Speaker 1: Welcome to the Bloomberg Pienl podcast. I'm Paul swing you.
Speaker 1: Along with my co host Lisa Brahma Waits. Each day
Speaker 1: we bring you the most noteworthy and useful interviews for
Speaker 1: you and your money, Whether at the grocery store or
Speaker 1: the trading floor. Find a Bloomberg Penl podcast on Apple
Speaker 1: podcast or wherever you listen to podcasts, as well as
Speaker 1: at Bloomberg dot com. Well as Lisa just reported, it happened.
Speaker 1: So we finally got the Department of Justice approving T
Speaker 1: Mobile's acquisition of Sprint, clearing one of the biggest hurdles
Speaker 1: left to get this deal done. This deal is announced
Speaker 1: more than a year ago, Folks, to help us break
Speaker 1: it down, what the d o J actually said, today's
Speaker 1: Nabila Ahmed. She is a deal's reporter for Bloomberg News.
Speaker 1: She joins us in our Bloomberg Interactive Broker studio. So, uh, Nabila,
Speaker 1: what will? What is this d o J approval? What
Speaker 1: does it really look like? D i J is requiring
Speaker 1: Sprint in T Mobile to divest Sprints um prepaid businesses.
Speaker 1: So this includes Boost Mobile, Virgin Mobile and Sprints are
Speaker 1: in prepaid brand to dish and also give them some
Speaker 1: spectrum assets. And on top of that, they have to
Speaker 1: make available to Dish at least twenty thousand cell sites
Speaker 1: and hundreds of retail locations so that Dish can actually,
Speaker 1: you know, do its business with consumers. So far, the
Speaker 1: market response has indicated that people are underwhelmed by dishes
Speaker 1: involvement here and think that this is a wholesale win
Speaker 1: for T Mobile, Sprint as well as Verizon and a
Speaker 1: T and T. Is that what people are saying who
Speaker 1: you speak to as well in the Billa listen the question.
Speaker 1: I mean, it can't both be a win for Sprint
Speaker 1: and T Mobile and for Dish, can it? I mean? So, yeah,
Speaker 1: you can argue that Dish, you know, through this deal
Speaker 1: will be set up to become a really strong force carrier,
Speaker 1: but it's going to take a really long time. So
Speaker 1: you've got Sprint and T Mobile being strengthened here, but
Speaker 1: Dish is going to be a distant fourth I think,
Speaker 1: and you know, making del Rahim today just said that
Speaker 1: the remedies set up Dish as a disruptive force in wireless.
Speaker 1: I don't know about that. I want to bring a
Speaker 1: te equal Asian. Uh. Jennifer Reid. Jennifer is a senior
Speaker 1: litigation annalys from Bloomberg Intelligence. She also joins us here
Speaker 1: in our Bloomberg Interactive Broker Studio. So, Jen, from your
Speaker 1: anti trust perspective, UH, is there anything unusual in what
Speaker 1: came out of the d o J today? You know,
Speaker 1: I don't think that there's anything unusual. But the one
Speaker 1: thing I do want to push back on because I've
Speaker 1: I've heard from many that this is really not going
Speaker 1: to create a fourth competitor, and you know, what is
Speaker 1: the d o J thinking? But I will have to
Speaker 1: say that the d o J knows how much opposition
Speaker 1: there's been to this deal and how much opposition there
Speaker 1: may be to this settlement, and they're really still coming
Speaker 1: off that loss. You know, from a T and T time,
Speaker 1: Warner and I do think that they're going to be
Speaker 1: very careful about what they do here, and they vet
Speaker 1: these divestiture packages very carefully, and I have to think
Speaker 1: they went through it with a fine tooth comb and
Speaker 1: at least are convinced that this will do the trick.
Speaker 1: But but in terms of being unusual or unique, I
Speaker 1: think the time it took was unusual. How much came
Speaker 1: out to the public was unusual, and even the announcement
Speaker 1: today was a bit unusual. I'm surprised to hear you
Speaker 1: say this. Do do you think that markets are sort
Speaker 1: of under estimating how good this deal could potentially be
Speaker 1: for Dish. Well, it's possible, that's one thing, But it
Speaker 1: could also be that they still have a challenge the
Speaker 1: companies with the state lawsuit. So this isn't over because
Speaker 1: they still have a challenge. They still have to go
Speaker 1: to court, and they either have to win in court
Speaker 1: or they have to ultimately settle with the States in
Speaker 1: order to get this deal closed. The other thing is
Speaker 1: that Dish has been trading for a long time on
Speaker 1: the expectation that they sell their spectrum assets and make
Speaker 1: a ton of money out of that. This deal means
Speaker 1: that Dish will not that's not what's going to be happening,
Speaker 1: because they still will mean that Dish actually can't sell
Speaker 1: control of those assets to anybody for three years. So
Speaker 1: that may be another reason why you're seeing Dish kind
Speaker 1: of share price performance being underwhelming today. So Nobilla, what's
Speaker 1: the sense on timing when the sink can actually close? Well,
Speaker 1: I guess they could close now, even though the lawsuit
Speaker 1: from the State Ages is pending. They can technically do that,
Speaker 1: but my understanding is that the companies are actually going
Speaker 1: to be looking to settle with the State ages, these
Speaker 1: twelve states and the District of Columbia, and you know
Speaker 1: the court date is coming up in early October, but
Speaker 1: they're going to try to settle before that. I love
Speaker 1: how Paul asks the question, you know, when are they
Speaker 1: going to finally settle this? When can we stop talking
Speaker 1: about that there's there's there's there exactly? I should just
Speaker 1: mention just shares are up two and a half percent,
Speaker 1: so people do see some potential upside here, much bigger
Speaker 1: gains though so far year to data on both Team
Speaker 1: Mobile and Sprint, I do have to wonder. Tara La Chappella,
Speaker 1: Bloomberg Opinion earlier today was asking the question, really wisely,
Speaker 1: why are anti trust regulators not more focused on the
Speaker 1: wireless carriers in the same way that they are big tech?
Speaker 1: Jen Well, I think the issue is that when they
Speaker 1: open these investigations, they're usually based on complaints. This is
Speaker 1: what triggers it and true antitrust complaints, not not complaints
Speaker 1: that I just don't like this company, but this company
Speaker 1: is doing things that thwart me as a new competitor
Speaker 1: or in increase consumer prices. And when those complaints come in,
Speaker 1: this is what leads to an investigation, and usually it
Speaker 1: will be an investigation of a company that's dominant, dominant
Speaker 1: within a market. And if you look at wireless, while
Speaker 1: we call it a concentrated market and we have big carriers,
Speaker 1: you can't really say any one of them is necessarily dominant. No,
Speaker 1: but you could say that the fight between T Mobile
Speaker 1: and Sprint lowered costs for consumers materially well absolutely, and
Speaker 1: then eliminating that fight will end up increasing costs for everyone,
Speaker 1: which is a reason why people think that A T
Speaker 1: and T and Verizon are going to be such big
Speaker 1: winners from this high up. So, I mean, Nobilla, come
Speaker 1: in here. I mean, what's the what's the counter argument?
Speaker 1: What's the counter argument that you know, America is going
Speaker 1: to be leading in five G, this is going to
Speaker 1: be good for consumers, that's the counter argument. You know.
Speaker 1: This is what Makin del Rahim wanted to do with
Speaker 1: the settlement is to be able to say this is
Speaker 1: actually going to be good for consumers. And if you
Speaker 1: had Sprint was left behind, as we know, Lasa's friends
Speaker 1: got a lot of its own issue is and and
Speaker 1: you know it may have gone broke or would have
Speaker 1: needed to have been taken over by somebody else. They
Speaker 1: would have needed a partner at the very least. Um,
Speaker 1: So this is a way of ensuring that you have
Speaker 1: a stronger third carrier as well as an emerging fourth carrier.
Speaker 1: It's been such a long time to Bill, if I
Speaker 1: forget the original terms of the deal, but is massa
Speaker 1: Herosan and soft Bank? Are they exiting completely their investment?
Speaker 1: They're not. They're not clemented the company. They are going
Speaker 1: to be still in the new company, but Derscha Telecom
Speaker 1: will be the controlling shareholder. And the terms, just to
Speaker 1: remind everyone, so it's twenty six and a half billion
Speaker 1: dollars is the overall headline value. And actually they're saying
Speaker 1: that even though they're making these divestitures, um, they're planned,
Speaker 1: forty three billion dollars of synergies will still stand. And
Speaker 1: I was going to say, at least of the argument
Speaker 1: that you just made that you asked no Bill about
Speaker 1: is exactly what the state's argument is in court. And
Speaker 1: the answer is going to be that the remedy is
Speaker 1: not going to allow the other three wireless carriers to
Speaker 1: raise prices. That that's going to constrain their ability to
Speaker 1: raise prices. So that's exactly what the fight is going
Speaker 1: to be going forward. And the one last thing I
Speaker 1: should say is that you know, we are still waiting
Speaker 1: for formal left c C clearance here, so the companies
Speaker 1: technically can't close until they get that, and that might
Speaker 1: not be until September. When that happens, the States may
Speaker 1: have to go to court to seek an emergency order
Speaker 1: to keep the companies from closing. This is so interesting
Speaker 1: to me. I mean, yes, we've been talking about this
Speaker 1: deal forever, but it involves so much, and it involves,
Speaker 1: you know, so many different players, and I'm just wondering, Jen,
Speaker 1: what's the next step with some of these state lawsuits.
Speaker 1: I mean, we we've heard that they're probably going to settle.
Speaker 1: Is that your sense as well? Right now? I don't
Speaker 1: see it that way. I think the states are really
Speaker 1: dug in now at the companies are going to go
Speaker 1: in there and try hard to settle, and the states
Speaker 1: have more flexibility than the Department of Justice does in
Speaker 1: terms of what they can accept. They can even accept
Speaker 1: something like money just put into a fund or promises
Speaker 1: to build out even for G in certain rural areas.
Speaker 1: So I think that the companies will be trying very
Speaker 1: hard to do that. The next step right now is
Speaker 1: in August first meeting to hammer out the schedule. There
Speaker 1: was in October seventh trial date that was agreed upon,
Speaker 1: but it was contingent on T Mobile and Sprint getting
Speaker 1: this deal. The terms of the deal done July twelfth.
Speaker 1: Then that didn't happen, so Nobila legic real quickly. T Mobile,
Speaker 1: what are they going to do with these Sprint assets?
Speaker 1: Is there costs are taken out as a revenue, synergies.
Speaker 1: What's the upside here? Yeah, I mean they've got these
Speaker 1: forty three billion dollars of synergies which will be out
Speaker 1: of operational costs. And really what they're getting is really
Speaker 1: good quality midvance spectrum. Sprint has a lot of that,
Speaker 1: and that you know, this is what they're going to
Speaker 1: use to build out their five G network. Nabilla Ahmed,
Speaker 1: thank you so much for being with us. Jennifer Reeh
Speaker 1: Bloomberg Intelligence uh and Nabilla of Bloomberg News, thank you
Speaker 1: both for being here and passing through the d o
Speaker 1: J approval. It is official. UH, it is official that
Speaker 1: they have approved the tie up between Sprint and T Mobile.
Speaker 1: Right now, we want to turn our attention to UH
Speaker 1: to the Intel. Intel shows rose today after reporting second
Speaker 1: quarter earnings that beat expectations, that gave an upbeat forecast
Speaker 1: for chip sales, sort of an indo key indicator. We're
Speaker 1: very excited that we're about to hear from the CEO
Speaker 1: himself about what the outlook might be. There's been a
Speaker 1: lot of question recently about the outlook given China slowdown,
Speaker 1: given global economy. UH. So we're going to turn our
Speaker 1: attention over to Intel CEO Robert Swan talking with Bloomberg
Speaker 1: anchors Vonnie Quinn and Guy Johnson. You're listening to Bloomberg
Speaker 1: Markets with Lisa Ramowitz and Paul Sweeney on Bloomberg Radio.
Speaker 1: If you speak with any chief executive or chief financial
Speaker 1: officer of a big company, the buzzword today is artificial intelligence.
Speaker 1: How do you use it? How can we best get
Speaker 1: ahead of our competitors by understanding our business and deploying
Speaker 1: it UH in a way that makes our our employment
Speaker 1: more efficient. Joining us now as someone who knows a
Speaker 1: lot about it. Don White, chief executive officer and founder
Speaker 1: of Satisfied Labs in New York. So don before we
Speaker 1: get into sort of the big conundrum of where artificial
Speaker 1: intelligence can be deployed right now out and in the future,
Speaker 1: just give us a sense of what Satisfied Labs is.
Speaker 1: Satisfy Labs is an AI knowledge management platform that means
Speaker 1: we take information data and convert it into a way
Speaker 1: that machines can understand. Big buzzword around AI is that
Speaker 1: machines can learn well. For them to learn these we
Speaker 1: taught in specific format as specific verbiage. So what are
Speaker 1: some of the early investors? Like? Who are you doing
Speaker 1: business with right now? Our last round was led by
Speaker 1: Major League Baseball. We've also worked with the Broadway Community,
Speaker 1: a company called Broadway I which is a consortium of
Speaker 1: producers and theater owners. And then red Light Management, which
Speaker 1: is the largest independent music agency, has also bought in
Speaker 1: for the entertainment and music festival business. So what do
Speaker 1: you do for Major League Baseball? If I go to
Speaker 1: city Field for example see field. The company started out
Speaker 1: of the city Field. We were looking at a menu
Speaker 1: and there was a question one of my co founders asked, hey,
Speaker 1: you know they have bacon on a stick here, and
Speaker 1: he said, hey, how could we find bacon on a six?
Speaker 1: So we started promoting that idea and fans asked where
Speaker 1: can I get baking on a stick? And the whole
Speaker 1: idea kind of flew from that. That is a unique
Speaker 1: story about how an AI UH data management company to
Speaker 1: find bacon bake it on a stick. That's how I
Speaker 1: guess that. My question is when we talk about AI,
Speaker 1: it can be deployed in a whole host of different
Speaker 1: ways across a whole host of different industries. Just to
Speaker 1: give people a sense of what we're talking about, is
Speaker 1: is basically being to call somebody, call a company up
Speaker 1: and have a robot speak to you in a in
Speaker 1: a sufficient way? Is it? Uh? The concept of predicting
Speaker 1: a fans behavior? I mean, what what exactly are you
Speaker 1: trying to cater to? In the AI sort of umbrella.
Speaker 1: The future format is messaging. Messaging will be both chat
Speaker 1: and voice. It's really about collecting all the exact answers
Speaker 1: to questions so that you're not going through some tree,
Speaker 1: but getting exactly what you need based on your query.
Speaker 1: So all the technology companies right now are focused on
Speaker 1: getting their information in a format or a way that
Speaker 1: now when you do go onto chat, you can get
Speaker 1: exactly what you need right away. How predictable are we do?
Speaker 1: We just ask the same questions over and over again,
Speaker 1: us humans. We have reviewed nine million questions in just
Speaker 1: stadiums and about are very similar. But what you'll find
Speaker 1: is I have sixty five different ways to ask where
Speaker 1: the bathroom is? And it's really interesting to see how
Speaker 1: people approach that very common question with their own little skew.
Speaker 1: We're really boring essentially, what the nuts involved in this are.
Speaker 1: So what's your relationship with Apple? So we are a developer,
Speaker 1: we support the platform. So Apple business Chat has enabled
Speaker 1: our technology to be put through in l a f
Speaker 1: C and some of the other stadiums. So l a
Speaker 1: f C is Los Angeles Football Club. Okay, that's soccer.
Speaker 1: That is soccer. Just look at me. So if you
Speaker 1: go to the game tonight, you'll be able to leverage
Speaker 1: Apple business Chat to get a beer at a Express locations.
Speaker 1: You can order your beer, pay for it through Apple
Speaker 1: Pay on your Apple iPhone or or iPad, and then
Speaker 1: go walk up and get it right away and go
Speaker 1: back to your seat. So which industries have most effectively
Speaker 1: used AI already? So m AI is heavy in retail,
Speaker 1: it's now becoming much larger in sports and entertainment, tourism.
Speaker 1: You'll start to see the transportation companies pick up on it.
Speaker 1: Pharma obviously is another good opportunity to health the health area,
Speaker 1: and I think just the whole food and beverage industry. Like,
Speaker 1: we're working with some large brands both on the beverage
Speaker 1: side that are interested in how this data could change
Speaker 1: the way they predict products. What are people looking for
Speaker 1: versus what are people getting is a huge area AI
Speaker 1: can step in well. And I think that this is
Speaker 1: actually super important because people think about it from a
Speaker 1: messaging standpoint and from you calling someone up and not
Speaker 1: knowing whether you're dealing with a human or a robot.
Speaker 1: But what I when I've talked to CFOs in particular before,
Speaker 1: what they say is we want to understand what to
Speaker 1: create next and basically how to telegraph demands sort of
Speaker 1: the way Netflix does right with shows. It's fascinating to people. Yeah, which,
Speaker 1: so what are the some of the other applications here,
Speaker 1: So I kind of get the stadium thing. What are
Speaker 1: some of the retail applications of this. So retail is
Speaker 1: simple as navigating a store, like you walk into a store,
Speaker 1: and if you do talk to a person and get
Speaker 1: guided to a location or a product, the store brand
Speaker 1: never knows you wanted that product. So this fulfills a
Speaker 1: demand curve, which is like what you just said is
Speaker 1: if you could provide a digital messaging way to get
Speaker 1: what people want instead of talking necessarily to a person
Speaker 1: and looking for the staff, you now know what people
Speaker 1: are looking for and how you can better stock and
Speaker 1: provide product. I I love what this tells us about humans.
Speaker 1: What have you learned about humans as you try to
Speaker 1: recreate and teach computers about them? You know, there's a
Speaker 1: concept in search called the long tail. It means that
Speaker 1: we all assume that sevent of things were common, but
Speaker 1: once you try to conquer that last, all of our
Speaker 1: interests do become quite unique and personalized. So I've learned
Speaker 1: is that we think very broadly about customers. But this
Speaker 1: personal personalization move will require AI to really get to
Speaker 1: what your needs are and my needs are and sell
Speaker 1: to me what I can consume. Who do you compete against?
Speaker 1: I mean, there's other companies out in the market. I
Speaker 1: won't give them any airtime, right because that's not something
Speaker 1: that I would do. But there are companies trying to
Speaker 1: solve the same problem. But we are very dominant in
Speaker 1: our industry because of our investor group and the people
Speaker 1: that we've worked with. Got it, Donnie White, thanks so
Speaker 1: much for joining us Donnie as a CEO and founder
Speaker 1: of Satisfy Labs based here in New York City. See
Speaker 1: another example of some cool tech in New York City.
Speaker 1: It's not all Silicon Valley. I look at that way
Speaker 1: to plug, plug plug the house they're trying to sell exactly,
Speaker 1: will say, I will say, I do find it really
Speaker 1: interesting that we learn more about ourselves as we try
Speaker 1: to teach computers about us sometimes than we would otherwise.
Speaker 1: And uh and I kind of like that. I kind
Speaker 1: of like the beer application, you know, because the worse
Speaker 1: stadium you go into a baseball game, as you get
Speaker 1: there and there's a line of thirty people and you
Speaker 1: miss an inning and a half and it's just not
Speaker 1: worth It's I mean, bacon on a stick, bacon all
Speaker 1: of one to know all this time, Bacon on a stick.
Speaker 1: This is Bloomberg Markets with Lisa Brahmo Eds and Paul
Speaker 1: Sweeney on Bloomberg Radio. Bloomberg Markets is brought to you
Speaker 1: by Commonwealth Financial Network, home to the industry's most satisfied advisers.
Speaker 1: Learn more about the firm that's been putting independent advisors
Speaker 1: and their clients first since nineteen nine visit Commonwealth dot com. Well,
Speaker 1: we have the SMP five so far this year. The
Speaker 1: FED certainly remains dubbish. The economy is slowing, but as
Speaker 1: we saw today, is still posting solid growth. So the
Speaker 1: question is what's next. To help us answer that, we
Speaker 1: welcome Scott Wren. Scott is a senior global equity strategist
Speaker 1: for Wells Fargo Investment Management based in St. Louis. Scott,
Speaker 1: thanks so much for joining us. Just want to start
Speaker 1: our start off first by getting your sense of kind
Speaker 1: of what you took away from the g d P
Speaker 1: numbers this morning. Well and Paul, First, I want to
Speaker 1: say before we get sorry, I want to pass along
Speaker 1: my condolences to Tom Keene and his family on the
Speaker 1: loss of his father. So always tough to lose a parent,
Speaker 1: so I's wanted to say that. Um, but on the
Speaker 1: GDP number this morning, you know a little bit better
Speaker 1: than expected modest growth, and I think really for us
Speaker 1: that's going to be the story for this year. I mean,
Speaker 1: you know, we have an official number out there of
Speaker 1: two point three percent. I think that's about right for
Speaker 1: GDP for the year. So, uh, two point one, you know,
Speaker 1: two point three anywhere in there. Uh not the end
Speaker 1: of the world by any stretch. And I think that's
Speaker 1: growth that that the stock market would would certainly find acceptable.
Speaker 1: How long can the consumer continue to be strong if
Speaker 1: business spending doesn't pick up speed here? Yeah, at least
Speaker 1: I tell you that the consumption number inside of that
Speaker 1: GDP number was pretty strong. But I think that uh,
Speaker 1: you know, typically when you're when you're later in the cycle,
Speaker 1: and and and you know, we're certainly in the last
Speaker 1: third of this cycle, at least we believe we are.
Speaker 1: You know, the baton would be hung would be handed
Speaker 1: from the consumer to businesses who would and do capex spending,
Speaker 1: and that obviously hasn't happened. But you know, we we
Speaker 1: think that we are going to get some kind of
Speaker 1: trade deal. We need some better business confidence that would
Speaker 1: help UM in terms of capex is really capex spending
Speaker 1: here in the States. UM is seeing some headwinds, but
Speaker 1: also globally with a lot of these trade uncertainties. So
Speaker 1: you know, for us, I think we can chug along
Speaker 1: for at these modest rates of growth without a lot
Speaker 1: of capex spending. But it would certainly improve and broaden
Speaker 1: the economy if we could see uh, someone other than
Speaker 1: the consumer carrying the ball down the field. So, Scott,
Speaker 1: how do you think these GDP numbers will influence the
Speaker 1: Fed as it meets next week? Well, you know, first
Speaker 1: let me say that really in our opinion, we don't
Speaker 1: think the Fed needs to do anything. I mean, you know,
Speaker 1: we we we're a good level of unemployment obviously, of
Speaker 1: inflation is modest although a little bit below the target.
Speaker 1: But you know we're looking for a quarter point and
Speaker 1: you know this this next week, you know, between some
Speaker 1: potential positive or negative comments coming out of these trade
Speaker 1: negotiations with with Minutian and Lightheiser in Shanghai and then
Speaker 1: the Wednesday announcement from the Fed, where you know, you
Speaker 1: could make a rational argument that they should do nothing,
Speaker 1: uh the quarter point we're expecting, or you can make
Speaker 1: an argument for the shot and awe of a fifty
Speaker 1: basis point cut. So, um, the Fed's probably going to
Speaker 1: kind of you know, keep you know, keep it right
Speaker 1: down the middle to a basis point cut, talk a
Speaker 1: little bit about inflation and a little bit about um
Speaker 1: some risk to global growth. But you know, from our perspective,
Speaker 1: you know, are are you really going to get much
Speaker 1: bang for your buck? You do now? Maybe do in September.
Speaker 1: You know, it seems like you're not going to get
Speaker 1: much bang for your buck. And if that's what the
Speaker 1: FED is trying to do with a rate cut, Umm,
Speaker 1: not quite sure points is going to do it well.
Speaker 1: Regardless of whether or not it will work, it does
Speaker 1: seem like the markets are pricing in a basis point
Speaker 1: right cut next week, in addition to possibly two more
Speaker 1: later in the year. And I'm wondering what this means
Speaker 1: for global equities, but particularly US equities. You have them
Speaker 1: close to all time highs yet again today. Do you
Speaker 1: think that this is supportive, especially with that strong consumer Well,
Speaker 1: I do think it's supportive. And and you know, for
Speaker 1: US stocks are not far from what we would consider
Speaker 1: their their at are very close to what we would
Speaker 1: consider fair value. You know, you look out over the
Speaker 1: next twelve months, you know, maybe you can get you know,
Speaker 1: six percent high or something like that. But I think
Speaker 1: the most important thing, Lisa is that you have reassurance
Speaker 1: from the FED that, should this global growth deteriorate, which
Speaker 1: it seems like, you know, certainly the risk is to
Speaker 1: the downside, that the FED is ready to step in.
Speaker 1: I think that's what the market really wanted to hear.
Speaker 1: Um Um. You know, we think there'll be two cuts
Speaker 1: this year. He seems three seems excessive. But uh um,
Speaker 1: I think it's safe to say that not only is
Speaker 1: the US Federal Reserve, um uh, have the economy and
Speaker 1: the markets back, so to speak. But you know, let's
Speaker 1: face a little literally every major central bank on the
Speaker 1: planet is either easing or trying to figure out how
Speaker 1: to ease. I was a little surprised that the CB
Speaker 1: didn't actually do something yesterday. I thought, you know, I mean,
Speaker 1: it's like, come on, you know, Germany's p m I
Speaker 1: s down at forty three and change, and you're talking
Speaker 1: about doing something in September. You know, I just, uh,
Speaker 1: I don't really get the e c B. I mean,
Speaker 1: I think we need to need to act, but in
Speaker 1: any case, these central banks are in an easing mode
Speaker 1: that's going to be at least positive for the market
Speaker 1: and not a negative. So Scott, given where we are
Speaker 1: in this economic cycle ten plus years into it, what
Speaker 1: sectors do you suggest investors take a look at you Well,
Speaker 1: i'd tell you know, we've in in recent months, we've
Speaker 1: taken a little bit of money off the table. We've
Speaker 1: backed off of stocks in general. But what we're still
Speaker 1: where we still have a good lean on is sectors
Speaker 1: and we're we we think this expansion is going to continue.
Speaker 1: We continue to like technology, consumer discretionary industrials. We do
Speaker 1: like financials, which has been you know, certainly certainly dicey
Speaker 1: on a year today basis, they've trailed not by a lot,
Speaker 1: but by by a bit um. So we want to
Speaker 1: be in those sectors that are going to benefit from
Speaker 1: a continuation of this expansion. We think that's still the
Speaker 1: way to go. We don't want our clients getting defensive
Speaker 1: here and loading up on staples and utilities and and
Speaker 1: and things like that. So that's the way we're leaning. Um.
Speaker 1: I think that's where you're going to see the best
Speaker 1: earnings earnings growth happen, not just in this reporting quarter
Speaker 1: we're seeing, but as we look ahead over the next
Speaker 1: twelve months or so. Just real quick, why should investors
Speaker 1: just do sixty portfolio? Put it there, keep it there,
Speaker 1: not think about it again. Well, you know, I tell
Speaker 1: you one thing. Least, if you do that and you've
Speaker 1: had this gigantic running here, at the very least you
Speaker 1: need to look at doing some rebalancing to get back
Speaker 1: to that. Because if you've had that split and you
Speaker 1: started that seven years ago or something like that, you're
Speaker 1: going to be way out of whack. And there's a
Speaker 1: lot to be said. Most of our clients and most
Speaker 1: retail investors, that's the foundation of your portio portfolio, whether
Speaker 1: it's sixty or whatever it is. And then you've got
Speaker 1: some portion of that portfolio you try to be a
Speaker 1: little lighter on your feet on and be in the
Speaker 1: right sectors and that in the right sectors out of
Speaker 1: the sectors that are going to underperform. So um, the
Speaker 1: foundation your portfolio should be in it for the long haul.
Speaker 1: You can trim it and work around the edges, but
Speaker 1: you know, mostly the stock market you need to have
Speaker 1: the bulk of your assets dedicated. Scott Wren, thank you
Speaker 1: so much for being with us. Scott Wren, Senior Global
Speaker 1: Equity strategist at Wells Fargo Investment Institute, which overseas nearly
Speaker 1: two trillion dollars. Interesting to think about that, Paul, And
Speaker 1: it's actually a really important point, which is that stocks
Speaker 1: have outperformed so dramatically that you have to then reallocate
Speaker 1: some of that back to bonds or reallocate some of
Speaker 1: the money that you've gotten cast off from dividends UH
Speaker 1: into stocks. So where are you going to go? But
Speaker 1: right now it looks like it's pretty good backdrop with
Speaker 1: central banks saying we got your back, and the consumer
Speaker 1: still going strong. This is Bloomberg. So we got that
Speaker 1: second quarter GDP print this morning. It was better than
Speaker 1: people expected, still still signified a slowdown in the US economy.
Speaker 1: The key question, though, for many people is what will
Speaker 1: this mean for the Federal Reserve? Is this a good
Speaker 1: sign or a bad sign for the US economy? Here
Speaker 1: to tell us the answer to that, Carbor Kadona, chief
Speaker 1: US economist for Bloomberg Economics. Here in our eleven three
Speaker 1: oh studios, Carl, there was good news and there was
Speaker 1: bad news. The good news was the consumer. The bad
Speaker 1: news was business expenditures. UH and a number of other
Speaker 1: data points what's your main takeaway from this report? Well,
Speaker 1: I'm gonna stick with the theme of the O or here,
Speaker 1: which seems to be caffeine and coffee. So, uh right,
Speaker 1: let's just talk about coffee the segue there, no, no, no no,
Speaker 1: not novel kind of coffee. I like free coffee. But
Speaker 1: the theme here is that the caffe nation of consumers
Speaker 1: and consumers spending really drove the show in Q two,
Speaker 1: and this is really providing a template for what growth
Speaker 1: is going to look like over the next several quarters.
Speaker 1: So you want to see the Q three and the
Speaker 1: Q four GDP reports in advance. Just take a look
Speaker 1: at what you saw today in the Q two numbers.
Speaker 1: Business investment has been rattled by slowing global growth, trade
Speaker 1: tensions with China in particular. These things are not going
Speaker 1: away anytime soon. Nor is the low level of the
Speaker 1: unemployment rate and the tailwind that that's providing to household
Speaker 1: income generation. Uh. And so consumer spending is going to
Speaker 1: what not go away anytime soon? Not either. And so
Speaker 1: really this modestly above trend pace of we're all economic
Speaker 1: growth driven by consumers, uh, is you know, the the
Speaker 1: new normal for the economy for the foreseeable future. So, Carl,
Speaker 1: you mentioned trade as being an impact. We have some
Speaker 1: tweets from Larry Cudlow the National Economic Council UH today
Speaker 1: just coming across saying the U. S And China not
Speaker 1: expected to reach a grand deal next week. That's according
Speaker 1: to Mr Cudlow. How important is getting something done on
Speaker 1: trade or not to these GDP numbers that we're seeing. Well,
Speaker 1: absolutely we see a significant distortion. We saw it in
Speaker 1: UH in the back half of last year. We saw
Speaker 1: it in the Q one number. So when the trade
Speaker 1: gap narrowed dramatically in inventory levels increased, all of that
Speaker 1: was due to trade saber rattling because producers are trying
Speaker 1: to pad their supply chains and rush materials in before
Speaker 1: tariffs go into effect. And UH they're afraid to make
Speaker 1: capital outlays as they don't know what the next twists
Speaker 1: and turns in the trade war will actually be. So
Speaker 1: we're certainly see an impact in the economic data, especially
Speaker 1: business investment UH. And will that go away anytime soon?
Speaker 1: I'm very much in the cut Low camp here that
Speaker 1: I don't see any grand compromise coming down the pike,
Speaker 1: probably not until at least after the election. So we
Speaker 1: may see a little deals on Huawei or soybean or
Speaker 1: agricultural purchases and whatnot. We're not going to see a
Speaker 1: grand compromise because that's I think an important pillar of
Speaker 1: President Trump's reelection campaign. So the big question w W
Speaker 1: T F D what would the FED do? Right? I mean,
Speaker 1: the question is here. I'm I'm trying to figure out,
Speaker 1: you know, what does this all mean for the expected
Speaker 1: three rate cuts that are gonna get this year. Well,
Speaker 1: this means that next week's basis point cut is largely
Speaker 1: appropriate for the Fed. I think that they'll follow through
Speaker 1: with another rape cut, probably at the December meeting, maybe October.
Speaker 1: I don't think the FED wants to go back to
Speaker 1: back with basis points July basis points in September. Then
Speaker 1: you start to create a feeding frenzy in the marketplace,
Speaker 1: where the market is going to then drag the FED
Speaker 1: into a more pronounced easing cycle than the FED really
Speaker 1: wants to invasion. But but here's my question. I mean,
Speaker 1: does this GDP report move the needle in any way,
Speaker 1: shape or form. Even though it gives a FED confidence
Speaker 1: that consumers are looking good, it also reinforces their concerns
Speaker 1: about a weak business investment climate, which is which is
Speaker 1: almost I mean, I don't want to say entirely due
Speaker 1: to trade, but significantly due to trade. It's trade, it's
Speaker 1: slowing global growth, and it's a strong dollar, which is
Speaker 1: part of the reason why the FED needs to ease.
Speaker 1: If central banks around the global are easing, which we
Speaker 1: saw hints it that is coming soon from the e
Speaker 1: c B, We've already seen it from Australia, New Zealand,
Speaker 1: South Africa, a slew of emerging market central banks, Turkey
Speaker 1: the earlier this week. If everyone else is easy and
Speaker 1: the FED is not, you're going to have a very
Speaker 1: strong trade weighted dollar, which is a de facto tightening
Speaker 1: of monetary conditions in the US economy. So the FED
Speaker 1: needs to do a little bit of easy just to
Speaker 1: avoid the dollar blowing through the roof and really toppling
Speaker 1: both the export sector and a lot of domestic industry
Speaker 1: which is sensitive to currency strengths as well. Carra Kadonna,
Speaker 1: thank you so much for the perspective. Carra Kadona, chief
Speaker 1: US economist for Bloomberg Economics, UH talking about that GDP report,
Speaker 1: US growth slowing to two point one percent, still ahead
Speaker 1: of the expected one point eight percent in the quarter
Speaker 1: in a year in annual terms. We do want to
Speaker 1: just bring you those headlines that we had earlier about
Speaker 1: US China not expected to reach some sort of grand
Speaker 1: deal nets the week. This according to Larry Cutlow speaking
Speaker 1: on CNBC. He also said that the White House has
Speaker 1: ruled out any current the intervention, shooting down some speculation
Speaker 1: that President Trump may intervene to weaken the dollar further.
Speaker 1: This is Bloomberg. Thanks for listening to the Bloomberg P
Speaker 1: and L podcast. You can subscribe and listen to interviews
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Speaker 1: I'm pim Fox. I'm on Twitter at pim Fox. I'm
Speaker 1: on Twitter at Lisa Abramo. It's one before the podcast.
Speaker 1: You can always catch us worldwide on Bloomberg Radio.