thousand applications for summer rules, Oh wow, and they weeded out with an acceptance rate frankly under one percent to four thousand summer interns. Bob Michael's got to wander into a room with a bunch of emotional, really really smart, really competent kids. What's your first message to them? 00:08:06 Speaker 3: My first message is the way to differentiate yourself is to make use of the current tools that are available in the marketplace that you know, the senior investors in the platform aren't really that skilled at so AI is one. When I came into the industry, it was electronic spreadsheets. Do that and secondly, observe what's going on. You'll see who the leaders are and the traits that are characteristic of them. You'll also see people who you feel well because of their characteristics and traits. They're being held back, so keep your eyes open and observe. 00:08:46 Speaker 2: I really emphasize the last thing you just said is forget about trying to find wonderful people like Kelsey Barrow. Is just an idea. Figure out the people that aren't getting it done. That's the biggest lesson from an intern. You didn't mention this that part of the training of a JP Morgan intern is to master the Bloomberg Professional Service to Nail technology. Okay, we just send them for training every day. Coming to you, Bob Michael lecturing on the Bloomberg terminal to interns, the charums at JP Morgan. He drives all the fixed income. Stay with us. More from Bloomberg Surveillance coming up after this. 00:09:33 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Applecarplay and Android Auto with the Bloomberg Business app, or watch us live on YouTube. 00:09:46 Speaker 2: I got a line item on Madison Square Gardens Sport Group at capital expenditures that doesn't include what's going to cost to keep my Jalen in my household. 00:09:58 Speaker 5: It's not Jalen, it's mind, Jay, I understand. 00:10:01 Speaker 2: Chris Morangi is our Knicks expert here where throat he could join us today, CIO of value at Gabelli Funds. Just thrilled he could come by. You have talked forever about Madison Square Gardens sports. How do you respond after what we've all witnessed over the last ninety days. 00:10:19 Speaker 5: Well, I still have Knicks fever, still living off of it. You know you mentioned bitcoin earlier. I don't all that. Mario would have called it rat poison. But we're not We're not involved. We'd rather buy sports teams. They're great stores of value. Actually are good businesses. Capital light, the tribal audiences. They allow them to exerpt pricing power and winning helps, but it's not everything. 00:10:39 Speaker 2: You know, how much does winning help? Where do you see that in the income statement? 00:10:43 Speaker 5: Well, it definitely has created more Knicks fans, including in my household. It seems like your household. But you know, I'm not sure the Knicks are worth materiality more today than they were a month ago. They are the most valuable franchise in the NBA. You know, you're paying a four hundred dollars, it's not going from two to fifty four hundred dollars this year, twenty four million shares, a little bit of debt. That's an enterprise ten billion. The Knicks are worth at least ten ten billion based on the Lakers selling for that much earlier this year. And you get your Rangers for free. 00:11:11 Speaker 4: Is that why James Dolan is splitting up the team. 00:11:14 Speaker 5: Well, lots of theories about that. One is to give them financial flexibility. There is this thing, and I won't go too deep into it at nine o'clock in the morning, but one sixty two m it's a new provision of the tax code which makes it more expensive to keep players. 00:11:25 Speaker 2: Speaking of Chile, and we have to bring in our Knicks expert Alexis christoffs with Chris Marank. 00:11:32 Speaker 5: Hey, you know we kept Shaman. How excited are we about that? I'm excited about that. I do think that was going to happen. We'd like to bring it back. They want to keep the core of the core five starters. I think next year exactly. Very exciting. 00:11:43 Speaker 4: Chris, want to ask you about Comcast big announcement yesterday splitting apart the company the NBC Universal from the core cable broadband business there. What do you think the strategy is there? 00:11:56 Speaker 5: And how do you guys think? Well, it's a trend splitting companies. You know, in two thousand and nine I was here cheering on Brian Roberts who absolutely stole NBC from ge Trot multiple troth. The world has changed, and it's changed a lot. This split is not a surprise. The timing is a little bit of a surprise, but you know, it definitely gives them increased flexibility. I think they'll see more consolidation, particularly on the cable side. 00:12:19 Speaker 4: The joke among media investment bankers is every five years, Brian gets an itch and he needs to go out and do something big. What do you think he wants to do in this new world order? I can't imagine he's splitting these companies up and putting news bringing. Mister angelicis back right to retire. 00:12:35 Speaker 5: Well, Michael Angelakis is a deal guy, yes, and so that's not missed. Telecom companies need scale, you know again, Proban ten years ago would be talking about the brideband hedge, which is to use Netflix, you need fast broadband that was only provided at the time by the cable companies. That Moat has been breached by fiber from the telephone companies as well as now fixed wireless. And you've got more guys coming over that moat from space. 00:13:00 Speaker 2: Your heritage here with Gibelli and I was a huge, huge interest in gab years ago. You guys own media. So I think CNN is with CBS. What's NBC universally going to do? They it's out in the zeitgeist. Rich Greenfield's talking it up. I mean they got to mate with somebody. 00:13:18 Speaker 5: Right, Well, yeah, and there are a lot of pieces. Obviously, they did the spin off of versunt at the very beginning of the year. I'll remember they have another network in business. But yes, they have kept most of the sports business the cable networks, including ms now and CNBC. They have their own path. We love their CEO. I like the stock and buying the stock. NBC is a bit different obviously have the parks business, which is probably the most business within NBC. Yeah, but listen, there are Netflix's showed in sand they want to buy, probably said with some of the other big tech companies. 00:13:50 Speaker 4: All right, let's step back just broadly. How are you guys at Gabelly looking at the markets these days? So you know there's we're in a bubble everywhere somewhere. It's just a question of where we are in that bubble, and I think we have We're still mid innings to use the sports analogy. Still tons of money obviously going to Capex. That's what's fueled the market. Orning estimates have gone up. They've gone up more than the market. 00:14:13 Speaker 5: And so we're trying to focus on industries that we know inflation, conduits, et cetera. So no change in what we do. 00:14:22 Speaker 4: So I know you guys are really bottoms up. Look at value, fair market value, private market value. Where do you see value out there? Because it seems like it's that's tough to do. 00:14:32 Speaker 5: Yeah, I mean it's still down market down cap, which was a wasteland for many many years. It's where we started really finding value. We're still there and the indices have been dominated by Semis. 00:14:42 Speaker 2: Did you ever do a conference call with David Weston like you're on the phone, Chris Marangi Gabelli, what a wonderful quarter, mister Weston? Did you ever do that? 00:14:52 Speaker 5: I don't think we got around to that, but you do right now joining us. 00:14:55 Speaker 2: David Weston, I want to get to your really important interview with Paul Krugman. David West But this is just too much media here right now. I mean, I'm sorry. We have a consolidation of American media. David weston where are we in five years? Giving your experience at ABC and bloomber Well. 00:15:13 Speaker 6: I think it is consolidation, that's right. I mean, you know about this better than I do, probably, But the thing you've seen was streaming. The big move is technological. It's streaming. Streaming is techno or thanks to Netflix and now we have YouTube. And the one thing we've learned about streaming I think is you need a lot of content, you need a huge library. That's why Bob ey Or bought Fox right to get really bulk up a lot. And I think that's what they've got to do for MS. I heard you talking about NBC Chris. 00:15:40 Speaker 2: YouTube do it's all about it? I mean they're in camp. Well, I talked to her people. They're back from camp. Did you ever go to can I have been? Did you go to Kenny? 00:15:49 Speaker 5: I have missed that. 00:15:52 Speaker 2: Called mipcom that you had to go to every year. 00:15:55 Speaker 1: I don't. 00:15:56 Speaker 5: Well, by the way, Tom now on the course st that's where you stay. YouTube is the biggest media company in the world, which people forget about. But I think it's more than just streaming. It's live. It's live in sports like this program Thank you, you know it's Rob Schwartz. 00:16:11 Speaker 2: Live is the new mode. I stole the quote from him talk about live. 00:16:15 Speaker 5: You can't skip it. I mean, people have to listen to replays of what you're doing here. But it's worth most when we listen to you live. 00:16:22 Speaker 7: Uh. 00:16:22 Speaker 5: And that's why what advertisers are paying up for, and that's why we subscribe. 00:16:27 Speaker 2: David Beckhen youre remitted to ABC. 00:16:28 Speaker 4: You're in ABC News for a long time. Where does network news? 00:16:31 Speaker 5: I mean, where are we here? 00:16:33 Speaker 4: And I look at Paramount and they CBS, N CNN. I don't know how that works. 00:16:39 Speaker 6: So do you want an answer for my heart or for my head? 00:16:42 Speaker 3: Yeah? 00:16:44 Speaker 2: Heart, it's going to be great. 00:16:46 Speaker 6: And we're going to be really important, and network news is going on. For head, I don't understand the business plan. I just don't get it. 00:16:53 Speaker 7: Uh. 00:16:53 Speaker 6: And we've seen this, by the way, this goes all the way back to cable. I mean when I went to run ABC News, is Fox News had not yet started, MSNBC had just started, and so they came over, but there's been one innovation after the other that just eroded the business plan. So there's no motor around the businesswere you can't charge unless they're scarcity. I absolutely agree with Live on Sports, particularly sports betrayor, and I would say Tom, you and Paul when it comes to markets, I mean, there's some scarcity there you want, but other than that, there's just you can't charge for it. And as a result, what you're seeing, I think is a version of AM radio infecting its way into broadcast network news. 00:17:34 Speaker 2: That's what you're seeing. 00:17:34 Speaker 5: I would refer to David, but I actually think that with this polarization of the country, you are seeing ms now stake out one side, Fox says the other, and it's a battle for the middle. CNN is fading. News Nation is coming into there, maybe the networks, So. 00:17:46 Speaker 2: You have to have an opinion. CNN prided themselves and Matt Winkler and Michael Bloomberg have said, we're going to do a news organization where people don't know what Paul Sweeney thinks, okay, or maybe they don't know what I think. But is there a middle ground available? Chrisma Ange or you're going to only win with a polarization. 00:18:06 Speaker 5: Well, again using the ironalogy. In my heart, I wish that was the world in my head. 00:18:10 Speaker 6: I don't think the answer is it's never happened yet. When you're talking about general news, what happened here at Bloomberg was unique in that if you go left or right when it comes to money, you're going to be out of business because you know it's either right or wrong. The market's upwards down and you know you can't have a pen when you talk about general news. Then you can have opinions, but they are right and left. 00:18:32 Speaker 2: Across American worldwide. We continue our conversation, thrilled to have David Weston with us with his work at ABC and of course now with Wall Street Week at Bloomberg, and Chrismarengi with us with Gibelli even better, three media pros, Paul Sweeney with all of his work over the decades, Chris Fox. 00:18:50 Speaker 4: They've seemed to stake their company and I would argue pretty successfully on their news and their branded news in sports. 00:18:59 Speaker 2: Is that enough? 00:19:00 Speaker 5: Well, you know Rupert acted first on this by selling his entertainment business to Disney. I'm not sure Disney York Comcast would have I think they probably both would have replayed that and could go back in history. You know, they've taken a run at Roku or are buying Roku, which is a little bit of a surprise to the street because they're trying to find a business model for what they have left. And I wouldn't doubt them. They're very good, They're very agile, So we'll see how that plays out. 00:19:26 Speaker 2: Clyde Davis has died at ninety four, Ted Turner recently, John Malone iconic, and Gibelli was so attached to TCOMA. Where's that? Where's the next generation of those people? Or was that all time lost? 00:19:42 Speaker 5: I don't know what the next generation. Obviously we have next generations of some of those families, but I'm not sure we have the moguldom that we once to have. The Sumners and the John's. Rupert's still around obviously as a John, and he's active, but he's active in a different way. 00:19:53 Speaker 2: I got to get this in, folks, because David Wesson's just killing it. Did you just have a conversation with Paul Krugman? We did, Laurie, What did you learn? I saw the headline from your people. David is people. 00:20:06 Speaker 6: Weston is people in the basics idea a person, not a people, a person regular is. 00:20:12 Speaker 2: Coming around to supporting a Trump tariff regime. 00:20:16 Speaker 6: Well, well, I think that may be a little too much, but it was interesting. He said he was actually uncomfortable with where he is when it comes particularly with automobiles on tariffs, because he would like to be a free trader, and he said he and other people he knows are very uncomfortable. He thinks that not sustain at this point. Given what China is doing. There have to be some sort of protective tariffs or we will just lose our auto industry. 00:20:37 Speaker 2: This is critical, folks, because this is Krugman's wheelhouse. This is how he won the Nobel Prize christ Range. Mario Gabelli started out as an auto analyst. Are you guys long China? 00:20:49 Speaker 5: Ev We're very worried about it, but we still like a lot of the car parks companies that are sort of agnostic to the platform, not as much as we were, you know, fifty years ago to fifty this year. 00:21:00 Speaker 4: So oh, okay, you don't. 00:21:03 Speaker 3: Look at it. 00:21:03 Speaker 2: Mario is fifty. 00:21:04 Speaker 5: Well I'm fifty to maris a little older than but our firm almost as alts me. 00:21:09 Speaker 2: Yeah, this has been wonderful. Thank you to the two of you so much for coming in this morning. Chris Morangi with all of his leadership at Capelli and David Weston stay with us. More from Bloomberg Surveillance coming up after this. 00:21:29 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Apple Karplay and Android Otto with the Bloomberg Business app, or watch us live on YouTube. 00:21:41 Speaker 2: We're going to do this interview differently. Ellen walld Iss, senior fellow at Atlanta Council, and I can go to where where's Brent Crude going? And what's again of guess going to do? We have a treasure. She wrote a book a number of years ago called Saudi Inc. And it directly folds into the tapestry the culture of the Arab clash against Persia. I think a Valley Naras. There's a wonderful new book on around joining us now, Ellen Water book is must and Saudi Inc. Ellen reset. Now, the arch Sunni Shia split in the world after this war. 00:22:19 Speaker 8: So I do think that While the Sunni Shia split is very important in a religious sense, I do think that politically it's probably becoming less of an issue. And we've seen that in a number of fronts, you know. I think that the most prominent is really the Iranian support for Hamas. Hamas is a predominantly Sunni group. It grew out of the Muslim Brotherhood in Egypt, which is a very Sunni based group, and so we're really seeing I think that while there are very distinct religious differences between Iran and Saudi Arabia, I think they're very profound culturally. 00:22:58 Speaker 9: They're very profound religiously. You know, Iranian clerics. 00:23:02 Speaker 8: Do not look to the Saudis as a source of religious legitimacy or religious authority, which is something that other Sunny countries do. But I do think that we are seeing the growth and prominence in fact of kind of mixed areas. Look at the United Arab Emirates. This is a region that has traditionally, you know, it is it is a Sunni, you know country, but it is traditionally very close to Iran and Persia, and I think we're seeing that playing out in real time as a lot of these Gulf countries are kind of caught between Iran's orbit on one hand and Iran as the growing regional power, and you know, on the other hand, their traditional allies. 00:23:44 Speaker 2: Do the Arab Sudanes, let's start with the Trucial States and go up to Kuwait. Do they consider the United States still a steadfast ally. 00:23:55 Speaker 8: I do think that that is a question that the answer to that is going into becoming very quickly. 00:24:01 Speaker 9: I think that they were initially, they did. 00:24:04 Speaker 8: Consider the US to be a very steadfast ally, especially you know, the UAE. They have been working very closely with the US to establish you know, nuclear power plants, which have been very important to their overall energy growth. They've really become very close with Israel, which has brought a number of very positive economic. 00:24:25 Speaker 9: Benefits for them. 00:24:26 Speaker 8: And yet at the same time, I do think that they felt somewhat abandoned and still feel abandoned because they believe very strongly that Iran should not control the straight of form moves. Iran should not pay tolls or should not demand tolls or any kind of you know, fees for passage to the straight or form moves. And if the United States gives in on this in any form. It's as signed to the UAE that the United States is not a partner that will support them, and I think that we will see them make some very important choices. 00:25:00 Speaker 9: In the coming months that have to do with this. 00:25:03 Speaker 8: If they don't believe that the US will defend free passage in the straight of horm moves, they are going to build pipelines to get around it, and they're not going to necessarily depend on the US politically or diplomatically. 00:25:17 Speaker 2: Ellen. 00:25:17 Speaker 4: A lot of traders are saying, hey, you wind this war down and oil just from a supply and demand perspectives going back down to fifty, if not. 00:25:26 Speaker 5: Even lower by the end of the year. How do you think about that. 00:25:31 Speaker 9: I think that there's a lot of optimism there in terms of. 00:25:36 Speaker 8: Oil returning to somewhat normal flows out of the Persian Gulf, and that's really not happening. Yes, we've seen a lot of oil exit the Persian Gulf recently, we're not seeing nearly as many tankers come back in. 00:25:48 Speaker 9: I think that the new normal is going to look like a ferry service. 00:25:52 Speaker 8: We're going to see a couple of services that will basically ferry oil out of the Straight of horm moves to tankers that sit outside, so more oil will leave. Then necessarily we see tankers in. But this process will be more expensive, it will seek longer. And I also think that China's demand, China's buying patterns have not returned to where they were before. If China decides, hey, we're no longer interested in, you know, buying that extra four million, five million or so barrels a day, then yeah, we're going to be in a big oil blot because the world is used to China demand being elevated like that. 00:26:27 Speaker 9: If China does return to that, then I do think that oil at fifty is a bit low. 00:26:33 Speaker 2: Ellen, Well, thank you so much, senior fellow, the Atlantic Council or Definitive Book, Saudi Incs. Stay with us. More from Bloomberg Surveillance coming up after this. 00:26:50 Speaker 1: You're listening to the Bloomberg Surveillance podcast. Catch us live weekday afternoons from seven to ten am Eastern Listen on Apple, Karplay and Android Otto with the Bloomberg Business Up, or watch us live on YouTube. 00:27:02 Speaker 2: She is well qualified for a larger perspective, not so much the cliche of sixty thousand feet, but just where are we now with Partronata Warden of Columbia in the hugely prestigious UCLA reach in trade in international relations. Tiny Fakoohi joins us from met Life. Our international relations now in the time of Trump, a cacophony of news we're facing is our trade, is our international linkages? Are they forever broken? Or can we still move forward with American exceptionalism? 00:27:37 Speaker 7: Broken is a strong word, I think, but I would say that it's a concern. It's a concern in terms of our international trade. How that affects our ability to get the things that we need at the right price right Inflation is one of those concerns that without with these shifting global trade patterns, were not going to necessarily be able to get to that two percent in inflation for some time, just because of all the changes to the global economy, the supply shocks that continue to come. 00:28:11 Speaker 2: The endless supply shocks. What does the demand side look like? Paul keeps telling me the restaurants are packed. 00:28:18 Speaker 7: Yeah, the demand side is strong, whether that's you know, just the top twenty percent or the top nineteen percent or the top one percent or whatever. On the macro macroeconomic front, you've got a strong consumer overall in aggregate, and you've got strong corporations, right, Corporate profits are going from strength to strength. Let's see what happens the next quarter, but for sure they've done extremely well and that also supports the economy. 00:28:47 Speaker 5: How's the consumer doing out there? 00:28:49 Speaker 2: Again? 00:28:49 Speaker 4: The consumer seems pretty darn Is it just as simple as if the consumer's got a job, the consumer's okay? 00:28:55 Speaker 7: That and inflation not being at nine percent helps, right, So we had we had problems because of inflation. Consumer says they can the consumers say they're unhappy, but they don't spend like they're unhappy, and that's the important difference, right. And they are still you know, they say you can inflate, you can inflate debt away. That's what happened during the pandemic. And they're still on aggregate again at relatively low debt levels and debt service ratios, So there's bandwidth there. 00:29:30 Speaker 4: We've got oil back then as seventy dollars a barrel from one hundred plus. Does that mean my inflation concerns are done? 00:29:37 Speaker 5: I think there's a lot. 00:29:38 Speaker 7: There's a bit of a tail there for in terms of how that passes through the rest of the economy. My big concern though, is really more about the intersection of AI price pressures and energy prices. So, yes, there's a little bit there because of the Strait of Hormuz, but there's a lot there because of AI demand for all sorts of things chips, computers, blah blah blah, but especially also very much energy. 00:30:06 Speaker 2: But the heart and soul e met life. Your work, Drew Madis, is work in that is to get away from the blah blah blah and say, here's where we are in three years or five years. Do you look at AI as a blah blah blah. I love that for you. Can I steal that? I'll steal that. But if you look at the blah blah blah, is it all a productivity enhancer and a net positive for our nation three years, five years out? 00:30:32 Speaker 5: I would say yes. 00:30:33 Speaker 7: But how we get there is certainly not a smooth and easy path. Clearly there's massive gains to be had from productivity. But if you think about let's say we are something like in nineteen ninety eight or so in terms of the nineteen ninety six ninety ninety eight in terms of the dot com boom, you didn't really see you know, you played around with things. You thought it was kind of cool, the internet, but you didn't really have the productivity benefits until a decade or sole Yewer so on. 00:31:04 Speaker 2: You played around with it. That perfectly captures nineteen ninety five. 00:31:09 Speaker 4: So, FED chairman Wassha, what was your initial read of his first statement, his first press conference and kind of the direction here? 00:31:18 Speaker 2: Yeah, so I think. 00:31:19 Speaker 7: He's I mean, the result of it has been very much in line with what I think works to his advantage. He didn't say very much in the statement, in his press conference, he tried not to say very much. He didn't provide a press a dot and I think all of those things are in his line of trying to say less as a FED chair I think the markets took that as Hey, we knew he was a hawk all along. 00:31:51 Speaker 2: Let's go. 00:31:53 Speaker 7: But I'm a little bit worried about the future because I think he wants to be he wants to play more close to the vest. But this isn't twenty twenty eleven anymore. Now we've got the social media error where if you don't speak, everybody else will fill in for in that vacuum for you. 00:32:11 Speaker 5: You know, all the FED chair all the FED. 00:32:15 Speaker 7: Governors, the presidents, every commentator out there, all the you know, and that's that's where playing it close to the vest may not work when it is a couple of year, a couple of decades. 00:32:25 Speaker 2: So really great observation that the social media, the communications are, you know, they're turning into a green Span worsh comparison. Yeah, you know, it's just a different worlds, right, Yeah, Tony, Thank you so one. Tony Forkoping, never enough time, Senior Director Economic and Market Strategy in that life. 00:32:42 Speaker 1: This is the Bloomberg Surveillance podcast, available on Apple, Spotify, and anywhere else you get your podcasts. 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